Public policy

We work with the field to develop and implement federal, state and local policies to significantly advance employee ownership

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We are at a moment of unprecedented opportunity for employee ownership (EO) in the United States. The EO ecosystem of advocates, educators, lenders, technical assistance providers and community partners is growing and maturing. At the same time, local, state and federal governments are investing in employee ownership to foster economic resilience and equity.

To fully realize the benefits of EO, we need to level the playing field through public policy. Policymakers at the local, state and federal levels have a critical role to play—and so do you!

Five key policy areas

At Project Equity, we prioritize a “big tent” strategy that lifts up all forms of broad-based employee ownership (most commonly, Employee Stock Ownership Plans, Worker Cooperatives and Employee Ownership Trusts).

By promoting broad-based employee ownership in all its forms, public policy can provide EO options for businesses of all sizes and types. Together, we can dramatically expand EO through policy solutions across five key areas:

Education and awareness

Educate business owners, their advisors, employees, lenders and others about succession planning and employee ownership options

Affordable technical assistance

Subsidize employee ownership feasibility assessments and technical assistance for worker-owners

Accessible capital

Increase capital available and reduce barriers to financing EO businesses

Economic development programs

Embed education, TA, and capital access for EO into government economic development programs

Incentives for Employee-Owned Businesses (EOBs)

Establish tax credits, exemptions, procurement supports or other financial incentives for EO businesses

Additional resources

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Interactive policy databases

We created interactive databases to track the progress of EO policies over time.

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Download our white paper on why government should support employee ownership

Learn how community partners are getting involved in EO policy initiatives

Our policy priorities

Together with partners across the country, we are developing and implementing a range of EO policies at the federal, state, and local levels. Contact us to get involved!
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Federal policy priorities

Below, we have highlighted impactful policy tools available to the federal government to support EO and have included summaries of relevant legislation proposed this session. View our interactive EO policy database for a comprehensive view of past and current federal EO policy.

Appropriate authorized grant funds to support EO education programs and build affordable TA capacity in states across the country (WORK Act budget appropriation)
     
  • The United States Department of Labor announced its new Employee Ownership Initiative in July 2023, as required by the Worker Ownership Readiness and Knowledge (WORK) Act. After several prior attempts, the WORK Act was passed in December 2022 as part of the Omnibus Spending Bill. The Department of Labor has been charged with making improvements to the regulations regarding ESOPs and distributing $50M in grants to the states to promote employee ownership. These grants were slated to start in fiscal year 2025, but have yet to be appropriated by Congress, delaying the impact of this legislation. The DOL’s rule change to ESOP valuations has also been delayed by the recent administration change.
  • These funds can support (1) outreach and education to employees and employers about employee ownership, succession planning, and employee participation in business decision-making and success; (2) Technical assistance to help employees become business owners, for feasibility studies regarding the transition of existing businesses to employee ownership, and to “help employees and employers start new employee-owned businesses”; (3) Training employees and employers in methods of employee participation; and (4) Training entities to apply for funding under this program (states themselves can apply directly or sponsor applications by actors within their states).
Amend the WARN Act to require employers to notify workers of an intended business closure and give employees the right of first refusal to purchase the business (Employee Ownership Financing Act)
    • Introduced in 2025, the Employee Ownership Financing Act (S.2458) would create an Office of Employee Ownership within the Department of Labor (but outside of the Employee Benefits Security Administration). It would also amend the Worker Adjustment and Retraining Notification (WARN) Act to require that employers with over 100 employees notify workers of an intended closure or mass layoff and give employees the right of first refusal to purchase the business through either an ESOP or worker cooperative. Finally, the Act proposes to establish a federal-level Advisory Council on Employee Ownership composed of seven members appointed by the Secretary of Labor to help shape federal EO policy and elevate the voice of employee-owners in national EO discussions.
    Appropriate authorized grant funds to support EO education programs and build affordable TA capacity in states across the country (WORK Act budget appropriation)
       
