AIEmployee Stock Ownership Plans: barriers, benefits, and proposed legislation

Labor Department and Labor LawSenate Health, Education, Labor, and Pensions · July 24, 2025 · 119th Congress
The Senate HELP Committee held this hearing to examine how Employee Stock Ownership Plans (ESOPs) benefit workers and companies, and to discuss bipartisan legislation aimed at removing federal barriers to their formation, including unresolved Department of Labor valuation regulations that Chair Cassidy said have been outstanding for 51 years [0:18:52]. Begins at ▶ 0:16:08
Transcript
Highlights

Title

Employee Stock Ownership Plans: barriers, benefits, and proposed legislation

Purpose

The Senate HELP Committee held this hearing to examine how Employee Stock Ownership Plans (ESOPs) benefit workers and companies, and to discuss bipartisan legislation aimed at removing federal barriers to their formation, including unresolved Department of Labor valuation regulations that Chair Cassidy said have been outstanding for 51 years▶ 0:18:44. Witnesses from employee-owned companies and an academic researcher testified about retirement security, financing challenges, and pending bills. Begins at▶ 0:16:08

Who spoke

• Chair Bill Cassidy (R-LA)▶ 0:16:08: Opened by noting 86% of Americans want Congress to focus more on retirement▶ 0:16:08 and that ERISA has never issued required ESOP valuation regulations in 51 years▶ 0:18:44; later questioned witnesses on financing shortcomings of traditional bank loans versus a federal loan program▶ 1:22:15.

• Sen. Bernie Sanders (I-VT), Ranking Member▶ 0:20:31: Praised Vermont's employee-owned companies▶ 0:20:31, argued employee ownership counters outsourcing and CEO-focused corporate models▶ 0:21:31, and announced new legislation to provide financial assistance for worker buyouts via ESOPs or cooperatives▶ 0:24:19; closed by quoting Ronald Reagan's 1987 endorsement of employee ownership▶ 0:25:00.

• Mr. Bill Roark, Torch Technologies co-founder▶ 0:28:06: Described Torch's growth to 100% ESOP by 2011 and over $800 million in annual revenue▶ 0:29:27; said unclear valuation rules create fear of forced sale if a low valuation invites external buyout offers▶ 1:10:22; explained Torch's public benefit corporation structure, approved by 90% of employees▶ 1:44:58.

• Mr. Eddy Dupuis, Acadian Companies CEO▶ 0:33:51: Described Acadian's growth from 2 ambulances to over 750 and 5,000 employees since transitioning to an ESOP in 1993▶ 0:34:47; said roughly 8-10 companies he spoke with shied away from ESOP conversion▶ 1:11:18; warned Medicaid cuts will strain the company financially while call volume stays constant▶ 1:38:33.

• Mr. Brock Barton, King Arthur Baking Company CFO▶ 0:39:10: Explained King Arthur became employee-owned in 1996▶ 0:40:08 and described how the company avoided layoffs during a 2022 commodity-price downturn by engaging employees directly▶ 0:42:28; noted the company lowered its diversification eligibility age to 40▶ 1:01:56.

• Dr. Joseph Blasi, Rutgers Institute for the Study of Employee Ownership▶ 0:44:15: Cited data showing about 15 million ESOP participants and $1.8 trillion in total assets▶ 0:44:43, and said ESOP participants have roughly double the retirement wealth of non-ESOP workers age 50+▶ 0:46:04; identified lack of financing and awareness as key barriers to wider adoption▶ 0:48:44.

• Sen. Tommy Tuberville (R-AL)▶ 0:25:33: Introduced witness Bill Roark▶ 0:25:33 and asked how ESOPs provide job security during ownership transitions▶ 0:49:47 and what federal changes could help▶ 0:53:10.

• Sen. Jon Husted (R-OH)▶ 0:58:39: Asked witnesses to compare private-equity exits with ESOP exits and how workers can diversify retirement holdings▶ 0:59:08.

• Sen. Maggie Hassan (D-NH)▶ 1:04:07: Highlighted her bipartisan bill with Sen. Daines to equalize S-corp and C-corp tax treatment for ESOP stock sales▶ 1:04:24; asked how ESOPs help workers at all levels share in company success▶ 1:06:54.

• Sen. Roger Marshall (R-KS)▶ 1:08:20: Praised ESOP culture and pressed Roark on the importance of resolving valuation uncertainty▶ 1:09:47; also discussed Kansas wheat quality with Barton▶ 1:11:44.

