Employee Ownership Blog
Corey Rosen

Corey Rosen

June 25, 2021

New Colorado Law Provides Tax Credits to Help Fund Converting to Employee Ownership

Colorado has become the first state to pass a law that helps cover some of the costs to convert to employee ownership. On June 23, Governor Polis signed into law H.B. 21-1311, a bill that makes sweeping changes to Colorado tax law, notably a provision to provide $10 million annually in tax credits over the next six years to fund the professional service costs of conversions to employee ownership. The funds could be used to convert to an ESOP, an employee ownership trust, or a worker cooperative. ESOPs can qualify for a credit equal to 50% of the conversion costs up to $50,000; cooperative and employee ownership trusts can get up to $25,000 (see page 21 of the bill).

Corey Rosen

May 25, 2021

Tax Deferral for Sellers to S Corp ESOPs Included in Bipartisan Bill

On May 5, 2021, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021, referred to as "SECURE Act 2.0" (H.R. 2954) in reference to the SECURE Act of 2019. The bill makes a number of changes to retirement plan law but, unlike the version introduced last year, does not include a provision allowing owners of S corporation ESOPs to get the same Section 1042 tax deferral on the sale of stock to an ESOP trust as owners of C corporation ESOPs can. S. 1770, sponsored by Senators Cardin (D-MD) and Portman (R-OH), does.

Corey Rosen

May 10, 2021

California and Colorado Legislatures Consider Major Funding Proposals for ESOPs

Several California Assembly and Senate members have written letters to the leaders of the Assembly and Senate budget committees urging inclusion of a $36.5 million appropriation to fund a one-time effort to support employee ownership in the state. So far, the proposal has not generated any opposition. The Senate and Assembly letters can be found here.

Corey Rosen

May 05, 2021

New York Senate Passes Bill to Allow Engineering, Architecture, and Land Survey Firms to Be Majority ESOP-Owned

New York has traditionally been a state where it is difficult to operate as a majority ESOP-owned engineering, architectural, landscape architectural, or land survey firm. Existing law requires that a majority of the owners be licensed professionals. Following a 60-0 vote on May 4, the New York Senate passed S. 5261 a bill that would allow majority-owned ESOPs to qualify under New York corporate practice rules for these firms if 75% or more of the company’s voting trustees or ESOP plan committee (often the board of directors) are members of the profession.

Corey Rosen

April 29, 2021

Almost One in Eight of the Largest Private Companies Is Employee-Owned

Twenty-five of the largest private companies as ranked by Forbes (219 in all) are employee-owned. Twenty-one of these have ESOPs, two have profit sharing plans that work like ESOPs, one is owned by a trust for employees, and one provides phantom stock to all employees. The companies are ranked by sales. Nine of the companies are supermarket or convenience store chains, and six are in construction. Companies had to have $2 billion or more in sales to be in the list.

Corey Rosen

April 27, 2021

Major Texas ESOP Initiative Moving Forward

Update: Since we published this article, H.B. 2246 the Senate Calendars committee failed to allocate floor time to this bill, effectively ensuring that it will not be acted on during this session.

Corey Rosen

April 22, 2021

Sample ESOP Plan Administration Charter Now in NCEO Document Library

ESOP plan administration committees are set up by companies to oversee ESOP operations. Depending on the committee's charter, it can appoint and monitor the ESOP trustee; resolve questions concerning allocations, vesting, eligibility, distributions, and other plan operational issues; make sure appropriate records are kept and passed on to the third-party administrator (TPA); and interpret plan provisions, among other possibilities. Not all ESOPs have these committees. These functions may be performed by the board of directors.

Corey Rosen

April 19, 2021

Canada Moves Forward on Employee Ownership

The Trudeau government has proposed a new budget that contains an important provision to look at ways for Canada to set up employee ownership trusts following the models of US ESOPs and UK Employee Ownership Trusts. The budget states that: “Employee ownership trusts encourage employee ownership of a business, and facilitate the transition of privately owned businesses to employees. Both the United States and the United Kingdom support and encourage employee ownership through these types of arrangements. Budget 2021 announces that the government will engage with stakeholders to examine what barriers exist to the creation of employee ownership trusts in Canada, and how workers and owners of private businesses in Canada could benefit from the use of employee ownership trusts.”

Corey Rosen

April 08, 2021

New Aspen Institute Report Urges Action to Make Disadvantaged Groups Employee-Owners

A new report by the Aspen Institute, Race and Gender Wealth Equity and the Role of Employee Share Ownership, urges the adoption of a series of initiatives to use employee ownership to address race and gender inequality.

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