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Adds a new subsection (e) to 29 U.S.C. 2102 (Section 3 of the Worker Adjustment and Retraining Notification Act) establishing that when an employer orders a permanent plant closing of an entire facility the employer must include in the required notice an offer for affected employees to purchase the plant, facility, or company via an employee stock ownership plan or an eligible worker-owned cooperative, and sets appraisal, disclosure, and negotiation/plant‑operation requirements.
Adds a new subsection (i) to 29 U.S.C. 1108 (Section 408 of ERISA) providing that the prohibitions in sections 406 and 407 do not apply to the purchase and operation of a company, plant, or facility through an employee stock ownership plan pursuant to the new 29 U.S.C. 2102(e).
Amends section 4975 of the Internal Revenue Code by adding a new paragraph (26) to subsection (d) to exempt from the tax on prohibited transactions the purchase and operation of a company, plant, or facility through an employee stock ownership plan pursuant to 29 U.S.C. 2102(e); and amends subparagraph (A) of section 4975(f)(6) by inserting "(26)" into the list so that owner-employee rule references include the new paragraph (26).
Creates a new Office of Employee Ownership within the Department of Labor to expand employee ownership across the U.S. by running an Employee Ownership Initiative, operating a new Employee Ownership Loan Program (loans and loan guarantees) and advising on policy. It also gives employees a limited right of first refusal to buy a plant/facility/company slated for permanent closing through an ESOP or eligible worker-owned cooperative. The bill sets up an Advisory Council, requires implementing regulations within one year, caps the loan/guarantee fund at $500 million, authorizes $5 million in FY2026 for start-up administrative costs and ongoing administrative funding thereafter, and establishes procedural rules for appraisals, disclosures, and negotiation periods when the employee right-of-first-refusal is triggered.
Defines "Director" as the Director of the Office of Employee Ownership appointed under section 3(a)(2).
Defines "eligible worker-owned cooperative" by reference to the meaning given that term in the Internal Revenue Code of 1986 (section 1042(c)(2)).
Defines "employee stock ownership plan" by reference to the meaning given that term in the Internal Revenue Code of 1986 (section 4975(e)(7)).
Defines "Office" as the Office of Employee Ownership established under section 3(a).
Defines "Secretary" as the Secretary of Labor.
Who is affected and how:
Employees and workers: Direct beneficiaries. Workers at facilities facing permanent closure gain a statutory opportunity to buy the business through an ESOP or eligible worker-owned cooperative, plus negotiated protections to keep operations running while negotiations proceed.
Employee stock ownership plans (ESOPs) and worker-owned cooperatives: Expanded access to capital and technical support through the Loan Program increases the practical feasibility of ownership transitions and new employee-owned conversions.
Employers and business owners: Face new procedural requirements when ordering permanent closures (appraisal, disclosures, offering employees the chance to purchase) and may incur appraisal and negotiation-related costs and operational delay obligations. Owners seeking quick sales or shutdowns may experience added transactional complexity.
Financial institutions and lenders: Potential new borrowers and counterparties for loans or loan guarantees; the program may alter demand for private financing in ownership transitions.
Department of Labor and federal agencies: Responsible for rapidly standing up an Office, producing regulations within one year, administering loans/guarantees, supporting an Advisory Council, and coordinating with IRS/ERISA frameworks; this requires administrative capacity and interagency coordination.
Federal budget and taxpayers: The Act authorizes up to $500 million in loan/guarantee exposure and $5 million in start-up costs for FY2026, which carries budgetary implications depending on program uptake and loan performance.
Potential benefits and risks:
Practical considerations:
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Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Introduced July 24, 2025 by Bernard Sanders · Last progress July 24, 2025
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Introduced in Senate