Frequently Asked Questions

Employee Ownership FAQs

Common questions about employee stock ownership plans (ESOPs), employee ownership trusts (EOTs), and other forms of employee ownership, from the basics to technical topics.

This FAQ is written primarily for business owners, managers, and advisors involved in setting up or running an employee ownership plan. If you're an employee at an ESOP company looking to understand your own benefits and rights, see our articles on Working at an ESOP Company and The Rights of ESOP Participants.

NCEO employee ownership FAQ hero (keyboard)

If an employee is on military leave, does that employee still get allocations of contributions to an ESOP for the time missed? How is the applicable pay rate for that time determined?

Under USERRA (the Uniformed Services Employment and Reemployment Rights Act), the law governing employer obligations to employees on military leave, if the employee returns to work after the service, he or she must be credited with allocations from the ESOP equal to what would have been received under the assumed rate of pay the employee would have received had he or she still been employed. In addition, the employee is credited with vesting for the time missed. However, forfeitures would not be added to the employee's account for the period. Also, the company does not have to attribute dividends or distributions to the imputed shares.

Link to this FAQ Topic: ESOP Plan Design & Participation