Employee Ownership Blog
Corey Rosen

Corey Rosen

Employee Ownership Efforts Move Forward in NJ, MO

New Jersey Governor Proposes Funding for Conversion to Employee Ownership

New Jersey governor Phil Murphy’s proposed 2024 budget includes $6 million in funding for conversions to ESOPs, worker cooperatives, or employee ownership trusts. The proposal came out of a Wealth Disparity Task Force created in 2021. Modeled after a law in Colorado, the funding program would provide partial support for feasibility and other transaction costs. The proposal will have to receive authorization from the New Jersey legislature. Details on the funding are not yet available but should be when the governor delivers his budget address on March 7.

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Corey Rosen

Promising New Employee Ownership Bills at State Level

State legislation on employee ownership is gaining momentum, with bills passed in Colorado during 2021 and in Massachusetts and California during 2022. Two new bills have attracted important support in Washington and Tennessee, and bills will be introduced soon in Texas, Minnesota, and Pennsylvania. The bills in Washington and Tennessee were introduced in the past week, as described below.

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Corey Rosen

Major Wins for Employee Ownership in New Spending Bill

The Consolidated Appropriations Act of 2023, an omnibus spending bill with many parts that was signed into law on December 29, contains major wins for employee ownership as part of the SECURE 2.0 Act of 2022. (The original SECURE [Setting Every Community Up for Retirement Enhancement] Act of 2019 was signed into law in December 2019 and modified various retirement plan rules, such as changing the age for required minimum distributions from 70½ to 72.) Section references here are to the SECURE 2.0 Act, not the appropriations bill as a whole, which contains many laws (e.g., there are multiple “sec. 114” instances, and one of them is in the SECURE 2.0 Act, amending Section 1042).

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Corey Rosen

Massachusetts Passes Employee Ownership Center Bill

Governor Charlie Baker of Massachusetts has signed a wide-ranging economic development legislative package that includes An Act to Enable the Massachusetts Center for Employee Ownership (S.261 / H.511), which will institutionalize the Massachusetts Center for Employee Ownership (MassCEO). The Office will be housed in the Massachusetts Office of Business Development. Much like the recently passed California Employee Ownership Act, the office will focus on outreach to business owners and serve as a resource hub for service providers and information. It will be led by a full-time director and will be able to make grants to local organizations to carry out its mission. The legislation also created a formal advisory board comprised of representatives from a number of stakeholder groups, including governor-appointed representatives from Massachusetts-based ESOP companies and worker cooperatives.

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Corey Rosen

SBA Says Main Street Employee Ownership Act Has Not Produced Many ESOP Loans

The 2018 Main Street Employee Ownership Act was intended to spur lending from the Small Business Administration for ESOP transactions. While the law seemed very clear that ESOPs should be eligible for  the SBA’s 7(a) lending program (a program that allows borrowers to get loans through SBA approved lenders rather than having to navigate the more cumbersome process of going to the SBA directly), SBA guidance on the Act excluded ESOPs from the program, as well as adding other requirements for equity in the deal and a separate valuation, that have made the law cumbersome at best.

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Corey Rosen

How the California Employee Ownership Act Became Law

The passage of the California Employee Ownership Act, the provisions of which I discussed in a recent blog post, has lessons for anyone wanting to move employee ownership forward in a state. We often think of legislation as the result of lobbying efforts by well-funded and/or politically connected groups. But the California Employee Ownership Act was the result of one employee ownership advocate calling one state legislator (Senator Josh Becker) and explaining the benefits of employee ownership in closing racial wealth and equity gaps in California. Senator Becker, coming from an entrepreneurial background, grasped the idea immediately and asked what he could do to promote more employee ownership in California. With his staff, he set up a meeting with a group of worker coop and ESOP advocates (including the NCEO) to come up with ideas. That group recruited additional supporters, and once the bill was drafted, these supporters lined up other supporters to contact their legislators (the NCEO was not involved in the lobbying part of this process). The bill moved through both houses without dissent. While the idea did not simply sell itself, it came pretty close.

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