Advancing Employee Ownership: A Look at Recent Senate Bills
Bipartisan support for Employee Stock Ownership Plans (ESOPs) is growing in Washington, as evidenced by two key pieces of legislation that recently moved through the Senate. Both the “Promotion and Expansion of Private Employee Ownership Act” and the “Employee Ownership Representation Act” aim to remove barriers and provide new incentives for businesses to adopt an employee-owned model.
The Promotion and Expansion of Private Employee Ownership Act of 2025
Introduced by Senators Steve Daines (R-MT) and Maggie Hassan (D-NH), this bill seeks to make it more appealing for private companies, particularly S corporations, to transition to employee ownership. Its main provisions include:
- Expanded Tax Deferral: The legislation would allow owners of S corporations who sell at least 30% of their company to an ESOP to defer 100% of the capital gains taxes, a significant increase from the current 10% deferral set to take effect in 2027.
- Government Support: The bill mandates the creation of an S Corporation Employee Ownership Assistance Office within the Treasury Department to provide educational and technical assistance.
- Advocacy: A new Advocate for Employee Ownership position would be established within the Department of Labor (DOL) to promote employee ownership and act as a liaison between stakeholders.
- Small Business Certification: The act would ensure that businesses retain their small business certifications even after an ESOP takes a controlling stake, as long as the majority of the new employee owners meet the required criteria.
You can read more about this bill here.
The Employee Ownership Representation Act of 2025
This bill, along with the “Retire Through Ownership Act,” was recently advanced unanimously by the Senate Health, Education, Labor, and Pensions (HELP) Committee, moving it closer to a full Senate vote. The legislation focuses on strengthening the institutional support for ESOPs:
- ERISA Advisory Council: The bill would add two ESOP company representatives to the ERISA Advisory Council, giving the employee ownership community a greater voice in shaping federal policy.
- New DOL Office: It would create a new Office of Employee Ownership within the DOL, separate from the Employee Benefits Security Administration (EBSA), to better support and promote ESOPs.
- Advocate for Employee Ownership: An amendment to this bill also includes the creation of the Advocate for Employee Ownership position, which would provide guidance and work with other agencies to expand employee ownership.
To learn more about the bills advancing through the HELP committee, you can read the full article here.