HB 1751 — An Act establishing the Office of Employee Ownership within the Department of Community and Economic Development; establishing the Employee Ownership Advisory Board; establishing the Main Street Employee Ownership Grant Program; and providing technical and financial assistance to employee-owned enterprises.

PRINTER'S NO.   2158

                    THE GENERAL ASSEMBLY OF PENNSYLVANIA



                        HOUSE BILL
                        No. 1751
                                               Session of
                                                 2025

     INTRODUCED BY FRIEL, INGLIS, MARCELL, GIRAL, GUZMAN, HILL-EVANS,
        FREEMAN, WAXMAN, OTTEN, KRAJEWSKI, McNEILL, WEBSTER, SANCHEZ,
        BRENNAN, RIVERA, GALLAGHER AND CEPEDA-FREYTIZ, JULY 21, 2025

     REFERRED TO COMMITTEE ON COMMERCE, JULY 22, 2025


                                    AN ACT
 1   Establishing the Office of Employee Ownership within the
 2      Department of Community and Economic Development;
 3      establishing the Employee Ownership Advisory Board;
 4      establishing the Main Street Employee Ownership Grant
 5      Program; and providing technical and financial assistance to
 6      employee-owned enterprises.
 7      The General Assembly of the Commonwealth of Pennsylvania
 8   hereby enacts as follows:
 9   Section 1.    Short title.
10      This act shall be known and may be cited as the Employee
11   Ownership Assistance Program Act.
12   Section 2.    Definitions.
13      The following words and phrases when used in this act shall
14   have the meanings given to them in this section unless the
15   context clearly indicates otherwise:
16      "Board."    The Employee Ownership Advisory Board established
17   under section 7(a).
18      "Department."    The Department of Community and Economic
19   Development of the Commonwealth.
 1    "Employee-owned enterprise."        One of the following:
 2        (1)   A business that meets one of the following
 3    conditions:
 4              (i)    The business is organized as:
 5                     (A)   an eligible worker-owned cooperative as
 6              defined under 26 U.S.C. § 1042 (relating to sales of
 7              stock to employee stock ownership plans or certain
 8              cooperatives); or
 9                     (B)   a corporation in which the employees own the
10              stock of the corporation through an employee stock
11              ownership plan, within the meaning of 26 U.S.C. §
12              4975(e)(7) (relating to tax on prohibited
13              transactions).
14              (ii)    The following apply to voting rights and shares
15        of the business:
16                     (A)   A majority of the voting rights of the
17              business are held by employees and all employees who
18              have stock allocated to them are entitled to vote.
19                     (B)   Shares of the business are voted in such a
20              manner that the vote of the majority of the employees
21              of the business controls the vote of the majority of
22              shares.
23                     (C)   Voting rights on corporate matters for
24              shares held in a trust for the employees of the
25              business shall pass through to those employees, at
26              least to the extent required by the pass-through
27              voting requirements under 26 U.S.C. § 864(c)(4)(D)
28              (relating to definitions and special rules).
29              (iii)    The majority of the members of the board of
30        directors of the business are elected by the employees.

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 1          (2)     A business that is organized in a manner determined
 2      by the secretary to involve substantial employee
 3      participation.
 4          (3)     An employee-ownership trust.
 5      "Employee-ownership group."      A corporation or other entity,
 6   including a labor union formed by or on behalf of the current or
 7   former employees of an industrial or commercial firm or facility
 8   located in this Commonwealth for the purpose of assuming
 9   ownership or control of the firm or facility and operating it as
10   an employee-owned enterprise.
11      "Employee-ownership trust."      Company stock or profit sharing
12   being held by a trustee on behalf of the company's employees
13   with employees receiving a percentage of ongoing profits or
14   401(k) retirement plans throughout employment without receiving
15   an equity stake in the company.
16      "Local administrative agency."        An organization that enters
17   into a written agreement with the department to administer
18   technical and financial assistance under this act, including:
19          (1)     A municipality.
20          (2)     A local development district of the Appalachian
21      Regional Commission.
22          (3)     A certified economic development organization
23      certified by The Pennsylvania Industrial Development
24      Authority under 64 Pa.C.S. § 1123 (relating to certification
25      of economic development organizations).
26          (4)     A nonprofit economic development organization
27      designated by the secretary.
28      "Office."    The Office of Employee Ownership established under
29   section 3(a).
30      "Secretary."    The Secretary of Community and Economic

