ESOPs Get Legislative Backing

Two pieces of legislation have been introduced, both sponsored by Senator Bernard Sanders [I-Vermont], and co-sponsored by Senators Sherrod Brown [D-Ohio], Patrick J. Leahy [D-Vermont], and Robert Menendez [D-New Jersey].  The first bill, the `Worker Ownership, Readiness and Knowledge Act’ (the `WORK Act’), S. 2909, is “to provide state programs to encourage employee ownership and participation in business decision making throughout the United States”. 

The second, S. 2914, would provide for the establishment of the United States Employee Ownership Bank.

Office of Employee Ownership and Participation 

The “WORK” Act calls for the Secretary of Labor to establish within the Department of Labor an Office of Employee Ownership and Participation to promote employee ownership and employee participation in business decisionmaking.   

This office, and its Director of Employee Ownership and Participation, is called on to support, within the individual 50 states, existing programs designed to promote employee ownership and employee participation in business decisionmaking; and to facilitate new such programs at the state level.  The bill says that support will come in the form of Federal grants, as well as the acting as a clearinghouse on techniques employed by new programs and existing programs within the States, and disseminating information relating to those techniques to the programs, or funding projects for information gathering on those techniques, and dissemination of that information to the programs, by groups outside the Office. 

The bill also calls for the facilitation of the formation of new programs, “in ways that include holding or funding an annual conference of representatives from States with existing programs, representatives from States developing new programs, and representatives from States without existing programs”. 

A New Program

Additionally, not later than 180 days after the date of enactment of the law, the Secretary of Labor is directed to establish a program “to encourage new and existing programs within the States, designed to foster employee ownership and employee participation in business decisionmaking throughout the United States”.  That program is to provide education and outreach to inform employees and employers about the possibilities and benefits of employee ownership, business ownership succession planning, and employee participation in business decisionmaking, including providing information about financial education, employee teams, open-book management, and “other tools that enable employees to share ideas and information about how their businesses can succeed.” 

The program is also charged with providing technical assistance to assist employee efforts to become business owners, to enable employers and employees to explore and assess the feasibility of transferring full or partial ownership to employees, and to encourage employees and employers to start new employee-owned businesses, and to train employees and employers with respect to methods of employee participation in open-book management, work teams, committees, and other approaches for seeking greater employee input; as well as training other entities to apply for funding under this legislation, to establish new programs, and to carry out program activities.

“We are, needless to say, excited that Senator Sanders and three colleagues have put forward these two bills,” said J. Michael Keeling, president of The ESOP Association, in a press release.  “S. 2909 seeks to expand programs that several states have established to help business owners create employee-owned companies.  S. 2914 is a bold new approach proposing, for the first time, a Federal loan guarantee program to save jobs in certain situations when the result of the financing would be a company owned 50% or more by the employees.”