Corey Rosen
NCEO and ASA File Amicus Briefs in Choate ESOP Case
Update on July 16, 2020: Pursuant to a motion by the plaintiff-appellant, the Fourth Circuit has today dismissed the plaintiff's appeal of the district court's judgment.
Employee Ownership Blog
Corey Rosen
Corey Rosen
SBA Updates Guidance on Payroll Protection Program Compliance
On May 13, 2020, the SBA, in consultation with the Department of the Treasury, updated its Frequently Asked Questions to include a new Question 46 that provides additional guidance about the certification needed to prove that the funds were necessary in order to maintain payroll and thus eligible for forgiveness.
Corey Rosen
SBA Issues PPP Enforcement Guidance
The Paycheck Protection Program (PPP) has generated considerable controversy concerning its implementation, fairness, and rules. The Small Business Administration (SBA) is maintaining a FAQ document on the PPP program (PDF) that will be regularly updated. The SBA states, "Borrowers and lenders may rely on the guidance provided in this document as SBA’s interpretation of the CARES Act and of the . . . PPP Interim Final Rules . . . The U.S. government will not challenge lender PPP actions that conform to this guidance, and to the PPP Interim Final Rules and any subsequent rulemaking in effect at the time."
Corey Rosen
Payroll Protection Program Funding Extended
Congress voted to add $310 billion in funding to the Payroll Protection Program (PPP). Banks have said the funds are likely to run out quickly. The bill adds one important change to the bill by adding a set aside for “(I) insured depository institutions with consolidated assets of not less than $10,000,000,000 and less than $50,000,000,000;” and “(II) credit unions with consolidated assets of not less than $10,000,000,000 and less than $50,000,000,000.” The bill provides that not less than $30 billion in loans will be made by these community financial institutions. The Senate passed the bill on April 21, and the House on April 23. It now goes to President Trump, who is expected to sign it.
Corey Rosen
Join Jack Stack of SRC Holdings for Answers About Responding to COVID
Jack Stack, the CEO of SRC Holdings, a 100% ESOP-owned company and creator of the Great Game of Business, is holding a free Q&A on responding to the coronavirus. It will be held Friday, March 20, at 11:00 CT. Stack will be looking at issues such as:
Corey Rosen
On Changing the Format of Our Annual Conference
Thirty-nine years ago, we held our first annual conference. We had 175 attendees, including my uncle Bernie. Last year we sold out at over 1,900; this year, we were on track to sell out even sooner at over 2,000. The conference is one of the most important ways we help make employee ownership grow and thrive. It is also over one-third of our annual revenue and provides most of the profit we use to support all the other work we do, such as research and outreach, that is essential to employee ownership but does not generate revenue. We devote approximately the equivalent of three full-time staff people per year to the event. I know many of you really look forward to the conference every year, just as I do. One of my favorite spring rituals is checking in each day on how many new registrations we are getting and looking forward to reconnecting with all the inspiring people I have gotten to know over the years, as well as meeting so many new ones. I come back reenergized for another year, and it is part of why I count my ongoing role as a pretty much full-time volunteer for the NCEO as an extraordinary blessing.
Corey Rosen
New DOL Process Agreement Adds Provisions on Indemnification and Control
A new process agreement between the Department of Labor and Farmers National Bank (FNB) was made public on February 28. It lays out a much more detailed process for evaluating whether an ESOP actually has and can pay for control. It also prevents FNB from accepting indemnification and sets new hurdles for the advancement of fees in legal cases. The agreement was included in a settlement in the case of Scalia v. The Farmers National Bank of Danville and Weddle Bros. Construction Company, No. 1:20-cv-674 (S.D. Ind. Feb 28, 2020). Process agreements apply only to the parties involved, but they may indicate how the DOL would proceed in other actions. While much of the agreement reiterates prior agreements, this new one lays out some potentially troubling issues.
Corey Rosen
Fortune 100 Companies: Half Offer Broad-Based Employee Stock Plans
Forty of the 78 employers among the 2020 Fortune 100 Best Companies to Work For that can offer stock plans have some kind of broad-based plan. Twenty-two of the organizations cannot have stock plans because they are nonprofits (mostly in health care), law or accounting firms, or a consumer cooperative (REI). The percentage of eligible companies offering these plans on the list has been around 50% since its inception.
Corey Rosen
IRS Rules That Typical ESOP Floor Price Protection Plans Are Taxable
In General Legal Advice Memo 2019-03, the IRS ruled that payments from a company to a former employee under an ESOP price protection plan are immediately taxable if made directly to the employee, but not if the employer makes a special "qualified non-elective contribution" to the plan that is allocated to the former employee’s account and then distributed as part of the ultimate account distribution. Once those funds are distributed, they would be taxed under normal distribution rules.