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 1   Development of the Commonwealth.
 2   Section 3.     Office of Employee Ownership.
 3      (a)   Establishment and purpose.--
 4            (1)   The Office of Employee Ownership is established in
 5      the department.
 6            (2)   The office shall:
 7                  (i)    Serve as an advocate for improving government
 8            knowledge and support for well-designed, broad-based
 9            profit-sharing and ownership stakes.
10                  (ii)    Increase awareness of how agency programs
11            affect companies with profit-sharing and ownership stake
12            programs.
13                  (iii)    Promote legislative or regulatory changes
14            necessary to ensure that government policies encourage
15            the adoption of existing and emerging sharing programs.
16      (b)   Gubernatorial appointment.--The Governor shall appoint
17   an employee ownership advocate. The employee ownership advocate
18   shall be an individual who by reason of training, experience or
19   attainment is qualified to represent the interest of employee-
20   owned enterprises. The following apply to the employee ownership
21   advocate:
22            (1)   No individual who serves as an employee ownership
23      advocate shall, while serving in the position, engage in any
24      business, vocation or other employment, or have other
25      interests, inconsistent with the individual's official
26      responsibilities.
27            (2)   The individual serving as an employee ownership
28      advocate may not seek or accept employment or render
29      beneficial services for compensation with any person or
30      corporation, as defined in 66 Pa.C.S. § 102 (relating to

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 1      definitions), during the tenure of the appointment and for a
 2      period of two years after the appointment is served or
 3      terminated.
 4            (3)   An individual who is appointed to the position of
 5      employee ownership advocate may not seek election or accept
 6      appointment to any public office during the tenure as the
 7      employee ownership advocate.
 8            (4)   The employee ownership advocate shall oversee the
 9      office and the programs established in this act.
10      (c)   Duties.--The office shall aid and guide businesses on
11   the benefits and formation of an employee-owned enterprise by
12   providing outreach, education and technical assistance. The
13   office shall:
14            (1)   Establish a robust and wide-reaching network of
15      technical support for businesses wishing to convert to
16      employee-owned enterprises.
17            (2)   Prepare and make publicly accessible in print and on
18      the office's publicly accessible Internet website information
19      to educate and guide business owners and employees in this
20      Commonwealth on the benefits and formation of employee-owned
21      enterprises.
22            (3)   Educate businesses and communities across this
23      Commonwealth on the economic and community benefits of
24      employee-owned enterprises.
25            (4)   Identify barriers to the development and advancement
26      of employee-owned enterprises and recommend State actions and
27      resources to remove barriers.
28            (5)   Gather and maintain statistics on all employee-owned
29      enterprises in place across this Commonwealth.
30            (6)   Evaluate and submit a report by December 31 of each

