An Act establishing the Office of Employee Ownership within the Department of Community and Economic Development; establishing the Employee Ownership Advisory Board; establishing the Main Street Employee Ownership Grant Program; and providing technical and financial assistance to employee-owned enterprises.

PRINTER'S NO. 2158
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 1751
Session of
2025
INTRODUCED BY FRIEL, INGLIS, MARCELL, GIRAL, GUZMAN, HILL-EVANS,
FREEMAN, WAXMAN, OTTEN, KRAJEWSKI, McNEILL, WEBSTER, SANCHEZ,
BRENNAN, RIVERA, GALLAGHER AND CEPEDA-FREYTIZ, JULY 21, 2025
REFERRED TO COMMITTEE ON COMMERCE, JULY 22, 2025
AN ACT
Establishing the Office of Employee Ownership within the
Department of Community and Economic Development;
establishing the Employee Ownership Advisory Board;
establishing the Main Street Employee Ownership Grant
Program; and providing technical and financial assistance to
employee-owned enterprises.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Employee
Ownership Assistance Program Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Board." The Employee Ownership Advisory Board established
under section 7(a).
"Department." The Department of Community and Economic
Development of the Commonwealth.
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"Employee-owned enterprise." One of the following:
(1) A business that meets one of the following
conditions:
(i) The business is organized as:
(A) an eligible worker-owned cooperative as
defined under 26 U.S.C. § 1042 (relating to sales of
stock to employee stock ownership plans or certain
cooperatives); or
(B) a corporation in which the employees own the
stock of the corporation through an employee stock
ownership plan, within the meaning of 26 U.S.C. §
4975(e)(7) (relating to tax on prohibited
transactions).
(ii) The following apply to voting rights and shares
of the business:
(A) A majority of the voting rights of the
business are held by employees and all employees who
have stock allocated to them are entitled to vote.
(B) Shares of the business are voted in such a
manner that the vote of the majority of the employees
of the business controls the vote of the majority of
shares.
(C) Voting rights on corporate matters for
shares held in a trust for the employees of the
business shall pass through to those employees, at
least to the extent required by the pass-through
voting requirements under 26 U.S.C. § 864(c)(4)(D)
(relating to definitions and special rules).
(iii) The majority of the members of the board of
directors of the business are elected by the employees.
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(2) A business that is organized in a manner determined
by the secretary to involve substantial employee
participation.
(3) An employee-ownership trust.
"Employee-ownership group." A corporation or other entity,
including a labor union formed by or on behalf of the current or
former employees of an industrial or commercial firm or facility
located in this Commonwealth for the purpose of assuming
ownership or control of the firm or facility and operating it as
an employee-owned enterprise.
"Employee-ownership trust." Company stock or profit sharing
being held by a trustee on behalf of the company's employees
with employees receiving a percentage of ongoing profits or
401(k) retirement plans throughout employment without receiving
an equity stake in the company.
"Local administrative agency." An organization that enters
into a written agreement with the department to administer
technical and financial assistance under this act, including:
(1) A municipality.
(2) A local development district of the Appalachian
Regional Commission.
(3) A certified economic development organization
certified by The Pennsylvania Industrial Development
Authority under 64 Pa.C.S. § 1123 (relating to certification
of economic development organizations).
(4) A nonprofit economic development organization
designated by the secretary.
"Office." The Office of Employee Ownership established under
section 3(a).
"Secretary." The Secretary of Community and Economic
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Development of the Commonwealth.
Section 3. Office of Employee Ownership.
(a) Establishment and purpose.--
(1) The Office of Employee Ownership is established in
the department.
(2) The office shall:
(i) Serve as an advocate for improving government
knowledge and support for well-designed, broad-based
profit-sharing and ownership stakes.
(ii) Increase awareness of how agency programs
affect companies with profit-sharing and ownership stake
programs.
(iii) Promote legislative or regulatory changes
necessary to ensure that government policies encourage
the adoption of existing and emerging sharing programs.