    • The United States Department of Labor announced its new Employee Ownership Initiative in July 2023, as required by the Worker Ownership Readiness and Knowledge (WORK) Act. After several prior attempts, the WORK Act was passed in December 2022 as part of the Omnibus Spending Bill. The Department of Labor has been charged with making improvements to the regulations regarding ESOPs and distributing $50M in grants to the states to promote employee ownership. These grants were slated to start in fiscal year 2025, but have yet to be appropriated by Congress, delaying the impact of this legislation. The DoL’s rule change to ESOP valuations has also been delayed by the recent administration change.
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    • These funds can support (1) outreach and education to employees and employers about employee ownership, succession planning, and employee participation in business decision-making and success; (2) Technical assistance to help employees become business owners, for feasibility studies regarding the transition of existing businesses to employee ownership, and to “help employees and employers start new employee-owned businesses”; (3) Training employees and employers in methods of employee participation; and (4) Training entities to apply for funding under this program (states themselves can apply directly or sponsor applications by actors within their states).
    Create an Employee Equity Investment Company (EEIC) program in the Commerce Department to offer loan guarantees for EO investment funds (American Ownership and Resilience Act)
       
    • The American Ownership and Resilience Act (S.1645) proposes to provide loan guarantees for investment funds focused on growing new and existing employee-owned businesses by establishing an investment facility in the Commerce Department that functions much like the existing SBA’s Small Business Investment Company (SBIC) program. These investment funds, called Employee Equity Investment Companies (EEICs), would raise their own funds to facilitate the process of selling a company to its employees through an ESOP, but would receive federal loan guarantees to provide debt at more reasonable costs or equity infusions into transactions where an ESOP already owns or is acquiring at least 30% of a company. As with the current SBIC program, loan guarantees would be provided on a zero-subsidy basis with fees paid by the investment funds. The bill was first proposed in 2023 as the Employee Equity Investment Act (EEIA).
     
    Create a $500 million Employee Ownership Loan Fund to provide low-interest loans and loan guarantees to employees seeking to create majority EO businesses (Employee Ownership Financing Act)
       
    • Introduced in 2025, the Employee Ownership Financing Act (S.2458) would create an Office of Employee Ownership within the Department of Labor (but outside of the Employee Benefits Security Administration) and would establish a $500 million Employee Ownership Loan Fund to be administered by the Office. The EO Loan Fund would provide low-interest loans or loan guarantees to enable employees to purchase at least 51% of the shares in their employer through an ESOP or worker cooperative.
    Establish an Advisory Council on Employee Ownership to give employee-owners a voice in shaping future federal policy (Employee Ownership Financing Act)
       
    • Introduced in 2025, the Employee Ownership Financing Act (S.2458) would create an Office of Employee Ownership within the Department of Labor (but outside of the Employee Benefits Security Administration) and would establish a 7-member advisory council on EO — with 3 seats held to represent ESOPs, worker cooperatives, and EO business associations — which would advise the implementation of the Office of EO and its EO Loan Fund.

    No current priority EOB incentives are under consideration in Congress.

    State policy priorities

    Below, we have highlighted impactful policy tools available to state governments to support EO and have included summaries of relevant legislation proposed this session. View our interactive EO policy database for a comprehensive view of past and current state EO policy.

    Create and fund education and awareness programs carried out by state agencies or qualified nonprofits
       
    • Wisconsin: SB 21 would establish an outreach program within the Wisconsin Department of Revenue to raise awareness of and provide training on employee ownership, and would direct the Department to apply for federal funding authorized (but not yet appropriated) by the 2022 WORK Act.
    • Indiana: SB 175 would establish an Employee-Owned Business Resource Center within the Indiana Department of Workforce Development. The Center would be tasked with raising awareness of the benefits of EO, providing technical assistance to facilitate EO startups and transitions, training employees and employers in democratic governance, and connecting employees and business owners to EO service providers.
    • Michigan: The Michigan Department of Labor and Economic Opportunity (LEO) launched a new $500,000 pilot program designed to expand access to employee ownership in the state. Administered by the Michigan Center for Employee Ownership (MICEO) on behalf of LEO, the pilot program will provide direct transition assistance to support Michigan businesses with transitioning to EO, including covering the costs of feasibility studies, financial evaluations, legal services, and other technical assistance. MICEO will also conduct marketing and outreach to raise awareness of EO statewide, and will develop best practices for facilitating transitions to EOTs. This policy has been enacted!
    Incentivize the sale of businesses to employees through tax credits and other enabling conditions
       