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 1      year to the Community, Economic and Recreational Development
 2      Committee of the Senate and the Commerce Committee of the
 3      House of Representatives. Each report must include:
 4                  (i)    The results of the office's efforts, impacts and
 5            benefits.
 6                  (ii)    A list of all employee-owned enterprises in
 7            this Commonwealth and the counties in which the employee-
 8            owned enterprises are located.
 9                  (iii)    Recommendations on the most effective
10            utilization of Commonwealth funding to encourage the
11            formation of employee-owned enterprises.
12                  (iv)    Other information deemed necessary by the
13            employee ownership advocate.
14            (7)   Select and fund a Pennsylvania 501(c)(3) nonprofit
15      organization defined under 26 U.S.C. § 501(c)(3) (relating to
16      exemption from tax on corporations, certain trusts, etc.)
17      with well-established knowledge of employee-owned enterprises
18      to work with the office and the department to ensure the
19      execution requirements under this act.
20   Section 4.     Technical and financial assistance program.
21      The office shall establish a technical and financial
22   assistance program to promote the development of employee-owned
23   enterprises.
24   Section 5.     Technical assistance.
25      (a)   Authorization to allocate money.--The office may
26   allocate or distribute money to local administrative agencies
27   for the purpose of providing grants and loans to employee-
28   ownership groups in industrial facilities and commercial
29   facilities, as those terms are defined in section 3 of the act
30   of August 23, 1967 (P.L.251, No.102), known as the Economic

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 1   Development Financing Law, for technical assistance to develop
 2   or improve an employee-owned enterprise.
 3      (b)   Eligibility.--
 4            (1)   An employee-ownership group shall be eligible for
 5      assistance if the employees in the employee-ownership group
 6      are employed by, formerly employed by or affiliated with one
 7      of the following:
 8                  (i)    An existing firm facing a threat of substantial
 9            layoffs or a plant closing and investigating a
10            reorganization of all or some portion of the firm's
11            business activity, at sites located within this
12            Commonwealth, as an employee-owned enterprise.
13                  (ii)    An existing firm, not necessarily facing a
14            threat of substantial layoffs or a plant closing but
15            considering a conversion to an employee-owned enterprise
16            and seeking professional services to accomplish the
17            conversion if conversion to employee ownership will
18            create new jobs or retain existing jobs at sites in this
19            Commonwealth.
20                  (iii)    An existing firm which currently has some form
21            of employee ownership and requires professional services
22            to ensure success of the employee-owned enterprise in the
23            effort to create new jobs or retain existing jobs at
24            sites in this Commonwealth.
25            (2)   For purposes of this subsection, the term "existing
26      firm" shall include an ongoing concern, the assets of an
27      existing company or the assets of a company that has been
28      closed for no more than one year as of the date of
29      application for the feasibility study.
30      (c)   Use of awarded money.--An employee-ownership group may

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 1   be awarded sums of money for the following purposes:
 2            (1)   Feasibility studies to investigate a reorganization
 3      or new incorporation as an employee-owned enterprise. At a
 4      minimum, the feasibility study shall:
 5                  (i)    Assess the market value and demand for the
 6            product produced by the plant affected by the closing or
 7            layoff.
 8                  (ii)    Assess the market value and demand for other
 9            products that could be manufactured or assembled at the
10            plant affected by the closing or layoff.
11                  (iii)    Evaluate the production costs to be incurred
12            if the plant were to be operated by the employee-
13            ownership group.
14            (2)   Professional services to implement a feasibility
15      study and other professional services to develop or ensure
16      the success of an employee-owned enterprise.
17      (d)   Repayment of awarded money.--Money awarded to an
18   employee-ownership group under subsection (c) is subject to the
19   following repayment conditions:
20            (1)   If the enterprise studied is purchased or improved
21      by the employee-ownership group, the sum of money awarded
22      will constitute a loan and the employee-ownership group shall
23      repay the entire amount of the loan, with interest, in a lump
24      sum at the closing of the purchase of the company or within
25      one year after the date of the release of the loan by the
26      office, whichever occurs later. The amount of the loan repaid
27      shall be returned to the office for the purpose of issuing
28      additional loans. The interest paid on the loan shall be used
29      by the office for administrative costs associated with
30      administering this act.