(b) Gubernatorial appointment.--The Governor shall appoint
an employee ownership advocate. The employee ownership advocate
shall be an individual who by reason of training, experience or
attainment is qualified to represent the interest of employee-
owned enterprises. The following apply to the employee ownership
advocate:
(1) No individual who serves as an employee ownership
advocate shall, while serving in the position, engage in any
business, vocation or other employment, or have other
interests, inconsistent with the individual's official
responsibilities.
(2) The individual serving as an employee ownership
advocate may not seek or accept employment or render
beneficial services for compensation with any person or
corporation, as defined in 66 Pa.C.S. § 102 (relating to
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definitions), during the tenure of the appointment and for a
period of two years after the appointment is served or
terminated.
(3) An individual who is appointed to the position of
employee ownership advocate may not seek election or accept
appointment to any public office during the tenure as the
employee ownership advocate.
(4) The employee ownership advocate shall oversee the
office and the programs established in this act.
(c) Duties.--The office shall aid and guide businesses on
the benefits and formation of an employee-owned enterprise by
providing outreach, education and technical assistance. The
office shall:
(1) Establish a robust and wide-reaching network of
technical support for businesses wishing to convert to
employee-owned enterprises.
(2) Prepare and make publicly accessible in print and on
the office's publicly accessible Internet website information
to educate and guide business owners and employees in this
Commonwealth on the benefits and formation of employee-owned
enterprises.
(3) Educate businesses and communities across this
Commonwealth on the economic and community benefits of
employee-owned enterprises.
(4) Identify barriers to the development and advancement
of employee-owned enterprises and recommend State actions and
resources to remove barriers.
(5) Gather and maintain statistics on all employee-owned
enterprises in place across this Commonwealth.
(6) Evaluate and submit a report by December 31 of each
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year to the Community, Economic and Recreational Development
Committee of the Senate and the Commerce Committee of the
House of Representatives. Each report must include:
(i) The results of the office's efforts, impacts and
benefits.
(ii) A list of all employee-owned enterprises in
this Commonwealth and the counties in which the employee-
owned enterprises are located.
(iii) Recommendations on the most effective
utilization of Commonwealth funding to encourage the
formation of employee-owned enterprises.
(iv) Other information deemed necessary by the
employee ownership advocate.
(7) Select and fund a Pennsylvania 501(c)(3) nonprofit
organization defined under 26 U.S.C. § 501(c)(3) (relating to
exemption from tax on corporations, certain trusts, etc.)
with well-established knowledge of employee-owned enterprises
to work with the office and the department to ensure the
execution requirements under this act.
Section 4. Technical and financial assistance program.
The office shall establish a technical and financial
assistance program to promote the development of employee-owned
enterprises.
Section 5. Technical assistance.
(a) Authorization to allocate money.--The office may
allocate or distribute money to local administrative agencies
for the purpose of providing grants and loans to employee-
ownership groups in industrial facilities and commercial
facilities, as those terms are defined in section 3 of the act
of August 23, 1967 (P.L.251, No.102), known as the Economic
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Development Financing Law, for technical assistance to develop
or improve an employee-owned enterprise.
(b) Eligibility.--
(1) An employee-ownership group shall be eligible for
assistance if the employees in the employee-ownership group
are employed by, formerly employed by or affiliated with one
of the following:
(i) An existing firm facing a threat of substantial
layoffs or a plant closing and investigating a
reorganization of all or some portion of the firm's
business activity, at sites located within this
Commonwealth, as an employee-owned enterprise.
(ii) An existing firm, not necessarily facing a
threat of substantial layoffs or a plant closing but
considering a conversion to an employee-owned enterprise
and seeking professional services to accomplish the
conversion if conversion to employee ownership will
create new jobs or retain existing jobs at sites in this
Commonwealth.
