[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2458 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2458
To require the Secretary of Labor to establish the Office of Employee
Ownership to carry out the Employee Ownership Initiative and establish
and carry out the Employee Ownership Loan Program, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 24, 2025
Mr. Sanders (for himself, Mrs. Shaheen, Mr. Blumenthal, and Mrs.
Gillibrand) introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To require the Secretary of Labor to establish the Office of Employee
Ownership to carry out the Employee Ownership Initiative and establish
and carry out the Employee Ownership Loan Program, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Employee Ownership Financing Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Director.--The term ``Director'' means the Director of
the Office of Employee Ownership appointed under section
3(a)(2).
(2) Eligible worker-owned cooperative.--The term ``eligible
worker-owned cooperative'' has the meaning given the term in
section 1042(c)(2) of the Internal Revenue Code of 1986.
(3) Employee stock ownership plan.--The term ``employee
stock ownership plan'' has the meaning given the term in
section 4975(e)(7) of the Internal Revenue Code of 1986.
(4) Office.--The term ``Office'' means the Office of
Employee Ownership established under section 3(a).
(5) Secretary.--The term ``Secretary'' means the Secretary
of Labor.
SEC. 3. OFFICE OF EMPLOYEE OWNERSHIP.
(a) Establishment of the Office of Employee Ownership.--
(1) In general.--Not later than 90 days after the date of
enactment of this Act, the Secretary shall establish the Office
of Employee Ownership in the Department of Labor, outside of
the Employee Benefits Security Administration.
(2) Director.--The Secretary shall appoint the Director of
the Office of Employee Ownership to serve as the head of the
Office at the pleasure of the Secretary.
(3) Staff.--The Director may select, appoint, and employ
such employees as are necessary to carry out the functions of
the Office.
(b) Functions.--The Director shall be responsible for--
(1) carrying out the Employee Ownership Initiative
established under section 346 of the SECURE 2.0 Act of 2022 (29
U.S.C. 3228); and
(2) carrying out the Employee Ownership Loan Program under
section 4.
SEC. 4. EMPLOYEE OWNERSHIP LOAN PROGRAM.
(a) Definition of Eligible Entity.--In this section, the term
``eligible entity''--
(1) means--
(A) an employee stock ownership plan;
(B) an eligible worker-owned cooperative; or
(C) a qualified trust under section 401(a) of the
Internal Revenue Code of 1986, or another entity, on
behalf of an employee stock ownership plan or eligible
worker-owned cooperative, which other entity may
include a company that sponsors an employee stock
ownership plan; and
(2) excludes any entity primarily owned by a private equity
firm, as defined by the Director.
(b) Loan Program.--
(1) In general.--The Director shall establish and carry out
an Employee Ownership Loan Program to make loans, or loan
guarantees, to eligible entities satisfying the requirements
under subsection (c) in order to foster increased employee
ownership of United States companies and greater employee
participation in company decision making throughout the United
States.
(2) Loans.--
(A) In general.--Each loan or loan guarantee made
by the Secretary to an eligible entity under this
section shall be--
(i) to enable the eligible entity to
purchase the equity of a company--
(I) that is not less than 51
percent employee-owned; or
(II) that will become not less than
51 percent employee-owned through
support from the loan or loan
guarantee;
(ii) to allow a company that is less than
51 percent employee-owned to become not less
than 51 percent employee-owned;
(iii) to allow a company that is not less
than 51 percent employee-owned to increase the
level of employee ownership at the company; or
(iv) to allow a company that is not less
than 51 percent employee-owned to expand
operations and increase or preserve employment.
