PRINTER'S NO. 441
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 478
Session of
2025
INTRODUCED BY FARRY, PENNYCUICK, FONTANA, LAUGHLIN, TARTAGLIONE,
KEARNEY, STEFANO AND PISCIOTTANO, MARCH 20, 2025
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
MARCH 20, 2025
AN ACT
1 Establishing the Office of Employee Ownership within the
2 Department of Community and Economic Development;
3 establishing the Main Street Employee Ownership Grant
4 Program; and providing technical and financial assistance to
5 employee-owned enterprises.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the Employee
10 Ownership Assistance Program Act.
11 Section 2. Definitions.
12 The following words and phrases when used in this act shall
13 have the meanings given to them in this section unless the
14 context clearly indicates otherwise:
15 "Department." The Department of Community and Economic
16 Development of the Commonwealth.
17 "Employee-owned enterprise." One of the following:
18 (1) A business that meets all of the following
19 conditions:
 1 (i) The business is organized as:
2 (A) an eligible worker-owned cooperative as
3 defined under 26 U.S.C. § 1042 (relating to sales of
4 stock to employee stock ownership plans or certain
5 cooperatives); or
6 (B) a corporation in which the employees own the
7 stock of the corporation through an employee stock
8 ownership plan, within the meaning of 26 U.S.C. §
9 4975(e)(7) (relating to tax on prohibited
10 transactions).
11 (ii) The following apply to voting rights and shares
12 of the business:
13 (A) A majority of the voting rights of the
14 business are held by employees and all employees who
15 have stock allocated to them are entitled to vote.
16 (B) Shares of the business are voted in such a
17 manner that the vote of the majority of the employees
18 of the business controls the vote of the majority of
19 shares.
20 (C) Voting rights on corporate matters for
21 shares held in a trust for the employees of the
22 business shall pass through to those employees, at
23 least to the extent required by the pass-through
24 voting requirements under 26 U.S.C. § 864(c)(4)(D)
25 (relating to definitions and special rules).
26 (iii) The majority of the members of the board of
27 directors of the business are elected by the employees.
28 (2) A business that is organized in a manner determined
29 by the secretary to involve substantial employee
30 participation.
20250SB0478PN0441 - 2 -
 1 (3) An employee-ownership trust.
2 "Employee-ownership group." A corporation or other entity,
3 including a labor union formed by or on behalf of the current or
4 former employees of an industrial or commercial firm or facility
5 located in this Commonwealth for the purpose of assuming
6 ownership or control of the firm or facility and operating it as
7 an employee-owned enterprise.
8 "Employee-ownership trust." Company stock or profit sharing
9 being held by a trustee on behalf of the company's employees
10 with employees receiving a percentage of ongoing profits or
11 401(k) retirement plans throughout employment without receiving
12 an equity stake in the company.
13 "Local administrative agency." An organization that enters
14 into a written agreement with the department to administer
15 technical and financial assistance under this act, including:
16 (1) A municipality.
17 (2) A local development district of the Appalachian
18 Regional Commission.
19 (3) A certified economic development organization
20 certified by The Pennsylvania Industrial Development
21 Authority under 64 Pa.C.S. § 1123 (relating to certification
22 of economic development organizations).
23 (4) A nonprofit economic development organization
24 designated by the secretary.
25 "Office." The Office of Employee Ownership established under
26 section 3(a).
27 "Secretary." The Secretary of Community and Economic
28 Development of the Commonwealth.
29 Section 3. Office of Employee Ownership.
30 (a) Establishment and purpose.--
20250SB0478PN0441 - 3 -
 1 (1) The Office of Employee Ownership is established in
2 the department.
3 (2) The office shall:
4 (i) Serve as an advocate for improving government
5 knowledge and support for well-designed, broad-based
6 profit-sharing and ownership stakes.
7 (ii) Increase awareness of how agency programs
8 affect companies with profit-sharing and ownership stake
9 programs.
10 (iii) Promote legislative or regulatory changes
11 necessary to ensure that government policies encourage
12 the adoption of existing and emerging sharing programs.
13 (b) Gubernatorial appointment.--The Governor shall appoint
14 an employee ownership advocate. The employee ownership advocate
15 shall be an individual who by reason of training, experience or
16 attainment is qualified to represent the interest of employee-
17 owned enterprises. The following apply to the employee ownership
18 advocate:
19 (1) No individual who serves as an employee ownership
20 advocate shall, while serving in the position, engage in any
21 business, vocation or other employment, or have other
22 interests, inconsistent with the individual's official
23 responsibilities.