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 1            (2)   If the enterprise studied is not purchased by the
 2      employee-ownership group within one year after the completion
 3      of the feasibility study, and the enterprise makes a good
 4      faith effort to pursue conversion, the money will constitute
 5      a grant.
 6            (3)   The office shall evaluate the employee-ownership
 7      group's final report under paragraph (2) to determine if
 8      repayment is feasible. If the office determines that the
 9      employee-ownership group is unable to repay the sum of
10      awarded money, the amount of money that was awarded to the
11      employee-ownership group will constitute a grant. If the
12      office determines that the employee-ownership group is able
13      to repay some or all of the money awarded, the amount of
14      money that was awarded to the employee-ownership group will
15      constitute a loan.
16      (e)   Other conditions.--
17            (1)   The applicant shall provide evidence that there is a
18      prospect for recovery and future job growth or job retention
19      in applications under subsection (b)(1)(i) or a substantial
20      prospect of job growth or job retention in applications under
21      subsection (b)(1)(ii) and (iii).
22            (2)   Maximum State participation shall be 50% of the
23      total cost of the technical assistance and the maximum loan
24      or grant amount shall be $35,000.
25   Section 6.     Financial assistance.
26      (a)   Authorization to allocate funds.--The office may
27   allocate or distribute money to local administrative agencies
28   for the purpose of providing loans and loan guarantees to
29   employee-owned enterprises reorganizing industrial facilities,
30   manufacturing facilities and agricultural enterprises as defined

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 1   in section 3 of the act of May 17, 1956 (1955 P.L.1609, No.537),
 2   known as the Pennsylvania Industrial Development Authority Act,
 3   for the development of employee-owned enterprises.
 4      (b)   Eligibility.--
 5            (1)   Eligibility for assistance shall be limited to
 6      reorganizing an existing enterprise being evaluated for
 7      conversion to an employee ownership group, an organization
 8      which is facing a threat of substantial layoffs or a plant
 9      closing which may be assisted by conversion to employee
10      ownership, a start-up organization seeking formation as a
11      worker cooperative business or an existing employee ownership
12      enterprise seeking funding to grow the business to create new
13      jobs.
14            (2)   For purposes of this subsection, the term "existing
15      enterprise" includes an ongoing concern, the assets of an
16      existing company or the assets of a company which has been
17      closed for no more than one year as of the date of completion
18      of a feasibility study.
19   Section 7.     Employee Ownership Advisory Board.
20      (a)   Establishment.--The Employee Ownership Advisory Board is
21   established within the department.
22      (b)   Powers and duties.--The board shall have the following
23   powers and duties:
24            (1)   Raise awareness for employee-owned enterprises in
25      this Commonwealth.
26            (2)   Research methods to encourage the development and
27      expansion of employee-owned enterprises in this Commonwealth.
28            (3)   Make recommendations to the department and General
29      Assembly on policies related to employee-owned enterprises.
30            (4)   Develop proposed best practices for employee-owned

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 1      enterprises in this Commonwealth.
 2            (5)    Develop educational materials and outreach
 3      opportunities for the maintenance and development of
 4      employee-owned enterprises in this Commonwealth.
 5      (c)     Members.--The board shall be composed of the following
 6   members:
 7            (1)    The Employee Ownership Advocate.
 8            (2)    An employee owner.
 9            (3)    A certified public accountant.
10            (4)    A representative from a worker-owned cooperative.
11            (5)    A representative from a federation of labor unions.
12            (6)    A representative from the banking industry or
13      community development financial institution.
14            (7)    A regional advocate for business development.
15            (8)    A professor from an institution of higher education
16      located in this Commonwealth with an expertise in employee
17      ownership and labor relations.
18            (9)    A representative from a law firm with expertise in
19      employee ownership.
20            (10)    A member of the Senate appointed by the President
21      pro tempore of the Senate.
22            (11)    A member of the House of Representatives appointed
23      by the Speaker of the House of Representatives.
24      (d)     Officers.--
25            (1)    The Employee Ownership Advocate shall serve as the
26      chairperson of the board.
27            (2)    The board shall elect a vice chairperson from the
28      members of the board.
29      (e)     Term.--Except for the Employee Ownership Advocate, all
30   members of the board shall serve a term of four years and may

