This bipartisan, bicameral plan is a win-win for workers and businesses: it allows small- and medium-sized businesses to include employee ownership in the compensation package, and ESOPs often retain more employees as a result.”
The bill enjoys bicameral support with introductions in both the House and the Senate. Lead sponsors in the Senate are Ben Cardin (D-MD) and Steve Daines (R-MT) while Mike Kelly (R-PA) and Earl Blumenauer (D-OR) are lead sponsors in the House. In addition, 20 Senators are co-sponsoring the bill and six House members are co-sponsors.
Bipartisan support underscores the bill’s potential to create positive changes that transcend party lines. According to Representative Kelly, “By expanding Employee Stock Ownership Plans (ESOPs), we can put more hard working Americans on the path to financial prosperity and a secure retirement. This bipartisan, bicameral plan is a win-win for workers and businesses: it allows small- and medium-sized businesses to include employee ownership in the compensation package, and ESOPs often retain more employees as a result.”
The Promotion and Expansion of Private Employee Ownership Act seeks to streamline the regulatory process, potentially making it more attractive for business owners considering ESOP adoption. Specifics of the legislation include:
- Incentives for S-Corp owners to sell their stock to an ESOP by providing deferral treatment for contributions of S corporation stock to an ESOP so long as certain reinvestment requirements are met;
- Retention of SBA certification for small businesses that become ESOPs;
- Creation of an S Corporation Employee Ownership Assistance Office by the Treasury Secretary to provide technical assistance to S-Corps who are sponsoring ESOPs;
- Establishment of an “Employee Ownership Advocate” position within the Department of Labor’s Employee Ownership Initiative which was set up as part of the SECURE 2.0 Act that supports employee ownership.
Senator Cardin summed up the benefits of the legislation and Congress’ commitment to employee ownership in a statement. “Employee ownership provides small business owners and workers incredible opportunities to build generational wealth and create resiliency for their businesses. We need to preserve and expand this structure to enable more businesses to grow and to allow employees to accrue valuable benefits.”
The Menke team is encouraged by all the positive activity in the US Congress to encourage employee ownership and sees these developments as spurring a new decade of ESOP adoption and the transformative power of employee ownership.