(iii) An existing firm which currently has some form
of employee ownership and requires professional services
to ensure success of the employee-owned enterprise in the
effort to create new jobs or retain existing jobs at
sites in this Commonwealth.
(2) For purposes of this subsection, the term "existing
firm" shall include an ongoing concern, the assets of an
existing company or the assets of a company that has been
closed for no more than one year as of the date of
application for the feasibility study.
(c) Use of awarded money.--An employee-ownership group may
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be awarded sums of money for the following purposes:
(1) Feasibility studies to investigate a reorganization
or new incorporation as an employee-owned enterprise. At a
minimum, the feasibility study shall:
(i) Assess the market value and demand for the
product produced by the plant affected by the closing or
layoff.
(ii) Assess the market value and demand for other
products that could be manufactured or assembled at the
plant affected by the closing or layoff.
(iii) Evaluate the production costs to be incurred
if the plant were to be operated by the employee-
ownership group.
(2) Professional services to implement a feasibility
study and other professional services to develop or ensure
the success of an employee-owned enterprise.
(d) Repayment of awarded money.--Money awarded to an
employee-ownership group under subsection (c) is subject to the
following repayment conditions:
(1) If the enterprise studied is purchased or improved
by the employee-ownership group, the sum of money awarded
will constitute a loan and the employee-ownership group shall
repay the entire amount of the loan, with interest, in a lump
sum at the closing of the purchase of the company or within
one year after the date of the release of the loan by the
office, whichever occurs later. The amount of the loan repaid
shall be returned to the office for the purpose of issuing
additional loans. The interest paid on the loan shall be used
by the office for administrative costs associated with
administering this act.
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(2) If the enterprise studied is not purchased by the
employee-ownership group within one year after the completion
of the feasibility study, and the enterprise makes a good
faith effort to pursue conversion, the money will constitute
a grant.
(3) The office shall evaluate the employee-ownership
group's final report under paragraph (2) to determine if
repayment is feasible. If the office determines that the
employee-ownership group is unable to repay the sum of
awarded money, the amount of money that was awarded to the
employee-ownership group will constitute a grant. If the
office determines that the employee-ownership group is able
to repay some or all of the money awarded, the amount of
money that was awarded to the employee-ownership group will
constitute a loan.
(e) Other conditions.--
(1) The applicant shall provide evidence that there is a
prospect for recovery and future job growth or job retention
in applications under subsection (b)(1)(i) or a substantial
prospect of job growth or job retention in applications under
subsection (b)(1)(ii) and (iii).
(2) Maximum State participation shall be 50% of the
total cost of the technical assistance and the maximum loan
or grant amount shall be $35,000.
Section 6. Financial assistance.
(a) Authorization to allocate funds.--The office may
allocate or distribute money to local administrative agencies
for the purpose of providing loans and loan guarantees to
employee-owned enterprises reorganizing industrial facilities,
manufacturing facilities and agricultural enterprises as defined
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in section 3 of the act of May 17, 1956 (1955 P.L.1609, No.537),
known as the Pennsylvania Industrial Development Authority Act,
for the development of employee-owned enterprises.
(b) Eligibility.--
(1) Eligibility for assistance shall be limited to
reorganizing an existing enterprise being evaluated for
conversion to an employee ownership group, an organization
which is facing a threat of substantial layoffs or a plant
closing which may be assisted by conversion to employee
ownership, a start-up organization seeking formation as a
worker cooperative business or an existing employee ownership
enterprise seeking funding to grow the business to create new
jobs.
(2) For purposes of this subsection, the term "existing
enterprise" includes an ongoing concern, the assets of an
existing company or the assets of a company which has been
closed for no more than one year as of the date of completion
of a feasibility study.
Section 7. Employee Ownership Advisory Board.
(a) Establishment.--The Employee Ownership Advisory Board is
established within the department.
(b) Powers and duties.--The board shall have the following
powers and duties:
(1) Raise awareness for employee-owned enterprises in
this Commonwealth.