    • Colorado: HB25-1021 expands incentives designed to facilitate the sale of businesses to EO in Colorado by providing a state capital gains tax exemption on the sale of at least 20% of a company’s stock to a qualified employee-owned business. The bill also provides worker cooperatives with a deduction on federal income taxes paid, up to $1 million per year. This policy has been enacted!
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    • Massachusetts: H 503 would give some workers the right of first refusal if the owner of their business chooses to sell. If the employees successfully purchase a majority of the business, the selling owner is exempt from Massachusetts capital gains tax on the first $1 million of the sale. The bill stipulates that any existing labor union membership or collective bargaining agreements in effect at the time of the sale shall continue to be honored under the new ownership structure.
    • Wisconsin: SB 21 would provide a state capital gains tax exemption for sales to ESOPs or worker cooperatives so long as the business is majority employee-owned.
    Create grant or tax credit programs to subsidize feasibility study and TA costs
       
    • Colorado: HB25-1021 expands the state’s already significant EO conversion tax credit program by increasing the percentage of conversion or expansion costs that are eligible to be claimed for the credit from 50% to 75%, removing the annual tax credit cap, and extending the program through 2037. The bill also expands eligibility for the tax credit by allowing Colorado-based nonprofits that provide EO conversion services to businesses to claim a refundable tax credit for up to 75% of their costs, up to $167,000 per year. This policy has been enacted!
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    • Wisconsin: SB 21 would create a nonrefundable income tax credit for businesses converting to employee ownership, with a value of up to 70% of costs related to converting to a worker-owned cooperative or 50% of costs related to converting to an ESOP, up to a maximum amount of $100,000. The bill allocates $5 million per year, with any unused funds rolling over.
    • Michigan: The Michigan Department of Labor and Economic Opportunity (LEO) launched a new $500,000 pilot program designed to expand access to employee ownership in the state. Administered by the Michigan Center for Employee Ownership (MICEO) on behalf of LEO, the pilot program will provide direct transition assistance to support Michigan businesses with transitioning to EO, including covering the costs of feasibility studies, financial evaluations, legal services, and other technical assistance. MICEO will also conduct marketing and outreach to raise awareness of EO statewide, and will develop best practices for facilitating transitions to EOTs. This policy has been enacted!
    Establish credit enhancement programs or loan funds to finance EO transitions and capital needs by leveraging the State Small Business Credit Initiative
       
    • Every state has one or more state agencies that are receiving significant capital for small businesses through the State Small Business Credit Initiative (look up your state’s program here). We encourage employee ownership advocates to reach out to the relevant agencies in their state to educate them about how SSBCI funds can be used to support employee ownership. Use our fact sheet as a starting point.
     
    Establish and fund an EO-specific capital program
       
    • Indiana: SB 175 would create an Employee Ownership Revolving Loan Fund administered by the Center that would provide low-interest loans to support new EO businesses and EO transitions.
    Create and fund Offices of Employee Ownership in state governments
       
    • Wisconsin: SB 21 would establish an outreach program within the Wisconsin Department of Revenue to raise awareness of and provide training on employee ownership, and would direct the Department to apply for federal funding authorized (but not yet appropriated) by the 2022 WORK Act (section 346 of the SECURE 2.0 Act).
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    • Indiana: SB 175 would establish an Employee-Owned Business Resource Center within the Indiana Department of Workforce Development. The Center would be tasked with raising awareness of the benefits of EO, providing technical assistance to facilitate EO startups and transitions, training employees and employers in democratic governance, and connecting employees and business owners to EO service providers.
    Establish tax credits, exemptions, or other financial incentives for EO businesses
       
