The Employee Ownership Update
June 15, 2018
Employee Ownership Legislation Progresses in CongressThe Main Street Employee Ownership Act (S. 2786) has been included in the Senate's National Defense Authorization Act (NDAA), widely seen as a must-pass bill. The Senate is expected to vote on the NDAA as early as next week. It would be the first pro-ESOP bill to become law in 21 years.
The bill would focus on increasing the lending and outreach efforts of the Small Business Administration (SBA) to support ESOPs and worker cooperatives by:
- Updating the SBA's lending practices to better serve employee-owned businesses
- Empowering the SBA to assist small business owners in converting their companies to employee ownership through outreach and training programs
- Directing the SBA to coordinate with funds licensed as SBA Small Business Investment Companies and its Microloan program to consider employee ownership as an area for investment and lending
The Senate bill has won consistent bipartisan support and is co-sponsored by Senators Gillibrand and James Risch (R-ID).
The companion bill in the House of Representatives (H. 5236) passed the House in a voice vote on May 8, and is also included in the House version of the NDAA. Its primary sponsor, Nydia M. Velázquez (D-NY), says, "This bill will empower more employees to invest in firms and coops where they work, raising wages and creating greater economic opportunity."
The next step for the bill is the conference committee to reconcile the House and Senate versions of the NDAA, which is expected in late summer or early fall, following which the bill would proceed to the President to be signed into law.
ESOP Company CEO Nominated as Republican Candidate for Governor of MaineShawn Moody, who founded Moody's Collision Centers and then sold it to its 200 employees through an ESOP, decisively won the Republican nomination for governor of Maine in the state's June 12 primary.
Pennsylvania Legislature Considers Pro-ESOP BillRepresentatives from the Pennsylvania Center for Employee Ownership will testify before the Pennsylvania House of Representatives Finance Committee on House Bill 1289 on June 19. This bill would add incentives that mirror the federal deferral of capital gains tax (the "1042 rollover") for business owners who sell shares to an ESOP. Pennsylvania and Arkansas are currently the only two states that do not mirror the federal deferral. For more information or to attend, contact the executive director of the Pennsylvania Center for Employee Ownership, Kevin McPhillips (email@example.com).
Federal Reserve of Boston Publishes on Employee OwnershipIn an ongoing series of articles on the quality of work, the Federal Reserve Bank of Boston published an article on employee ownership on May 23. The article includes an interview with Douglas Kruse of Rutgers University that covers the background and latest research results about employee ownership and ESOPs, plus an interview with several employee-owners of Cape Air, including a video about employee ownership at the company.
Rhode Island Bill Would Provide Information on Employee Ownership When Businesses Are ClosingA bill in Rhode Island would require that employees be notified about their right to make a bid to purchase the business in the event of a mass layoff or closure. The Local Ownership Opportunity Act (H.7799 and S. 2871) would require a poll of employees to measure interest in a worker buyout. Employees could then enter into negotiations to buy the business through a worker cooperative. Worker buyouts in these situations have not been common for decades and can be very difficult to finance.
The Santa Clara University CEPI's New Executive Director Is Alex FloreaThe Certified Equity Professional Institute (CEPI) at Santa Clara University announced that it has hired its new executive director. Alex Florea's first day was yesterday, June 14. Alex has over 20 years of experience with business services, accounting, and equity compensation specifically. The CEPI supports best practices in equity compensation, especially through its certification exam for equity plan professionals.
The NCEO congratulates Alex and CEPI, and we look forward to continuing our long-standing, productive collaboration!
One Advertisement, Five Employee-Owned CompaniesOliver's Market became employee-owned in 2017, shortly before the devastating wildfires in its home territory north of San Francisco. To celebrate the one-year anniversary of becoming 100% employee-owned, Oliver's launched a special featuring products from other employee-owned companies, including New Belgium Brewing, Bob's Red Mill, Clif Bar, and Modern Times Brewing.
The ad is available online.