(B) Terms and conditions for loans and loan
guarantees.--Notwithstanding any other provision of
law, a loan that is made or guaranteed under this
section shall--
(i) bear interest at an annual rate that is
the lesser of--
(I) a rate that is sufficient to
cover an appropriate amount of the cost
of borrowing and losses to the
Department of Labor for obligations of
comparable maturity, as determined by
the Secretary in consultation with the
Director; or
(II) a rate that is equal to the
current applicable market rate for a
loan of comparable maturity, as
determined by the Secretary in
consultation with the Director;
(ii) have a repayment period not to exceed
15 years; and
(iii) satisfy applicable requirements of
the Internal Revenue Code of 1986 and the
Employee Retirement Income Security Act of 1974
(29 U.S.C. 1001 et seq.).
(C) Subordination.--A loan or loan guarantee made
under this section may be subordinated to the interests
of current and former participants in the employee
stock ownership plan or eligible worker-owned
cooperative if an eligible entity files for bankruptcy,
if determined appropriate by the Director.
(c) Preconditions.--An eligible entity seeking a loan or loan
guarantee under this section shall submit to the Director, at such
time, in such manner, and containing such information as the Director
may reasonably require, a business plan (and follow-up reporting on the
business plan, as determined by the Director) that--
(1) in the case of an eligible entity that is an employee
stock ownership plan or that is receiving the loan or loan
guarantee on behalf of such a plan, demonstrates that--
(A) not less than 51 percent of the equity of the
company to be supported by the loan or loan guarantee
is or will be owned by an employee stock ownership
plan;
(B) the trustee of the plan has full voting rights
for the shares and, under the plan, such shares are
voted in accordance with section 409(e) of the Internal
Revenue Code of 1986;
(C) not fewer than 2 of the members of the board of
directors of such company are directors who are not
employed by the company, have no other business
relationship with the company, and are otherwise
independent from the company;
(D) the company will establish a committee, of
which not less than 50 percent of the members are
employees (but not officers) of the company, that will,
not later than 1 year after receipt of the loan or loan
guarantee, submit to the Director a plan to establish a
system of meaningful employee involvement in any work-
related decisions of the company, including decisions
with respect to--
(i) increasing workplace democracy;
(ii) open-book management; and
(iii) other forms of meaningful employee
engagement;
(E) the company offers a diversified investment
option for retirement for employees; and
(F) all employees of the company will receive basic
information about company progress on a quarterly basis
as determined by the Director through regulations;
(2) in the case of an eligible entity that is an eligible
worker-owned cooperative or that is receiving the loan or loan
guarantee on behalf of such a cooperative, demonstrates that
the board of directors of the company is or will be elected, by
members of the eligible worker-owned cooperative on a 1 member
to 1 vote basis; and
(3) contains a study from an independent third party with--
(A) a fair market valuation of the company; and
(B) a positive determination that the eligible
entity should generate enough cash flow to pay back the
loan or loan guarantee within the repayment period
required under subsection (b)(2)(B)(ii).
(d) Loan Portfolio.--
(1) Employee ownership loan program fund.--
(A) Establishment.--There is established in the
Treasury of the United States a fund to be known as the
``Employee Ownership Loan Program Fund''.
(B) Deposits.--Notwithstanding section 3302 of
title 31, there shall be deposited in the Employee
Ownership Loan Program Fund any amount repaid or
otherwise received with respect to loans or loan
guarantees made under this section, including from any
collection effort.
(C) Availability of amounts.--All amounts deposited
in the Employee Ownership Loan Program Fund under
subparagraph (B) shall--
(i) be deposited as offsetting collections
into the Employee Ownership Loan Program Fund;
(ii) be available to the Director, without
further appropriation, to make loans or loan
guarantees under this section and for the
administrative costs of such loans and loan
guarantees; and
(iii) remain available to the Director
until expended.
(2) Limitation of loan portfolio.--The principal amount of
outstanding loans and loan guarantees made under this section
(including using amounts from the Employee Ownership Loan
Program Fund) shall not exceed, in the aggregate, $500,000,000
at any one time.
SEC. 5. EMPLOYEE RIGHT OF FIRST REFUSAL BEFORE PLANT CLOSING.
