California California Employee Ownership Act Becomes Law
Governor Newsom has signed the California Employee Ownership Act. Both houses approved the bill unanimously. A broader version of the bill previously passed the Senate, but the bill was pared down in the Assembly. The Senate agreed to a pared down version with the understanding that an effort will be made to add the deleted features in the governor's next budget proposal.
The bill establishes the California Employee Ownership Hub within the California Office of Small Business. The Hub will work to “increase awareness and understanding of employee ownership among stakeholders, assist business owners and employees in navigating available resources, and streamline and reduce barriers to employee ownership.” California has a variety of loan support programs that companies seeking to convert to employee ownership could potentially qualify for.
The original version of the bill included grant funding for up to $50,000 for feasibility assessments and more aggressive outreach efforts. Bill sponsors will work to add that back in the next budget proposal from the governor.
The bill applies to worker cooperatives, ESOPs, and employee ownership trusts. Specifically, the bill directs the Hub to “partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities” to provide education and outreach on employee ownership. It also directs the office to set up a referral service model and to work with the various business development loan and grant programs in the state to make it “enhance the ability of broad-based employee ownership vehicles to access California capital programs.”