Advocacy News – April 19, 2024
As many Americans do not have any savings stored up for retirement, the federal government and states across the nation have been considering how to change that. Michigan is now one of those states. House Bill 5461, sponsored by Representative Mike McFall would mandate employers without a retirement savings plan to enroll employees into a state administered Individual Retirement Account (IRA.) This legislation received a hearing before the Michigan House of Representatives Committee on Labor earlier this week but has yet to receive the green light.
The bill, as introduced, creates a number of concerns for businesses across the state. The Michigan Chamber’s internal Health, Human Resources, and Talent (HHRT) committee reviewed the legislation and provided feedback. See below for the full memorandum the MI Chamber provided to the Michigan House of Representatives Committee on Labor. If you are interested in joining an internal Chamber policy committee, click here.
This memorandum is to voice the Michigan Chamber’s strong concerns to House Bill 5461 (McFall), legislation mandating employers without a retirement savings program automatically enroll employees into a state administered Individual Retirement Account (IRA). The details in this legislation, although well intentioned, need further thought and discussion. Based on initial member feedback, we urge you to consider and address the unexpected hurdles businesses and employees may face under HB 5461.
- Employee Choice – Because employers are responsible for the automatic enrollment of employees into the program and payroll deduction, they will inherently play an intermediary role between the employee and the state administrator, oftentimes without the employee’s knowledge that the program is mandated.
- Solution: We suggest allowing an opt-in approach versus opt-out, alleviating additional administrative work for employers and providing employees with freedom of choice.
- Simplicity – HB 5461 defaults several key decisions to the state board created under the legislation. For example, the automatic deduction percentage could be determined on the front end.
- Solution: We urge the sponsor to consider hammering out more details via legislation to eliminate future unknowns from implementation, rather than deferring to the board.
- Michigan First – We want to keep Michigander’s money in the Great Lakes State, while simultaneously highlighting and strengthening the incredible businesses that operate here.
- Solution: We urge the inclusion of a preference for Michigan companies to administer this IRA program.
- Minimum Wage Concerns – In some cases, HB 5461 would conflict with the federal Fair Labor Standards Act (FLSA), which requires employers to pay employees the minimum wage. Depending on the contribution amount designated by the board, an employee could face a decrease in wages below minimum wage.
- Solution: Carve out lower wage workers.