    • Colorado: HB25-1021 provides worker cooperatives with a deduction on federal income taxes paid, up to $1 million per year. This policy has been enacted!
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    • Oregon: HB 3646 provides majority employee-owned businesses with a purchasing preference for public contracting. Specifically, the bill enables state agencies to give a 5% preference in procuring goods and services from businesses that are at least 50% employee-owned. This policy has been enacted!
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    • California: SB 713 would direct the state’s Director of General Services to issue an ESOP contractor certificate that qualified public works contractors with an ESOP could apply for. The California Employee Ownership Hub manager would be tasked with maintaining a comprehensive bidders list of qualified contractors that have received the ESOP contractor certificate. Then, beginning in 2027, the state Department of Transportation would be required to award an unspecified percentage of state-funded construction contracts and construction-related procurements to contractors with the ESOP certificate.

    Local policy priorities

    Below, we have highlighted impactful policy tools available to local governments to support EO and have offered examples of those policies already in action from localities across the country. View our interactive EO policy database for a comprehensive view of past and current local EO policy.

    Create and fund city or county initiatives to raise awareness and educate business owners about EO
       
    • Chicago: The Mayor’s Office of Equity and Racial Justice in the City of Chicago launched its Community Wealth Building (CWB) Initiative in 2022. Then-mayor Lori Lightfoot committed $15 million of ARPA funds toward the CWB pilot project. Project Equity was one of 17 organizations that collaborated with the city to build the capacity of a local ecosystem that supports employee ownership, limited-equity housing cooperatives, community land trusts, and community investment vehicles.
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    • Los Angeles County: In September 2023, the LA County Board of Supervisors unanimously approved a motion by Supervisor Holly Mitchell to create a countywide Worker Ownership Initiative. Project Equity is supporting the county in developing and implementing the initiative.
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    • Saint Paul: Under the leadership of Mayor Melvin Carter, Saint Paul is advancing a variety of community wealth-building strategies, including support for employee-owned businesses. The city’s Office of Financial Empowerment has launched a shared ownership revolving loan fund, dedicated staff to shared ownership education and convenings, and has worked with Project Equity to conduct a policy audit to explore further tools to spur new EO businesses.
    Establish legacy business programs with succession planning programs and financial support
    • Many cities have legacy business programs to honor long-standing businesses in their communities and, in some cases, provide concrete benefits to support their continued presence and contributions. Education about succession planning and employee ownership can help keep these businesses thriving in their communities
    Create grant or tax credit programs to subsidize feasibility study and TA costs
       
    • A number of local governments have provided subsidies for feasibility studies to help businesses take the first step toward employee ownership, including Austin, Berkeley, Boston, Chicago, Madison, Minneapolis, New York, and Saint Paul. Details on each initiative can be found on our policy database.
     
    Connect local TA providers to regional and national referral networks
    Align existing capital programs with EO ownership structures
    • Miami: The City of Miami’s Economic Development Loan Fund (EDLF), capitalized with federal Community Development Block Grant (CDBG) funding, was established to provide businesses with financial assistance to support the retention and creation of jobs for low-to-moderate-income residents. After participating in the National League of Cities’ Shared Equity in Economic Development (SEED) Fellowship Program, the Miami City Commission passed a resolution in 2018 amending its EDLF program to include financing for transitions to worker cooperatives, authorizing up to $80k loans per transition, with larger loans requiring case-by-case approval.
    • Berkeley: In 2019, Berkeley’s Loan Administration Board approved changes to the City’s Small Business Revolving Loan Fund, first proposed by the Sustainable Economies Law Center in 2018. In particular, they created a goal for the RLF to allocate, at a minimum, 10% of its lending to worker cooperative start-ups or conversions and allowed the fund to support 10% of the equity for a cooperative conversion and 20% of the equity of a cooperative start-up. The fund, initially capitalized in the 1980s with a $500k grant from the US EDA, was expanded in 2020 with an additional $814k in EDA CARES Act funding to support businesses impacted by the COVID-19 pandemic.
     
