by Austin R. Ramsey at news.bloomberglaw.com
The US Labor Department is launching a new Division of Employee Ownership, making good on a 2022 congressional directive to promote worker-owned companies and facilitate easier private-company ownership transfers.
DOL’s Employee Benefits Security Administration announced the move Monday, part of an effort officials said was aimed at empowering and educating workers about the benefits of gaining a stake in their employers’ success.
The SECURE 2.0 Act (Pub. L. No. 117-328) Congress passed late last year instructed the agency to boost employee ownership participation models, most of which are organized as employee stock ownership plans, by providing outreach and technical assistance to companies and levying grant money to help cover the cost of setting up new plans. Lawmakers say they will allocate $50 million to the program between fiscal years 2025 and 2029.
EBSA’s new initiative comes after years of what existing plan advisers and trustees have dubbed a “regulation-through-enforcement” campaign in which agency investigators have targeted private companies for allegedly overvaluing the assets they transfer to their workers. The agency has until now resisted calls to finalize a rulemaking project launched more than 35 years ago to properly define the standard used to appraise stock purchases.
The Employee Stock Ownership Plan Association formally petitioned EBSA late last year to finalize its proposed fair-market-value standard (53 Fed Reg. 17632). In its reply, the department said it would begin a new notice-and-comment rulemaking process on the adequate consideration standard, pursuant to the SECURE 2.0 provisions.
“Worker ownership arrangements help create pathways for employees to earn a fair share of the profits that their labor makes possible,” Acting Secretary of Labor Julie Su said in a statement Monday.