2017 Congressional Bills Introduced to Support Employee Ownership

On Wednesday, June 10, VEOC board Treasurer Cindy Turcot and Associate Director Matt Cropp participated in a briefing on Capitol Hill aimed at informing Congressional staffers about the benefits of employee ownership, as well as discussing the details of three recently introduced bills aimed at expanding it nation-wide. The proposals have since picked up a bit of press, and the key points of the bills currently in play are:

"Worker Ownership, Readiness and Knowledge (WORK) Act" - S. 1081, H.R. 2387

  • Creates an “Employee Ownership and Participation Initiative” within the DOL’s Employment and Training Administration.

  • Provides for grants to state-level employee-ownership programs (state, municipal, or non-profit) to support:

    • Education and Outreach.

    • Participation Training.

    • Technical assistance for the conversion of firms to employee ownership.

    • Activities facilitating cooperation between employee-owned firms.

  • Up to 12 grants in FY 2018, 22 in FY 2019, 31 in FY 2020.

“Promotion and Expansion of Private Employee Ownership Act of 2017” - H.R. 2092

  • Expands the deferral of capital gains taxes currently allowed for C-Corporation ESOP sales to S-Corps.

  • Lenders to 50%+ S-Corp ESOPs may exclude 50% of interest if used to purchase stock for the ESOP.

  • Establishes an office within the Department of Treasury to provide technical assistance to S-Corps with ESOPs.

  • Ensures that small businesses remain eligible for SBA programs, for which they previously qualified, upon reaching majority ESOP ownership.

"U.S. Employee Ownership Bank Act"

  • Would provide for the creation of an Employee Ownership Bank, which would provide loan guarantees, subordinated loans, and technical assistance to employee ownership conversions.

  • Would provide employees of facilities being offshored a “right of first refusal” to purchase the operation via an ESOP or worker co-op.

  • Would provide Community Reinvestment Act credit to private financial institutions for participating in employee ownership conversion deals.