• Sen. Tim Kaine (D-VA)▶ 1:13:51: Described Virginia ESOP examples including Wiley Wilson and an unnamed building-supply company that repaid its ESOP loan in 12 of 20 years▶ 1:15:48; explained his valuation bill would create an IRS-based safe harbor for ESOP sellers▶ 1:18:12; later asked Roark to explain public benefit corporation status▶ 1:40:55.

• Sen. John Hickenlooper (D-CO)▶ 1:25:00: Shared his own experience building employee alignment as a former small business owner▶ 1:25:32; asked about state-level ESOP incentives▶ 1:26:27 and industries especially receptive to ESOPs▶ 1:29:42; entered a statement from the Employee Owned S Corporations of America into the record▶ 1:30:41.

• Sen. Jim Banks (R-IN)▶ 1:31:29: Noted his mother worked 30 years in a nursing home that became an ESOP▶ 1:32:09, cited roughly 6,400 employee-owned companies in Indiana▶ 1:32:34, and asked how the economy would differ with broader ESOP adoption▶ 1:33:03.

• Sen. Ed Markey (D-MA)▶ 1:35:27: Noted over 50% of Massachusetts business owners are 55 or older and lack succession plans▶ 1:35:54; pressed Dupuis on how recent Medicaid cuts passed by Congress will affect Acadian's operations▶ 1:37:29.

Key moments

• Cassidy said federal law has required DOL regulations clarifying ESOP stock sales for 51 years, and none have been issued despite bipartisan requests▶ 0:18:44.

• Roark recounted being laid off and having his office packed after a company acquisition, motivating him to build an ESOP so employees could "retire with dignity"▶ 0:51:53.

• Blasi cited research showing ESOP participants have roughly double the retirement wealth of similarly aged non-ESOP workers, and 0% reported layoffs in the last year versus 7% of non-ESOP workers▶ 0:46:04▶ 0:47:03.

• Roark said Torch cannot contribute more than the 25% maximum allowable limit to employees' ESOP accounts even when the company could afford to give more▶ 0:53:31.

• Sen. Kaine detailed his bill with Sen. Marshall that would use existing IRS valuation principles to create a legal "safe harbor" for ESOP sellers, addressing 50-plus years of regulatory uncertainty▶ 1:18:12▶ 1:11:44.

• Blasi said the federal government generally does poor job of sharing ESOP information across cabinet departments and that SBA financing has "not been friendly" to ESOPs▶ 1:08:01▶ 1:22:15.

• Dupuis said the Medicaid and Affordable Care Act cuts recently enacted by Congress will reduce reimbursement while Acadian's ambulance operating costs stay the same, since crews must respond regardless of a patient's ability to pay▶ 1:38:33▶ 1:38:59.

• Roark described Torch's 2024 conversion to a public benefit corporation, approved by 90% of employees (both by share count and by headcount), enshrining employee financial growth, customer service, community giving, and helping other companies become employee-owned as co-equal goals with profit▶ 1:44:58▶ 1:42:31.

• Blasi estimated roughly 137,000 U.S. businesses with 33 million employees and $15 trillion in sales are potentially convertible to ESOPs, given that 52% of business owners are near retirement age▶ 0:48:18.

• Dupuis said Acadian had no layoffs despite fiscal year 2022 financial underperformance, crediting the ESOP's long-term sustainability focus over quarterly targets▶ 0:57:45▶ 1:20:47.

Metadata

Official titleBusiness meeting to consider the nominations of David Brian Castillo, of Washington, to be Chief Financial Officer, Department of Labor, Brian Christine, of Alabama, to be an Assistant Secretary of Health and Human Services, Brittany Panuccio, of Florida, to be a Member of the Equal Employment Opportunity Commission for a term expiring July 1, 2029, Jonathan Snare, of Virginia, to be a Member of the Occupational Safety and Health Review Commission for a term expiring April 27, 2029, David Barker, of Iowa, to be Assistant Secretary for Postsecondary Education, and Mary Riley, of the District of Columbia, to be Assistant Secretary for Legislation and Congressional Affairs, both of the Department of Education.
CommitteeSenate Health, Education, Labor, and Pensions
Chamber / CongressSenate · 119th Congress
DateJuly 24, 2025
TypeMeeting
Witnesses
(none listed in event metadata)
Videosenate-isvp
Transcript249 caption blocks · 11,441 words · 1:46:17 runtime
EventCongress.gov 337285