Federal loan program aims to shift company ownership to workers

What it does

This bill creates a new Office of Employee Ownership within the Department of Labor and establishes a federal loan program offering up to $500 million in loans and loan guarantees to help employees and worker-owned cooperatives purchase companies or expand employee ownership stakes. It also amends labor law to give employees a right of first refusal to purchase their workplace before a plant closing, and creates an advisory council to guide the program.

Why we flagged it

The bill's core mechanism is federal financing for employee stock ownership plans and worker cooperatives, paired with mandatory workplace democracy provisions (board representation, employee committees, open-book management) and a right of first refusal on plant closures. This is fundamentally about shifting economic power toward workers, not a narrow tax or regulatory carve-out.

What the text implies

• The bill requires companies receiving loans to establish employee involvement committees and implement 'meaningful employee involvement' in work-related decisions within one year, effectively mandating workplace democracy structures that go beyond traditional ESOP governance.
• The right of first refusal on plant closures (Section 5) creates a 60-day negotiation period during which the facility must remain open, potentially delaying or preventing some closures and shifting leverage to workers in distressed situations.
• The loan subordination provision (Section 4) allows Department of Labor loans to be subordinated to ESOP participant interests in bankruptcy, prioritizing worker-participants over federal creditors—an unusual creditor hierarchy that signals strong worker protection intent.
• The bill excludes entities 'primarily owned by private equity firms' from loan eligibility, potentially limiting financialization of worker-owned structures and preventing PE firms from using the program to acquire and restructure companies.
• The advisory council structure (4 of 7 seats for employee representatives, 1 for ESOP providers, 1 for companies, 1 for associations) gives workers a supermajority voice in program governance, unusual for federal advisory bodies.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

The bill expands worker economic power and ownership stakes in companies, increases workplace democracy requirements, and gives employees a legal right to attempt to save their jobs through cooperative purchase before plant closure. These are concrete protections and wealth-building opportunities for ordinary workers. The loan program is self-sustaining (repayments fund future loans) and capped at $500M, limiting fiscal risk.

Who stands to gain

• Employee stock ownership plans (ESOPs)
• Worker-owned cooperatives
• Employees purchasing companies through ESOPs or cooperatives
• ESOP service providers and advisors (valuation, legal, trustee services)

Named in the bill

Department of Labor, Office of Employee Ownership, Employee stock ownership plans (ESOPs), Worker-owned cooperatives, Internal Revenue Code Section 1042, 4975, 401, 409, Employee Retirement Income Security Act (ERISA), Worker Adjustment and Retraining Notification Act (WARN Act), SECURE 2.0 Act of 2022

Where it stands

4 cosponsors: 4 Democrats.

• Jul 24, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Jul 24, 2025 — Referred to Senate Committee on Health, Education, Labor, and Pensions · Congress.gov: “Read twice and referred to the Committee on Health, Education, Labor, and Pensions”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.