Penalties start at $250 per eligible employee and rise to $750 per eligible employee for continued non-compliance, with additional $500-per-employee penalties assessed annually until you comply. They are assessed under California Government Code § 100033(b) and collected by the Franchise Tax Board. For a 12-person business that means up to $9,000 in the first cycle, then $6,000 a year — more than a small 401(k) would cost after tax credits.
The statutory schedule
Government Code § 100033(b), as quoted in CalSavers' own FAQ: each eligible employer that, without good cause, fails to allow its eligible employees to participate is subject to —
| Trigger | Penalty | Running total |
|---|---|---|
| Non-compliance 90+ days after notice | $250 per eligible employee | $250 |
| Non-compliance 180+ days after notice | Additional $500 per eligible employee | $750 — the first-cycle maximum |
| Each year thereafter, until compliant | Additional $500 per eligible employee | $750 + $500/yr, indefinitely |
What that means in dollars
The per-employee structure is what makes this expensive. Three concrete examples:
Compare that against the cost of complying: registering with CalSavers costs the employer nothing, and a small 401(k) frequently nets out near zero for the first three years once the SECURE 2.0 credits are applied. At almost any headcount the penalty is the most expensive option on the table — and unlike a plan, it buys you nothing.
One number you'll read elsewhere that is wrong
At least one widely-shared accounting-firm page claims penalties escalate "$500 per eligible employee for each additional 30-day period." That is not what the statute says. The schedule is $250 at 90 days, an additional $500 at 180 days, and $500 annually thereafter — collected by the FTB, not compounding monthly.
How the FTB frames the same schedule
You may notice the Franchise Tax Board's collections page describes the sequence differently, and it is worth understanding both framings so a letter never catches you off guard:
- Statute / CalSavers framing: $250 per employee at 90+ days after the CalSavers Board's notice; an additional $500 per employee at 180+ days.
- FTB operational framing: a First Notice carries the $250-per-employee penalty; a Final Notice adds $500 per employee if you have not complied within 90 days of the first notice date; Annual Notices add $500 per employee each year until compliance.
Both land in the same place — $250, then +$500, then +$500 per year. The difference is only which notice starts each clock. What matters practically is that the FTB's first notice also starts a 90-day appeal window that closes permanently once the final notice issues. If you have a notice in hand, read the penalty-notice walkthrough now.
Who does what in enforcement
| Step | Who |
|---|---|
| Identifies non-compliant employers from EDD payroll data | CalSavers Retirement Savings Board |
| Issues notice of non-compliance, then final notice | CalSavers Board (Gov. Code § 100033(c)) |
| Imposes and collects the penalty; issues First / Final / Annual notices | Franchise Tax Board |
| Hears appeals — within 90 days of the first FTB notice date | Franchise Tax Board |
Common questions
Is the penalty per business or per employee?
Per eligible employee. A 4-person shop faces up to $3,000 in the first cycle; a 25-person business faces up to $18,750. The headcount is yours from EDD filings, not an estimate.
Can I just pay it and move on?
You can, but it recurs: after the first $750-per-employee cycle it continues at $500 per employee every year until you comply. For nearly any business, registering — or sponsoring a plan — is cheaper than the fine within a year or two.
Are penalties ever forgiven?
Sometimes. Abatement is discretionary and never guaranteed, but it is worth asking about: come into compliance first, then contact CalSavers and the FTB about the assessment. Nobody can promise you an outcome. How to pursue it →
Does enforcement actually happen?
Yes. The CalSavers Board identifies non-compliant employers from EDD payroll data and refers them to the Franchise Tax Board, which assesses and collects. Notices go out in waves, and the assessment repeats every year until you comply.
What triggers the first notice?
Missing your registration deadline. The CalSavers Board identifies non-compliant employers from EDD payroll data and issues notices; the FTB then assesses and collects. Check which deadline applied to you →
Cheaper to fix than to pay
Fifteen minutes and we'll tell you the fastest route out of penalty exposure — register, certify, or plan. No charge.