Senate HELP Committee Unanimously Advances ESOP Priorities
On July 30, the Senate Health, Education, Labor & Pensions (HELP) Committee took a significant step by unanimously passing two key pieces of legislation: the Employee Ownership Representation Act (S. 1728) and the Retire Through Ownership Act (S. 2403). The bipartisan vote highlights the unique coalition of support ESOPs enjoy in Congress, reflecting the broad recognition that employee ownership benefits workers, strengthens businesses, and revitalizes local communities across the nation. This successful committee action is the result of months of effort by The ESOP Association and its advocates, who contributed to the drafting and passage of both bills.
The HELP Committee’s action represents a clear signal that Congress is committed to addressing decades of unnecessary regulatory uncertainty at the Department of Labor, which has too often slowed the growth of ESOPs despite their proven track record of success. The strong bipartisan support demonstrates that policymakers on both sides of the aisle see employee ownership as a powerful tool to expand retirement security and economic opportunity.
Retire Through Ownership Act
The Retire Through Ownership Act, sponsored by Senators Roger Marshall (R-KS) and Tim Kaine (D-VA), provides long-sought clarity on adequate consideration by providing guidance on how to determine fair market value for a company transitioning to an ESOP based on longstanding principles. The legislation establishes that ESOP fiduciaries may rely in good faith on independent appraisals prepared according to the well-established standards of IRS Revenue Ruling 59-60. This alignment with widely accepted valuation practices is a crucial step toward alleviating years of uncertainty that left ESOP transactions vulnerable to DOL investigations and private litigation, even when companies acted prudently. By providing a safe harbor for ESOPs that follow these well-established practices, the bill helps relieve a significant barrier to ESOP creation and ensures that more business owners can confidently sell to their employees. TEA worked with Senators Marshall and Kaine last year on a bipartisan Senate letter to the DOL outlining principles for an adequate consideration regulation as required by the WORK Act in the SECURE 2.0 legislation.
Employee Ownership Representation Act
The Employee Ownership Representation Act, sponsored by HELP Committee Chairman Bill Cassidy (R-LA), addresses another long-standing issue: the absence of employee ownership voices in executive branch rule making. The legislation expands the ERISA Advisory Council to include two representatives from the employee ownership community, ensuring that the perspectives of the over 14 million Americans affected by employee ownership are heard when the DOL is deciding on retirement policies.
The bill also incorporates provisions from the Advocate for Employee Ownership Act (S. 2474), led by Senators Maggie Hassan (D-NH) and Steve Daines (R-MT). These provisions authorize the Department of Labor to appoint an Advocate for Employee Ownership within its existing Employee Ownership Initiative. Importantly, the bill was improved during committee consideration to cover both S- and C-corporation ESOPs, guaranteeing fair representation for the full spectrum of employee-owned businesses.
Years of Advocacy Pay Off
This victory is the direct result of persistent advocacy by The ESOP Association members. From countless grassroots meetings with lawmakers to sustained engagement with policymakers in Washington, the Association worked tirelessly to advance these priorities. In closing the markup, Chairman Cassidy recognized these efforts, stating: “I want to thank The ESOP Association for their partnership with two really good ESOP bills today and we wouldn’t have been able to have them so good without their active participation.”
The unanimous passage of these bills out of the HELP Committee is a reminder of what’s possible when our community comes together with one voice. The ESOP Association will continue working to secure passage by the full Senate and move us closer to a future where more Americans can share in the wealth they help create.
