Senate Committee Recommends Funding WORK Act and Finalizing Valuation Regulations; House Does Not

The 2026 proposed appropriation for the Department of Labor (DOL) passed by the House Appropriations Committee lacks funding for state employee ownership offices authorized by the WORK Act that the Senate Appropriations Committee recommended in July. That committee is recommending an initial $2 million for 2025 to help fund state employee ownership outreach programs. The Senate committee also urged the DOL to finalize its ESOP valuation regulations.

The WORK Act of 2022 directed the DOL to create an Employee Ownership Initiative office to provide education on employee ownership (which it has now done) and authorized $50 million in funding over five years, starting in fiscal year 2025, for state employee ownership outreach and education programs. Although the WORK Act authorized the expenditures for the state programs, funding comes through a separate appropriation process.

The House appropriation bill for the DOL does not include funding for the state employee ownership offices authorized by the WORK Act. The Senate Appropriations Committee is recommending an initial $2 million for 2025 to help fund the state offices. The recommendation appears in the report language on the bill. Report language does not always make it into the final appropriation, but normally it does. If this appropriation is passed by the Senate, then a House-Senate conference committee would have to decide whether to retain it.

The WORK Act authorized $4 million for the first year of the program, increasing each year over five years. The $2 million would be a modest start but could lead to larger appropriations down the road. The Senate committee report also urged the DOL to issue updated valuation guidelines for ESOPs. The DOL has indicated this is a priority issue and expects regulations to come out in early 2026.

The Senate committee report language is below:

Employee Ownership Initiative.—The Committee recommendation includes $2,000,000 for grants authorized by section 346(d) of the SECURE 2.0 Act of 2022. Funds will be used to establish and expand employee ownership programs authorized by such section. The Committee expects the Employee Benefits Security Administration to provide subject matter assistance to ETA as it develops and administers this grant program.

The report also urges the DOL to finalize its ESOP valuation regulations:

Adequate Consideration Guidance.—The Committee notes that the SECURE 2.0 Act of 2022 also directs the Department to issue formal guidance on the adequate consideration exemption, as defined in section 407(d)(6) of ERISA. The Committee is disappointed that EBSA failed to achieve the latest regulatory agenda goal of issuing an adequate consideration notice of proposed rulemaking in March of this year. The Committee urges the Department to prioritize a timely, formal notice and comment rulemaking on the adequate consideration exemption that ensures taxpayers benefit from stakeholder input and experience, consistent with congressional intent.