    Create new sources of loan or grant capital aimed specifically at supporting EO businesses
       
    • Saint Paul: To catalyze its Shared Ownership initiative, the City of Saint Paul has capitalized the LOCAL Fund, a revolving loan fund dedicated to supporting new and existing EO businesses and community-owned commercial real estate, with $2.5 million in ARPA funds.
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    • Madison: In 2019, the City of Madison allocated $250k of already dedicated Worker Cooperative program funds to create the Worker Cooperative Revolving Loan Fund. This fund, operated by Shared Capital Cooperative, offers up to $50k in loans for businesses starting as or converting to a worker cooperative. An additional $50k was allocated to a revolving loan fund, operated by KIVA, to provide matching 0% interest and no-fee loans up to $15k for high-risk borrowers.
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    • City of Los Angeles: A coalition of grassroots groups, community-based organizations, and policymakers has proposed forming a Municipal Bank of Los Angeles to finance and prioritize community ownership projects like employee-owned businesses. See this report co-authored by Project Equity on the opportunity.
    Staff city or county Employee Ownership Initiatives to build local capacity with local EO developers and small business support systems
       
    • New York City: In 2015, New York City’s Council approved an ordinance to establish a Worker Cooperative Business Development Initiative (WCBDI), which would support the new and sustaining existing worker cooperatives through workshops, subsidized technical assistance, financial support, and other means. The WCBDI, led by the Small Business Services agency, received $1.2M in funding in its first year to be distributed to local cooperative ecosystem organizations to offer businesses free cooperative education and outreach, technical assistance, financing, and ongoing expert and peer support. Since then, through advocacy from the NYC Network of Worker Cooperatives (NYC NOWC) and support from City Council members, the WCBDI has remained a steadily funded initiative, a line item that had grown to $3.8M in FY24. In the first 10 years of the program, the initiative had disbursed over $30M in grants to over a dozen organizations across the City’s worker cooperative ecosystem, and had reported creating 116 co-ops with another 163 in the pipeline.
    Modify local bid preference programs to proactively include broad-based EOBs
      • Los Angeles County: As part of the EO motion passed in 2023 (see above), LA County will now include majority EO businesses in their Social Enterprise preferred procurement category, giving them a 15% bid preference on County contracts. This is the first EO-specific public procurement preference we are aware of in the US. The motion also directs the Department of Procurement to audit key contracting industries to explore opportunities to proactively engage and do business with local EO businesses.
       
      • San Pablo: In 2025, the City of San Pablo revised its Request for Qualifications for Cannabis Retail Operators to include broad-based employee ownership as a scoring metric for proposal submissions. Employee ownership is included within a “local hire/ownership plans” criterion, which offers an additional 20 points out of a possible 120.
      Ensure commercial real estate affordability through public or community ownership and targeted rent subsidies
         
      • Boston: Launched in 2023 using ARPA funding, Boston’s S.P.A.C.E (Supporting Pandemic Affected Community Enterprises) Program awarded grants for small businesses to open brick-and-mortar storefronts in commercial corridors with high vacancy rates across the city. These grants could be used for start-up and operating costs, including commercial rent, infrastructure build-out, security, and deposit. In addition to the grant funding, awarded businesses also received customized technical assistance (TA) through the City’s small business TA program. Applicants who were either already structured as a worker cooperative or were interested in starting a new worker cooperative were automatically awarded 5 points on their application, creating a preference for employee ownership. Four worker-owned businesses received a total of $535,000 in S.P.A.C.E. grants.
       
      • Some legacy business programs (e.g., San Francisco and City of Los Angeles) include subsidized long-term rental agreements. If used to support EO businesses, these could also help ensure long term affordability.
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