A new study, “Contribution of S ESOPs to Participants’ Retirement Security and Employee-Owner Benefits,” prepared for the Employee-Owned S Corporations of America (ESCA) by EY (formerly Ernst & Young), finds that:
The study was based on an analysis of Form 5500 returns.
A new law in Maine, LD 1969, directs the Maine Public Utilities Commission to require that any renewable energy project in the state receiving $50,000 or more in state funding to meet certain labor standards, including paying prevailing wages.
The law also provides that in soliciting bids for state support for renewable energy projects, the Public Utilities Commission should “consider whether a majority of the individuals working on an assisted project are members of an entity that is employee-owned, including but not limited to an entity that offers employee stock ownership plans.”
The Maine law is the first state law in the country to provide a specific employee ownership preference for using state contracting resources.
SB 1974, or the Employee Ownership, Empowerment, and Expansion Act, passed early stages of consideration and is now before committees in both houses of the Tennessee legislature. The bill would create a tax credit identical to Colorado’s employee ownership tax credit law. It provides up to 50% of the costs of conversion for any company converting into an ESOP, employee ownership trust, or worker cooperative, with up to $50,000 for an ESOP and $25,000 for a worker cooperative. This can include legal, appraisal, and/or feasibility studies. The credit would be available only for completed sales.
The bill goes two steps beyond the Colorado bill, however, by extending to employee-owned companies the same contracting preferences for companies owned by disadvantaged individuals. The state is directed to conduct an outreach program on this new rule.
Finally, the bill would exempt employee-owned businesses from the Tennessee Business Tax, which is currently from .02% to .3% of gross receipts, depending on the kind of business.
While the bill had early success, Senator Page Whalley (R) told us while “we will be unable to pass the bill during this session due to the fiscal note…we have made remarkable inroads with our Governor’s Office and the Department of Revenue such that we will bring an amended version of the legislation back in January 2023. I believe that this will allow us time to have the complex conversations and, possibly, even get the Governor to make this his own proposal.”
Inc. Magazine’s annual top workplace ratings for private companies show that the top 475 companies are almost twice as likely (55% to 29%) to offer some form of ownership to employees as the “also-ran” companies in the survey. The magazine noted that “Quantum Workplace conducted a benefits audit of the applicants and created an employee-engagement index to rank companies based on the responses of nearly 370,000 employees who volunteered to take its confidential questionnaire.” Companies have to have at least 10 employees and have less than $1 billion in revenue. The survey did not distinguish between forms of ownership or how many employees were eligible.
Kaiser Permanente, one of the nation’s largest HMOs, has announced that it will be encouraging its 37,000 vendors to become employee-owned. The organization said that its “Business Resiliency through Employee Ownership” program “aims to educate the health system’s suppliers about employee ownership and support those firms in transitioning to such a model, in which the majority of a company’s shares are owned by employees.”
The project will work through Obran, a worker-owned cooperative based in Baltimore seeking to become a cooperative conglomerate, and will be led by Project Equity, a nonprofit promoting employee ownership. Companies can sell to Obran or create their own worker cooperative, ESOP, or employee ownership trust with advice from Project Equity.