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 1   serve on the board until a successor is appointed.
 2      (f)   Compensation.--Members of the board shall not receive
 3   compensation for service on the board but shall be reimbursed
 4   for expenses incurred in the performance of their duties under
 5   this act.
 6      (g)   Staff support.--The office shall provide staff support
 7   to the board.
 8      (h)   Meetings.--The board shall meet at least twice each year
 9   to consider issues related to employee-owned enterprises and
10   make recommendations to the department and General Assembly.
11      (i)   Reports.--
12            (1)   No later than December 31, 2025, and each December
13      31 thereafter, the board shall issue an annual report
14      detailing recommendations and actions made by the board.
15            (2)   Each annual report under this subsection shall be
16      submitted to:
17                  (i)    The chairperson and minority chairperson of the
18            Community, Economic and Recreational Development
19            Committee of the Senate.
20                  (ii)   The chairperson and minority chairperson of the
21            Commerce Committee of the House of Representatives.
22   Section 8.     Main Street Employee Ownership Grant Program.
23      (a)   Establishment.--The Main Street Employee Ownership Grant
24   Program is established within the office to provide grants to
25   businesses that are eligible under subsection (b).
26      (b)   Eligibility.--A business is eligible for grants under
27   this section if the business has fewer than 200 employees.
28      (c)   Use of grant.--Grant money awarded may be used by an
29   eligible business to:
30            (1)   Establish a workers' cooperative in accordance with

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 1      15 Pa.C.S. Ch. 77 (relating to workers' cooperative
 2      corporations).
 3            (2)   Convert a business to an employee-owned enterprise.
 4            (3)   Provide support for technical assistance, such as
 5      the proper management of an employee-owned enterprise, best
 6      business practices or other assistance approved by the
 7      office.
 8      (d)   Limitation and approval.--Grant awards may not exceed
 9   $35,000. If a business is approved for a grant under this
10   section, the business shall have an automatic approval for
11   financial assistance under section 6.
12   Section 9.     Administration.
13      (a)   Responsibility of local administrative agencies.--Local
14   administrative agencies shall promote the employee ownership
15   program and the Main Street Employee Ownership Grant Program by
16   soliciting applications, evaluating applications and making
17   preliminary decisions on both technical assistance and financial
18   assistance. Not more than 2% of the money appropriated for the
19   purpose of this act may be used by local administrative agencies
20   for the purpose of administering these programs.
21      (b)   Approval by employee ownership advocate.--The employee
22   ownership advocate shall have full responsibility for final
23   approval of all applications for assistance.
24      (c)   Advances.--The office may make money advances to local
25   administrative agencies for the purpose of making loans, loan
26   guarantees or grants consistent with this act. Advances under
27   this section must be repaid to the office when the loan or loan
28   guarantee is repaid by the borrower.
29      (d)   Rules and regulations.--The secretary may adopt and
30   promulgate rules and regulations, statements of policy or forms,

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 1   guidelines and other procedures, forms and requirements
 2   necessary for the implementation and administration of this act.
 3   Section 10.    Indicators of program impact.
 4      (a)   Report.--On March 1 of each year of the employee
 5   ownership program's and the Main Street Employee Ownership Grant
 6   Program's existence, the employee ownership advocate shall
 7   submit a report to the Secretary of the Senate and the Chief
 8   Clerk of the House of Representatives on the impact of the
 9   programs, including:
10            (1)   Rules, guidelines or statements of policy used in
11      administering the programs.
12            (2)   The number of employee-ownership groups and firms
13      applying for and receiving assistance.
14            (3)   The number of feasibility studies which were
15      actually implemented.
16            (4)   The number of jobs retained or created and the
17      number of jobs created or retained as a result of financial
18      assistance.
19            (5)   Other information deemed necessary by the employee
20      ownership advocate.
21      (b)   Information to office.--Recipients of assistance under
22   these programs shall provide the office with the information
23   needed to fulfill the reporting requirement under subsection
24   (a).
25   Section 11.    Nondiscrimination.
26      A loan, grant or other financial assistance may not be made
27   to a recipient under this act unless the recipient certifies to
28   the department, in a form satisfactory to the department, that
29   the recipient will not discriminate against an employee or
30   against an applicant for employment because of race, religion,