(a) In General.--Section 3 of the Worker Adjustment and Retraining
Notification Act (29 U.S.C. 2102) is amended by adding at the end the
following:
``(e) Employee Stock Ownership Plans and Eligible Worker-Owned
Cooperatives.--
``(1) Opportunity to purchase.--If an employer orders a
plant closing that is a permanent shutdown of an entire
facility, the employer shall include in the notice required
under subsection (a) an offer for the affected employees of the
employer to purchase that plant or facility, or the company of
the plant or facility, through either of the following:
``(A) An employee stock ownership plan, as defined
in section 4975(e)(7) of the Internal Revenue Code of
1986, sponsored by a company that is not less than 51
percent employee-owned.
``(B) An eligible worker-owned cooperative, as
defined in section 1042(c)(2) of such Code.
``(2) Determination of value.--
``(A) In general.--The value of the plant,
facility, or company that is the subject of the offer
described in paragraph (1) shall be the fair market
value of the plant, facility, or company, respectively,
as determined by an appraisal that is--
``(i) conducted by an independent third
party selected in accordance with subparagraph
(B); and
``(ii) paid for by the employer described
in paragraph (1).
``(B) Independent third party.--The independent
third party described in subparagraph (A)(i) shall be--
``(i) in the case of a plant, facility, or
company to be purchased through an employee
stock ownership plan, selected by the trustee
of the plan; and
``(ii) in the case of an eligible worker-
owned cooperative, selected jointly by the
employer described in paragraph (1) and the
affected employees of that employer (or the
designated representative of such employees).
``(C) Disclosures.--For purposes of determining the
value of a plant, facility, or company that is the
subject of an employee stock ownership plan or eligible
worker-owned cooperative described in paragraph (1),
the offer required under such paragraph shall include,
with respect to the plant, facility, or company, a
disclosure of--
``(i) any outstanding liabilities,
including any outstanding claims by creditors;
``(ii) copies of all recent financial
statements;
``(iii) securities filings or related
disclosures;
``(iv) any legal claims filed against the
company;
``(v) any bankruptcy filings; and
``(vi) any other similar information
necessary to determine the full value and
financial viability of the plant, facility, or
company (and in the case of a plant or company,
any facilities of the plant or company).
``(3) Limitation.--In the event that the affected employees
and employer described in paragraph (1) (or the designated
representatives of such employees and employer) enter, in good
faith and during the 60-day period after the employer serves
the notice required under subsection (a), into negotiations for
the purchase of the plant, facility, or company, the plant (and
all facilities or operating units at the plant), facility (and
all operating units at such facility), or company (and all
facilities or operating units at the company), as applicable,
shall remain open during such negotiations and for at least the
30-day period following the closing date for such purchase.''.
(b) Exemption From Prohibited Transactions for Purchase Due to
Plant Closing.--
(1) In general.--Section 408 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1108) is amended by adding at
the end the following:
``(i) Purchase and Operation of Employer Company, Plant, or
Facility Due to Plant Closing.--Sections 406 and 407 shall not apply to
the purchase and operation of a company, plant, or facility through an
employee stock ownership plan (as that term is defined in section
4975(e)(7) of the Internal Revenue Code of 1986) pursuant to section
3(e) of the Worker Adjustment and Retraining Notification Act (29
U.S.C. 2102(e)).''.
(2) Conforming amendments to the internal revenue code of
1986.--
(A) In general.--Subsection (d) of section 4975 of
the Internal Revenue Code of 1986 is amended by
striking ``or'' at the end of paragraph (24), by
striking the period at the end of paragraph (25) and
inserting ``, or'', and by adding at the end the
following new paragraph:
``(26) the purchase and operation of a company, plant, or
facility through an employee stock ownership plan pursuant to
section 3(e) of the Worker Adjustment and Retraining
Notification Act (29 U.S.C. 2102(e)).''.