(2) Research methods to encourage the development and
expansion of employee-owned enterprises in this Commonwealth.
(3) Make recommendations to the department and General
Assembly on policies related to employee-owned enterprises.
(4) Develop proposed best practices for employee-owned
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enterprises in this Commonwealth.
(5) Develop educational materials and outreach
opportunities for the maintenance and development of
employee-owned enterprises in this Commonwealth.
(c) Members.--The board shall be composed of the following
members:
(1) The Employee Ownership Advocate.
(2) An employee owner.
(3) A certified public accountant.
(4) A representative from a worker-owned cooperative.
(5) A representative from a federation of labor unions.
(6) A representative from the banking industry or
community development financial institution.
(7) A regional advocate for business development.
(8) A professor from an institution of higher education
located in this Commonwealth with an expertise in employee
ownership and labor relations.
(9) A representative from a law firm with expertise in
employee ownership.
(10) A member of the Senate appointed by the President
pro tempore of the Senate.
(11) A member of the House of Representatives appointed
by the Speaker of the House of Representatives.
(d) Officers.--
(1) The Employee Ownership Advocate shall serve as the
chairperson of the board.
(2) The board shall elect a vice chairperson from the
members of the board.
(e) Term.--Except for the Employee Ownership Advocate, all
members of the board shall serve a term of four years and may
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serve on the board until a successor is appointed.
(f) Compensation.--Members of the board shall not receive
compensation for service on the board but shall be reimbursed
for expenses incurred in the performance of their duties under
this act.
(g) Staff support.--The office shall provide staff support
to the board.
(h) Meetings.--The board shall meet at least twice each year
to consider issues related to employee-owned enterprises and
make recommendations to the department and General Assembly.
(i) Reports.--
(1) No later than December 31, 2025, and each December
31 thereafter, the board shall issue an annual report
detailing recommendations and actions made by the board.
(2) Each annual report under this subsection shall be
submitted to:
(i) The chairperson and minority chairperson of the
Community, Economic and Recreational Development
Committee of the Senate.
(ii) The chairperson and minority chairperson of the
Commerce Committee of the House of Representatives.
Section 8. Main Street Employee Ownership Grant Program.
(a) Establishment.--The Main Street Employee Ownership Grant
Program is established within the office to provide grants to
businesses that are eligible under subsection (b).
(b) Eligibility.--A business is eligible for grants under
this section if the business has fewer than 200 employees.
(c) Use of grant.--Grant money awarded may be used by an
eligible business to:
(1) Establish a workers' cooperative in accordance with
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15 Pa.C.S. Ch. 77 (relating to workers' cooperative
corporations).
(2) Convert a business to an employee-owned enterprise.
(3) Provide support for technical assistance, such as
the proper management of an employee-owned enterprise, best
business practices or other assistance approved by the
office.
(d) Limitation and approval.--Grant awards may not exceed
$35,000. If a business is approved for a grant under this
section, the business shall have an automatic approval for
financial assistance under section 6.
Section 9. Administration.
(a) Responsibility of local administrative agencies.--Local
administrative agencies shall promote the employee ownership
program and the Main Street Employee Ownership Grant Program by
soliciting applications, evaluating applications and making
preliminary decisions on both technical assistance and financial
assistance. Not more than 2% of the money appropriated for the
purpose of this act may be used by local administrative agencies
for the purpose of administering these programs.
(b) Approval by employee ownership advocate.--The employee
ownership advocate shall have full responsibility for final
approval of all applications for assistance.
(c) Advances.--The office may make money advances to local
administrative agencies for the purpose of making loans, loan
guarantees or grants consistent with this act. Advances under
this section must be repaid to the office when the loan or loan
guarantee is repaid by the borrower.
(d) Rules and regulations.--The secretary may adopt and
promulgate rules and regulations, statements of policy or forms,
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guidelines and other procedures, forms and requirements
necessary for the implementation and administration of this act.