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 1   color, national origin, sex or age.
 2   Section 12.    Guidelines and regulations.
 3      (a)   One-year exemption from review.--In order to facilitate
 4   implementation of this act, the department may promulgate, adopt
 5   and use temporary guidelines that shall be transmitted as a
 6   notice to the Legislative Reference Bureau for publication in
 7   the next available issue of the Pennsylvania Bulletin. The
 8   guidelines shall not be subject to review under any of the
 9   following:
10            (1)   Section 612 of the act of April 9, 1929 (P.L.177,
11      No.175), known as The Administrative Code of 1929.
12            (2)   Sections 201, 202, 203, 204 and 205 of the act of
13      July 31, 1968 (P.L.769, No.240), referred to as the
14      Commonwealth Documents Law.
15            (3)   Section 204(b) of the act of October 15, 1980 (P.L.
16      950, No.164), known as the Commonwealth Attorneys Act.
17            (4)   The act of June 25, 1982 (P.L.633, No.181), known as
18      the Regulatory Review Act.
19      (b)   Expiration of exemption.--After the expiration of the
20   one-year period, all guidelines shall expire and shall be
21   replaced by regulations that shall have been promulgated,
22   adopted and published as provided by law.
23   Section 13.    Annual appropriation and funding sources.
24      (a)   Estimate of expenditures.--Before November 1 of each
25   year, the employee ownership advocate shall estimate the total
26   expenditures for the office and submit the estimate to the
27   Governor in accordance with section 610 of the act of April 9,
28   1929 (P.L.177, No.175), known as The Administrative Code of
29   1929. At the same time the office submits the estimate to the
30   Governor, the office shall also submit the estimate to the

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 1   General Assembly. The following apply:
 2            (1)   The employee ownership advocate shall be afforded an
 3      opportunity to appear before the Governor, the Appropriations
 4      Committee of the Senate and the Appropriations Committee of
 5      the House of Representatives regarding the estimate.
 6            (2)   For each fiscal year, the office shall calculate the
 7      office's proposed appropriation by subtracting the unspent
 8      portion of the office's budget for the previous fiscal year
 9      from the total appropriation that was approved by the General
10      Assembly. The remainder shall be allocated to the department
11      for the next fiscal year.
12      (b)   Allocation of assessment.--For each fiscal year, the
13   office shall determine for the preceding calendar year the
14   amount of its expenditures directly attributable to
15   administering this act as follows:
16            (1)   Expenditures of the office directly attributable to
17      section 5.
18            (2)   Expenditures of the office directly attributable to
19      section 6.
20            (3)   Expenditures of the office directly attributable to
21      section 8.
22            (4)   Expenditures of the office directly attributable to
23      section 9.
24            (5)   Total expenditures of the office directly
25      attributable to administering this act.
26      (c)   Funding sources.--Any of the following may be used as
27   funding sources for the office for the purposes of this act:
28            (1)   Money appropriated for the purposes of this act.
29            (2)   Federal money appropriated or authorized for the
30      purposes of this act.

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 1          (3)    Money received from a State agency through an
 2      interagency agreement or memorandum of understanding.
 3          (4)    A gift or other contribution from a public or
 4      private source.
 5          (5)    Returns on money dedicated for the purposes of this
 6      act, including, but not limited to, interest on loans or loan
 7      guarantees.
 8          (6)    Any appropriation that was unspent by the end of a
 9      previous fiscal year.
10   Section 14.   Effective date.
11      This act shall take effect in 60 days.




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