Federal Support for Transitioning Businesses to Employee Ownership (ESOP/EWOC)
This Act establishes a new federal loan guarantee facility (up to $5 billion annually) within the Department of Commerce to encourage businesses to transition into employee-owned structures (ESOPs or worker cooperatives). The goal is to increase the number of companies where employees hold a majority ownership interest, while ensuring strong protections for employee financial interests during these transactions. The program aims to enhance employee financial stability and the resilience of American businesses.
Key points
The US government provides financial guarantees to help investment firms finance the sale of businesses to Employee Stock Ownership Plans (ESOPs) or worker cooperatives.
Employee acquisition transactions must be overseen by independent trustees and advisors to ensure the financial terms are fair to the employee plan.
Employees are prohibited from personally financing the acquisition through wage cuts or rolling over their personal retirement plans.
In the event the company is later sold, ESOP participants are guaranteed a fair distribution of sale proceeds based on their compensation.
Status:
Introduced
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