(B) Exemption from owner-employee rules.--
Subparagraph (A) of section 4975(f)(6) of such Code is
amended by striking ``(9) and (12)'' and inserting
``(9), (12), and (26)''.
SEC. 6. ADVISORY COUNCIL ON EMPLOYEE OWNERSHIP.
(a) In General.--
(1) Establishment.--There is hereby established an Advisory
Council on Employee Ownership (hereinafter in this section
referred to as the ``Council'') consisting of 7 members
appointed by the Secretary.
(2) Membership.--
(A) In general.--Of the 7 members of the Council--
(i) 4 shall be appointed to represent
employees;
(ii) 1 shall be appointed to represent
companies that have established an employee
stock ownership plan or eligible worker-owned
cooperative;
(iii) 1 shall be appointed to represent
employee stock ownership plan providers; and
(iv) 1 shall be appointed to represent
associations or other membership organizations
for employee stock ownership plans or eligible
worker-owned cooperatives.
(B) Political affiliation.--Not more than 4 members
of the Council shall be members of the same political
party.
(3) Terms.--Members of the Council shall serve for terms of
2 years.
(4) Appointment; reappointment.--A member of the Council
may be reappointed to serve additional terms.
(5) Vacancies.--A member of the Council appointed to fill a
vacancy shall be appointed only for the remainder of such term.
(6) Quorum.--A majority of members of the Council shall
constitute a quorum and action shall be taken only by a
majority vote of those present and voting.
(b) Duties and Functions.--
(1) In general.--It shall be the duty of the Council to
advise the Secretary with respect to the carrying out of the
functions of the Secretary under this Act and to submit to the
Secretary recommendations with respect to carrying out such
duties.
(2) Meetings.--The Council shall meet at least 4 times each
year and at such other times as the Secretary requests.
(3) Report.--The Council shall annually submit a report to
the Secretary on the recommendations described in paragraph
(1).
(c) Executive Secretary; Secretarial and Clerical Services.--The
Secretary shall furnish to the Council an Executive Secretary and such
secretarial, clerical, and other services as are determined necessary
to conduct the business of the Council. The Secretary may call upon
other agencies of the Federal Government for statistical data, reports,
and other information which will assist the Council in the performance
of its duties.
(d) Compensation.--
(1) In general.--Members of the Council shall each be
entitled to receive the daily equivalent of the annual rate of
basic pay in effect for level IV of the Executive Schedule
under section 5315 of title 5, United States Code for each day
(including travel time) during which they are engaged in the
actual performance of duties vested in the Council.
(2) Travel expenses.--While away from their homes or
regular places of business in the performance of services for
the Council, members of the Council shall be allowed travel
expenses, including per diem in lieu of subsistence, in the
same manner as persons employed intermittently in the
Government service are allowed expenses under section 5703 of
title 5, United States Code.
(e) Termination.--Section 1013 of title 5, United States Code,
relating to termination, shall not apply to the Council.
SEC. 7. REGULATIONS OR GUIDANCE.
Not later than 1 year after the date of enactment of this Act, the
Secretary shall prescribe such regulations or guidance as are necessary
to implement sections 3, 4, and 6.
SEC. 8. AUTHORIZATION OF APPROPRIATIONS.
(a) Loan Program.--There are authorized to be appropriated to the
Employee Ownership Loan Program Fund established under section 4--
(1) $500,000,000 for fiscal year 2026, to remain available
until expended, to make loans or loan guarantees under such
section during such fiscal year and subsequent fiscal years;
(2) $5,000,000 for fiscal year 2026, to remain available
until September 30, 2026, for administrative costs in
establishing the program under such section; and
(3) such sums as may be necessary for fiscal year 2027, and
each subsequent fiscal year, for administrative costs in
carrying out the program during such fiscal years.
(b) Additional Authorizations.--There are authorized to be
appropriated to the Secretary to carry out this Act, other than section
4, such sums as may be necessary for each fiscal year.
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