24 (2) The individual serving as an employee ownership
25 advocate may not seek or accept employment or render
26 beneficial services for compensation with any person or
27 corporation, as defined in 66 Pa.C.S. § 102 (relating to
28 definitions), during the tenure of the appointment and for a
29 period of two years after the appointment is served or
30 terminated.
20250SB0478PN0441 - 4 -
 1 (3) An individual who is appointed to the position of
2 employee ownership advocate may not seek election or accept
3 appointment to any public office during the tenure as the
4 employee ownership advocate and for a period of two years
5 after the appointment is served or terminated.
6 (4) The employee ownership advocate shall oversee the
7 office and the programs established in this act.
8 (c) Duties.--The office shall aid and guide businesses on
9 the benefits and formation of an employee-owned enterprise by
10 providing outreach, education and technical assistance. The
11 office shall:
12 (1) Establish a robust and wide-reaching network of
13 technical support for businesses wishing to convert to
14 employee-owned enterprises.
15 (2) Prepare and make publicly accessible in print and on
16 the office's publicly accessible Internet website information
17 to educate and guide business owners and employees in this
18 Commonwealth on the benefits and formation of employee-owned
19 enterprises.
20 (3) Educate businesses and communities across this
21 Commonwealth on the economic and community benefits of
22 employee-owned enterprises.
23 (4) Identify barriers to the development and advancement
24 of employee-owned enterprises and recommend State actions and
25 resources to remove barriers.
26 (5) Gather and maintain statistics on all employee-owned
27 enterprises in place across this Commonwealth.
28 (6) Evaluate and submit a report by December 31 of each
29 year to the Community, Economic and Recreational Development
30 Committee of the Senate and the Commerce Committee of the
20250SB0478PN0441 - 5 -
 1 House of Representatives. Each report must include:
2 (i) The results of the office's efforts, impacts and
3 benefits.
4 (ii) A list of all employee-owned enterprises in
5 this Commonwealth and the counties in which the employee-
6 owned enterprises are located.
7 (iii) Recommendations on the most effective
8 utilization of Commonwealth funding to encourage the
9 formation of employee-owned enterprises.
10 (iv) Other information deemed necessary by the
11 employee ownership advocate.
12 (7) Select and fund a Pennsylvania 501(c)(3) nonprofit
13 organization defined under 26 U.S.C. § 501(c)(3) (relating to
14 exemption from tax on corporations, certain trusts, etc.)
15 with well-established knowledge of employee-owned enterprises
16 to work with the office and the department to ensure the
17 execution requirements under this act.
18 Section 4. Technical and financial assistance program.
19 The office shall establish a technical and financial
20 assistance program to promote the development of employee-owned
21 enterprises.
22 Section 5. Technical assistance.
23 (a) Authorization to allocate money.--The office may
24 allocate or distribute money to local administrative agencies
25 for the purpose of providing grants and loans to employee-
26 ownership groups in industrial facilities and commercial
27 facilities, as those terms are defined in section 3 of the act
28 of August 23, 1967 (P.L.251, No.102), known as the Economic
29 Development Financing Law, for technical assistance to develop
30 or improve an employee-owned enterprise.
20250SB0478PN0441 - 6 -
 1 (b) Eligibility.--
2 (1) An employee-ownership group shall be eligible for
3 assistance if the employees in the employee-ownership group
4 are employed by, formerly employed by or affiliated with one
5 of the following:
6 (i) An existing firm facing a threat of substantial
7 layoffs or a plant closing and investigating a
8 reorganization of all or some portion of the firm's
9 business activity, at sites located within this
10 Commonwealth, as an employee-owned enterprise.
11 (ii) An existing firm, not necessarily facing a
12 threat of substantial layoffs or a plant closing but
13 considering a conversion to an employee-owned enterprise
14 and seeking professional services to accomplish the
15 conversion if conversion to employee ownership will
16 create new jobs or retain existing jobs at sites in this
17 Commonwealth.
18 (iii) An existing firm which currently has some form
19 of employee ownership and requires professional services
20 to ensure success of the employee-owned enterprise in the
21 effort to create new jobs or retain existing jobs at
22 sites in this Commonwealth.
23 (2) For purposes of this subsection, the term "existing
24 firm" shall include an ongoing concern, the assets of an
25 existing company or the assets of a company that has been
26 closed for no more than one year as of the date of
27 application for the feasibility study loan.
