Public policy
We work with the field to develop and implement federal, state and local policies to significantly advance employee ownership
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
Just released
We created an interactive database to track the progress of EO policies over time.
Download our white paper on why government should support employee ownership
Learn how community partners are getting involved in EO policy initiatives
Our 2025-2026 policy priorities
Together with many partners, we are developing and implementing a range of EO policies at the federal, state and local levels in 2025-2026. Contact us to get involved!
Federal policy priorities
Appropriate $4M in 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 is now charged with making improvements to the regulations regarding ESOPs and distributing $50M in grants (assuming funds are appropriated) to the states to promote employee ownership starting in fiscal year 2025.
- 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).
Appropriate $4M in 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 is now charged with making improvements to the regulations regarding ESOPs and distributing $50M in grants (assuming funds are appropriated) to the states to promote employee ownership starting in fiscal year 2025.
- 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 SBA Small Business Investment Company program to offer loan guarantees for EO investment funds (Employee Equity Investment Act – EEIA)
- Proposed in 2023, the EEIA bill would provide loan guarantees for investment funds focused on growing new and existing employee-owned businesses by using the SBA’s Small Business Investment Company (SBIC) program.
Allow SBA loans without individual guarantees via a 10-year, $60 million pilot program (National Worker Co-op Development and Support Act)
- In March 2024, Congressman Ro Khanna introduced the National Worker Co-op Development and Support Act (HR 7721) to support new and existing worker cooperatives across the country. Included in the bill is a 10 year $60 million pilot program administered by the SBA that would offer worker cooperatives loans without individual guarantee requirements, a common obstacle for employee-owned businesses.
Support launch of EO Initiative in U.S. Department of Labor (WORK Act)
- The 2022 WORK Act (see above for details) established a new Employee Ownership Initiative. Announced in July 2024, the EO Initiative is housed within the Employee Benefits Security Administration (EBSA) in the U.S. Department of Labor. As the first federal initiative with a staffed division dedicated to advancing broad-based employee ownership, this initiative is historic. The Division of Employee Ownership will manage the grant program, once funds are appropriated; provide a clearinghouse of resources to support existing state EO programs and create new ones; and directly provide education and technical assistance services to businesses considering a transition to employee ownership.
Establish a US Council on Worker Cooperatives to develop an interagency federal worker cooperative strategy (National Worker Co-op Development and Support Act)
- Included in the recently introduced National Worker Co-op Development and Support Act (see details above and full bill text) is the formation of an interagency council focused entirely on advancing worker cooperative businesses. The council would be chaired by the Secretary of Labor or a designee and will convene leadership from the SBA, IRS, Treasury and Commerce Departments, National Economic Council, and Domestic Policy Council. The council would serve for 10 years, developing an interagency strategy for supporting worker cooperatives through policy recommendations and shared best practices across federal agencies.
Provide grace period for recertification of disadvantaged businesses that transition to EO (Employee Equity Investment Act)
- The proposed EEIA bill (see details above and full bill text) would create a 2 year grace period for any business transitioning to employee ownership that is already certified by the SBA as socially and economically disadvantaged, women-owned or service-disabled veteran-owned. During those two years, so long as the chief corporate officer and a majority of the board of directors are still socially and economically disadvantaged individuals (or women or service-disabled veterans), shares held through any form of employee ownership would determine ownership and control of the business just as individual ownership does.
State policy priorities
Create and fund education and awareness programs carried out by state agencies or qualified nonprofits
California
- Senator Josh Becker and Assemblymember Ash Kalra are jointly sponsoring a budget request to fund the California Employee Ownership Hub. Sign on here to support.
- Senator Josh Becker introduced the California Employee Ownership Act (SB1407) in April 2022. With support from Project Equity, Worker-Owned Recovery California (co-founded by Project Equity and other California-based worker ownership advocates in 2020) and Ownership America, this bill passed with unanimous bipartisan support and was signed into law by Governor Newsom in September 2022. Read about the bill and what we learned in the effort to pass it in our blog.
Washington: Last year, Project Equity joined a wide range of stakeholders to support S.B. 5096, the most comprehensive state EO bill to date. It passed unanimously and was signed into law in May 2023 by Governor Inslee. Read our blog post to learn more.
Colorado: Newly proposed HB24-1157 would provide statutory authority for the Colorado Employee Ownership Office, which Governor Jared Polis created in 2020 through an executive order, thus making the office permanent
Create grant or tax credit programs to subsidize feasibility study and TA costs
- Washington: S.B. 5096 (see above for more details) will create an annual $2 million tax credit to offset up to 50% of feasibility study and transition costs up to $100,000 for ESOPs and $25,000 for worker cooperatives and Employee Ownership Trusts.
- Colorado: Since 2019, Colorado has built a comprehensive EO initiative including an EO Tax Credit program. New legislation has increased the credit to cover up to 50% of transition costs for worker cooperatives, EOTs, and ESOPs, and 25% of costs for transitioning to an alternative equity structure (funded at $10 million annually). Colorado’s EO Office connects interested businesses with TA providers and ensures awareness of the tax credits.
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.
Create and fund Offices of Employee Ownership in state governments
- California: See above for details on our current effort to fund the California EO Hub and sign on here to support.
- New York: Proposed bills in the House and Senate (A1920 and S962) would establish an EO Center housed at a state university.
Explicitly include EOBs in all state programs for small businesses
Establish tax credits, exemptions, or other financial incentives for EO businesses
Local policy priorities
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 is one of 17 organizations currently collaborating with the city to build a local ecosystem that supports employee ownership, limited equity housing cooperatives, community land trusts, and community investment vehicles.
- 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.
- 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. Together with Project Equity, the city is launching an EO Initiative and conducting a policy audit to help spur new employee-owned businesses.
Establish legacy business programs with succession planning programming 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 and state governments have provided subsidies for feasibility studies to help businesses take that first step toward employee ownership. In Berkeley, California, for example, several local businesses transitioned to worker coops with support from the city and technical assistance from Project Equity. Read about our work with Berkeley, Chicago and Tucson in this article.
Connect local TA providers to regional and national referral networks
- See Chicago’s example here and above.
Align existing capital programs with EO ownership structures
- Saint Paul: To catalyze its EO initiative (see above), 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 of ARPA funds.
Capitalize local public banks that prioritize financial justice lending
- Los Angeles County: An advocacy coalition is proposing the formation of a public bank in LA 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
- See initiatives in Chicago, LA County and Saint Paul above.
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.
Ensure commercial real estate affordability through public or community ownership and targeted rent subsidies
- Chicago: The CWB initiative in Chicago (see details above) coordinates community-owned commercial real estate, community land trusts, and employee-owned businesses, working to ensure that land and property is affordable in the long term for those businesses.
- 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.
