Employee Ownership Blog
Corey Rosen

Corey Rosen

EBSA Nominee Daniel Aronowitz Pledges to "End the War on ESOPs"

Daniel Aronowitz, the nominee to head the Employee Benefit Security Administration (EBSA) in the Department of Labor (DOL), promised to “end the war on ESOPs.”

At Aronowitz’s June 5, 2025, confirmation hearing (the segment with Aronowitz starts at 35:30 in the video), Alaska Republican Senator Lisa Murkowski (who once worked for an ESOP company) noted that Aronowitz was “probably very familiar with the angst that has been expressed by some that ESOPs have been operating under a patchwork of litigation and there has been a need for a single clear regulatory definition of good-faith effort of valuation of ESOP stock.”

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Corey Rosen

NCEO Paper Compares Employee Ownership Models in Five Countries

A new NCEO paper, Expanding Employee Ownership: Models in the US, UK, Canada, France, and Slovenia (PDF; also see the embedded version below), explores the five leading models for trust-based employee ownership. Research and experience show that holding employee ownership in a trust, rather than individually owning shares, tends to be the most sustainable form of employee ownership. Companies generally need tax or other incentives to create and fund the plans for employee ownership to grow. Also, employee ownership is more likely to be widely adopted in forms that are funded in whole or in part by the company, rather than just by employees. These five models are the only legislatively supported models that combine all these features.

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Corey Rosen

American Ownership and Resilience Act Introduced in Congress

Bill relaunches last Congress’s Employee Equity Investment Act under Commerce Department

Senators Chris Van Hollen (D-MD) (press release) and Jerry Moran (R-KS) and U.S. Representatives Blake Moore (R-UT) and Lori Trahan (D-MA) have introduced the American Ownership and Resilience Act (Senate and House bill PDFs), a relaunch of the Employee Equity Investment Act of 2023 (EEIA) introduced in the last Congress. The legislation is cosponsored in the Senate by Senators Tammy Baldwin (D-WI), Todd Young (R-IN), Jeanne Shaheen (D-NH), Eric Schmitt (R-MO), and Peter Welch (D-VT). In the House, it is cosponsored by Representatives Dusty Johnson (R-SD) (press release) and Bill Foster (D-IL). It has not yet been assigned a bill number.

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Corey Rosen

New Maryland Law Lets Cannabis Businesses Have ESOPs

Maryland Governor Wes Moore signed legislation allowing cannabis businesses in the state to be owned by ESOPs. Under prior law, licenses to sell cannabis could not be transferred for five years, and then only under certain circumstances. The new law, SB-215, is a set of cannabis reform provisions that includes one allowing an exception to this rule when a cannabis licensee sells to an ESOP (see page 11 of this PDF). There are a handful of cannabis businesses with ESOPs in other parts of the US. For businesses that are large enough and profitable enough to have an ESOP, it can help avoid some of the particularly onerous tax obligations that cannabis companies can face.

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Corey Rosen

New Bipartisan Employee Ownership Act of 2025 Introduced

House Ways and Means Committee chair Mike Kelly (R-PA) and committee member Jimmy Panetta (D-CA) have introduced the Promotion and Expansion of Private Employee Ownership Act of 2025. The proposal does not yet have a bill number. The bill was introduced with six cosponsors equally split between both parties. The bill is identical to S. 2515 in the last Congress.

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Corey Rosen

Could a New Supreme Court Decision Make It Easier to Sue ESOPs?

ESOP legal experts suspect that the recent unanimous Supreme Court decision in Cunningham v. Cornell University, No. 23-1007 (U.S. Apr. 17, 2025) will make it easier for plaintiffs to file lawsuits against ESOP fiduciaries. The issue in Cornell related to ERISA’s prohibited transaction provisions and the many statutory exemptions. Under ERISA, fiduciaries are prohibited from causing plans to engage in transactions with parties in interest, subject to exemptions, including the adequate consideration exemption that authorizes ESOP stock transactions in employer stock. The question in Cornell was whether plaintiffs could adequately plead a violation of ERISA’s prohibited transaction provisions by simply stating that a transaction with a party in interest occurred, or whether plaintiffs must also plead that an exemption does not apply. Federal circuit courts have been split on this question, with some holding that plaintiffs had to plead facts to plausibly state that an exemption did not apply and others holding that plaintiffs do not have to address the exemptions. In Allen v. GreatBanc (7th Cir. 2016), the Seventh Circuit held that the plaintiffs stated a plausible breach of ERISA’s prohibited transaction provisions merely by alleging that the ESOP’s stock value dropped after the sale, that the ESOP transaction was financed by the seller, and that the loan’s interest rate was high. The Seventh Circuit did not require the plaintiffs to plead the absence of any prohibited transaction exemptions.

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Corey Rosen

New Jersey Moves Forward on Employee Ownership Program

The New Jersey Economic Development Authority (NJEDA) board approved the creation of the Employee Stock Ownership Plan (ESOP) Assistance Program. In its press release, the board said the program “will connect applicants with an approved contractor to perform feasibility studies and provide technical assistance. The program aims to increase employee ownership models in the state, which can provide employees with opportunities to have a greater stake in a business, generate sustainable and equitable wealth, and ensure greater financial security.”

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