28 (c) Use of awarded money.--An employee-ownership group may
29 be awarded sums of money for the following purposes:
30 (1) Feasibility studies to investigate a reorganization
20250SB0478PN0441 - 7 -
 1 or new incorporation as an employee-owned enterprise. At a
2 minimum, the feasibility study shall:
3 (i) Assess the market value and demand for the
4 product produced by the plant affected by the closing or
5 layoff.
6 (ii) Assess the market value and demand for other
7 products that could be manufactured or assembled at the
8 plant affected by the closing or layoff.
9 (iii) Evaluate the production costs to be incurred
10 if the plant were to be operated by the employee-
11 ownership group.
12 (iv) Determine whether there exists in the affected
13 area and in the employee-ownership group the desire and
14 capacity to create a new production entity and to become
15 competitive.
16 (2) Professional services to implement a feasibility
17 study and other professional services to develop or ensure
18 the success of an employee-owned enterprise.
19 (d) Repayment of awarded money.--Money awarded to an
20 employee-ownership group under subsection (c) is subject to the
21 following repayment conditions:
22 (1) If the enterprise studied is purchased or improved
23 by the employee-ownership group, the sum of money awarded
24 will constitute a loan and the employee-ownership group shall
25 repay the entire amount of the loan, with interest, in a lump
26 sum at the closing of the purchase of the company or within
27 one year after the date of the release of the loan by the
28 office, whichever occurs later. The amount of the loan repaid
29 shall be returned to the office for the purpose of issuing
30 additional loans. The interest paid on the loan shall be used
20250SB0478PN0441 - 8 -
 1 by the office for administrative costs associated with
2 administering this act.
3 (2) If the enterprise studied is not purchased by the
4 employee-ownership group within one year after the completion
5 of the feasibility study, the applicant shall submit a final
6 report concerning the feasibility of repaying the awarded
7 money.
8 (3) The office shall evaluate the employee-ownership
9 group's final report under paragraph (2) to determine if
10 repayment is feasible. If the office determines that the
11 employee-ownership group is unable to repay the sum of
12 awarded money, the amount of money that was awarded to the
13 employee-ownership group will constitute a grant. If the
14 office determines that the employee-ownership group is able
15 to repay some or all of the money awarded, the amount of
16 money that was awarded to the employee-ownership group will
17 constitute a loan.
18 (e) Other conditions.--
19 (1) The applicant shall provide evidence that there is a
20 prospect for recovery and future job growth or job retention
21 in applications under subsection (b)(1)(i) or a substantial
22 prospect of job growth or job retention in applications under
23 subsection (b)(1)(ii) and (iii).
24 (2) Maximum State participation shall be 50% of the
25 total cost of the technical assistance and the maximum loan
26 size shall be $100,000.
27 Section 6. Financial assistance.
28 (a) Authorization to allocate funds.--The office may
29 allocate or distribute money to local administrative agencies
30 for the purpose of providing loans and loan guarantees to
20250SB0478PN0441 - 9 -
 1 employee-owned enterprises reorganizing industrial facilities,
2 manufacturing facilities and agricultural enterprises as defined
3 in section 3 of the act of May 17, 1956 (1955 P.L.1609, No.537),
4 known as the Pennsylvania Industrial Development Authority Act,
5 for the development of employee-owned enterprises.
6 (b) Eligibility.--
7 (1) Eligibility for assistance shall be limited to an
8 employee-ownership group reorganizing an existing enterprise
9 which is facing a threat of substantial layoffs or a plant
10 closing and adequate private financing is not available.
11 (2) For purposes of this subsection, the term "existing
12 enterprise" includes an ongoing concern, the assets of an
13 existing company or the assets of a company which has been
14 closed for no more than one year as of the date of completion
15 of a feasibility study.
16 (c) Use of assistance.--Eligible project costs shall include
17 land and buildings, machinery and equipment and working capital
18 secured by accounts receivable and inventory.
19 (d) Debt instruments.--The financial subsidy provided should
20 be the minimum necessary to accommodate the borrower's financial
21 needs. Debt instruments shall include either or both of the
22 following:
23 (1) Loans, including deferred interest and principal
24 payments.
25 (2) Loan guarantees.
26 (e) Security.--
27 (1) Loans shall be secured by lien positions on
28 collateral at the highest level of priority which can
29 accommodate the borrower's ability to raise sufficient debt
30 and equity capital.
20250SB0478PN0441 - 10 -
 1 (2) When the obligation of a firm is guaranteed, the
2 fi