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The Employee Ownership Update

Loren Rodgers

June 15, 2018

(Loren Rodgers)

Employee Ownership Legislation Progresses in Congress

The 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:

Senator Kirsten Gillibrand (D-NY) has campaigned for the bill (see the May 1 Employee Ownership Update). A press release from her office quotes her as saying, "Employee-owned businesses have a strong track record of better pay and retirement benefits for workers and a commitment to creating local jobs."

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 Maine

Shawn 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 Bill

Representatives 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 (kevin@paceo.org).

Federal Reserve of Boston Publishes on Employee Ownership

In 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 Closing

A 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 Florea

The 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 Companies

Oliver'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.

Kenya Airlines to Issue Employee Shares

Kenya Airlines will issue shares worth $14 million USD (1.4 billion Kenyan Shillings) to its workforce.

UK: Gripple Founder Hugh Facey Wins OBE from Queen

The founder of Gripple, one of the best-known employee owned companies in the United Kingdom, was awarded the "Order of the British Empire" (OBE) by Queen Elizabeth. In the announcement, Gripple founder Hugh Facey said, " I concluded that I received it because of you—Our Brilliant Employees—to thank you for what you do day in day out to create wonderful companies."

Author biography and other columns in this series

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