AN ACT RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND CENTER FOR EMPLOYEE OWNERSHIP (Establishes the Rhode Island center for employee ownership to facilitate businesses in transitioning to an employee-owned business model.)

H7570

2026 -- H 7570
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LC004776
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND CENTER
FOR EMPLOYEE OWNERSHIP

Introduced By:
Representatives Diaz, McEntee, Shallcross Smith, and Edwards

Date Introduced:
February 06, 2026

Referred To:
House Small Business
(Lieutenant Governor)
It is enacted by the General Assembly as follows:
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SECTION 1. Findings.
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The general assembly finds the following:
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(1) Small businesses are the backbone of Rhode Island’s economy, comprising ninety-eight
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and nine-tenths percent (98.9%) of all businesses in the state; and
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(2) The Small Business Administration’s Office of Advocacy found that retirement is the
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fastest-growing reason nationwide for small business closures; and
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(3) Roughly fifty-six percent (56%) of small business owners in Rhode Island are aged
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fifty-five (55) or over, meaning many are at or approaching retirement age; and
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(4) In a survey published by the Business Enterprise Succession Taskforce, a coalition of
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Rhode Island small business advocates assembled by Lt. Governor Matos, sixty-six percent (66%)
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of respondent small business owners have not recently conducted a business valuation, a crucial
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component in the process of selling a small business; and
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(5) Employee Ownership presents an exciting opportunity to keep legacy small businesses
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in Rhode Island open while also extending the opportunity to a new class of prospective owners
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who, on their own, may not have the means to start or purchase a small business; and
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(6) Studies have shown employee ownership can help reduce employee turnover, and can
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yield higher wages and better benefits for the community as well as the local economy compared
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to other ownership models; and

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(7) At least twenty-four (24) other states in the U.S. already have existing Centers for
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Employee Ownership, including Massachusetts, Colorado, Vermont, Pennsylvania, and New
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Jersey.
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SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND
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GOVERNMENT" is hereby amended by adding thereto the following chapter:
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CHAPTER 169
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THE RHODE ISLAND CENTER FOR EMPLOYEE OWNERSHIP
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42-169-1. Creation of the Rhode Island center for employee ownership.

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(a) There shall be established in the State of Rhode Island an office known as the Rhode
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Island center for employee ownership (RICEO), which shall be under the charge of an officer
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known as the director of the Rhode Island center for employee ownership. The RICEO shall be
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housed under the business development center as established in § 42-64-39. The purpose of the
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RICEO will be to secure resources, provide technical assistance, and serve generally as a concierge
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service both to legacy business owners and worker owners interested in transitioning a small
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business to an appropriate employee-owned business model.
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(b) Responsibilities of the director. The director shall have responsibility for the
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organization, administration, and operation of the RICEO and shall have the ability to contract out
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services as required to provide sufficient technical assistance to relevant small business enterprises.
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Specifically, the director shall:
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(1) Provide a referral service to help qualified business owners and worker owners find
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appropriate legal, financial, and technical employee ownership resources and services; and
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(2) Partner with relevant private, nonprofit, and public organizations including, but not
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limited to, professional and trade associations, financial institutions, chambers of commerce,
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unions, small business development centers, economic and workforce development organizations,
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and nonprofit entities to promote and educate employee ownership benefits and succession models;
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and
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(3) Work with state agencies whose regulations and program affect employee-owned
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businesses, and businesses with the potential to become employee-owned, to enhance opportunities
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and reduce barriers; and
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(4) Create a network of technical support and service providers for businesses considering
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employee-owned business models including, but not limited to, certified professional accountants,
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lawyers, municipal and state government agencies; and
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(5) Work with financial institutions and appropriate state, private, and nonprofit entities to
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shape and implement guidance on lending to broad-based employee-owned business models; and

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(6) Develop programming to raise awareness broadly about employee ownership models,
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especially as a remedy to the state’s ongoing small business succession crisis; and
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(7) Create and maintain an inventory of employee-owned businesses in the state, including
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employee stock ownership plans, worker cooperatives, and employee-ownership trusts; and
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(8) Measure the success of program outreach and conduct research to determine whether
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Rhode Island’s small business owners experience increased growth, stability, or viability of their
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businesses and additional employee engagement in employee ownership structures as a result of
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the efforts of the RICEO; and
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(9) Organize, chair, and call to order the RICEO advisory committee.
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42-169-2. RICEO advisory committee.

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(a) Established. There shall be within the RICEO a committee known as the RICEO
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advisory committee (“the committee”).
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(b) Purpose. The purpose of the committee is to coordinate state resources, increase
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partnership and collaboration between state agencies and the small business community about
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employee-owned business models and succession planning, and to promote the work of the RICEO
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generally. State agencies assigned to serve on the committee shall provide relevant information and
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technical assistance when appropriate. The committee may request, through the relevant state
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agency, any clerical and technical assistance it may deem necessary to accomplish its purpose. Any
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vacancy of an appointed member, which may occur in the committee shall be filled by appointment
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by the respective appointing authority.
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(c) Organization.
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(1) The membership of the committee shall consist of the following five (5) individuals ex
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officio, or their designee:
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(i) The director of the department of labor and training;
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(ii) The director of the department of business regulation;
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(iii) The director of the secretary of state’s business services division;
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(iv) A representative from the Rhode Island commerce corporation;
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(v) The director of the Rhode Island district of the small business administration;
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(2) The membership of the committee shall consist of the following eleven (11) individuals,
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to be designated by their respective bodies, for two (2) year terms:
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(i) One member from each of the two (2) major caucuses of the house of representatives to
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be appointed by the speaker of the house and one member from each of the two major caucuses of
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the senate to be appointed by the president of the senate; and
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(ii) The following members appointed by the lieutenant governor:

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(A) One representative from a worker cooperative business;
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(B) One representative from an employee stock ownership plan business;
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(C) One representative from an employee-ownership trust business model;
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(D) One representative from any of the chambers of commerce in Rhode Island;
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(E) One representative from a Rhode Island-based academic institution with recognized
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expertise in employee ownership;
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(F) One representative from the small business development center; and
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(G) One representative from the Rhode Island Society of CPAs.
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(3) The committee shall be led by a chair selected and voted on by members of the
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committee. The chair shall serve a one-year term,+ but may serve more than one term if selected
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to do so by members of the committee, and shall remain in place until a successor is voted on and
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approved by the members of the committee. The director of the RICEO shall chair the first meeting
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prior to the election of the chair.
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42-169-3. Definitions.

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For the purposes of this section, unless the context otherwise requires:
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(1) “Employee-owned business model” means any arrangement in which a company’s
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employees own shares in their company or the right to the value of shares in their company
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including, but not limited to, worker cooperatives, as defined in § 7-6.2-2, or Employee Stock
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Ownership Plan (ESOP), as defined in 26 U.S.C. § 4975(e)(7), or Employee Ownership Trust, in
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which a trust holds a controlling stake in a business and benefits all employees on an equal basis;
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(2) “Legacy small business” means any existing small business enterprise currently
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incorporated in Rhode Island not presently incorporated under any employee-ownership business
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model; and
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(3) “Succession planning” means the general practice of replacing or passing on leadership
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roles within a business.
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42-169-4. Severability.

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If any portion of this law is found by a court of competent jurisdiction to be unlawful, such
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finding shall not affect any other portion of said law not specifically so found.
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SECTION 3. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND CENTER
FOR EMPLOYEE OWNERSHIP
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This act would establish the Rhode Island center for employee ownership to facilitate
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businesses in transitioning to an employee-owned business model.
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This act would take effect upon passage.
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