Section 10. Indicators of program impact.
(a) Report.--On March 1 of each year of the employee
ownership program's and the Main Street Employee Ownership Grant
Program's existence, the employee ownership advocate shall
submit a report to the Secretary of the Senate and the Chief
Clerk of the House of Representatives on the impact of the
programs, including:
(1) Rules, guidelines or statements of policy used in
administering the programs.
(2) The number of employee-ownership groups and firms
applying for and receiving assistance.
(3) The number of feasibility studies which were
actually implemented.
(4) The number of jobs retained or created and the
number of jobs created or retained as a result of financial
assistance.
(5) Other information deemed necessary by the employee
ownership advocate.
(b) Information to office.--Recipients of assistance under
these programs shall provide the office with the information
needed to fulfill the reporting requirement under subsection
(a).
Section 11. Nondiscrimination.
A loan, grant or other financial assistance may not be made
to a recipient under this act unless the recipient certifies to
the department, in a form satisfactory to the department, that
the recipient will not discriminate against an employee or
against an applicant for employment because of race, religion,
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color, national origin, sex or age.
Section 12. Guidelines and regulations.
(a) One-year exemption from review.--In order to facilitate
implementation of this act, the department may promulgate, adopt
and use temporary guidelines that shall be transmitted as a
notice to the Legislative Reference Bureau for publication in
the next available issue of the Pennsylvania Bulletin. The
guidelines shall not be subject to review under any of the
following:
(1) Section 612 of the act of April 9, 1929 (P.L.177,
No.175), known as The Administrative Code of 1929.
(2) Sections 201, 202, 203, 204 and 205 of the act of
July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law.
(3) Section 204(b) of the act of October 15, 1980 (P.L.
950, No.164), known as the Commonwealth Attorneys Act.
(4) The act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(b) Expiration of exemption.--After the expiration of the
one-year period, all guidelines shall expire and shall be
replaced by regulations that shall have been promulgated,
adopted and published as provided by law.
Section 13. Annual appropriation and funding sources.
(a) Estimate of expenditures.--Before November 1 of each
year, the employee ownership advocate shall estimate the total
expenditures for the office and submit the estimate to the
Governor in accordance with section 610 of the act of April 9,
1929 (P.L.177, No.175), known as The Administrative Code of
1929. At the same time the office submits the estimate to the
Governor, the office shall also submit the estimate to the
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General Assembly. The following apply:
(1) The employee ownership advocate shall be afforded an
opportunity to appear before the Governor, the Appropriations
Committee of the Senate and the Appropriations Committee of
the House of Representatives regarding the estimate.
(2) For each fiscal year, the office shall calculate the
office's proposed appropriation by subtracting the unspent
portion of the office's budget for the previous fiscal year
from the total appropriation that was approved by the General
Assembly. The remainder shall be allocated to the department
for the next fiscal year.
(b) Allocation of assessment.--For each fiscal year, the
office shall determine for the preceding calendar year the
amount of its expenditures directly attributable to
administering this act as follows:
(1) Expenditures of the office directly attributable to
section 5.
(2) Expenditures of the office directly attributable to
section 6.
(3) Expenditures of the office directly attributable to
section 8.
(4) Expenditures of the office directly attributable to
section 9.
(5) Total expenditures of the office directly
attributable to administering this act.
(c) Funding sources.--Any of the following may be used as
funding sources for the office for the purposes of this act:
(1) Money appropriated for the purposes of this act.
(2) Federal money appropriated or authorized for the
purposes of this act.
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(3) Money received from a State agency through an
interagency agreement or memorandum of understanding.
(4) A gift or other contribution from a public or
private source.
(5) Returns on money dedicated for the purposes of this
act, including, but not limited to, interest on loans or loan
guarantees.
(6) Any appropriation that was unspent by the end of a
previous fiscal year.
Section 14. Effective date.
This act shall take effect in 60 days.
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