Senate HELP Committee Plans Markup of 3 ESOP Bills This Week

The Senate Health, Education, Labor and Pensions Committee held a hearing Thursday to discuss three bills aimed at expanding employee stock ownership plans. The committee has a planned legislative markup for July 30 to consider the ESOP legislation.

Also during the hearing, the committee’s ranking member, Senator Bernie Sanders, I-Vermont, introduced the Employee Ownership Financing Act, which would create an Office of Employee Ownership to run a $500 million program “to provide loans to create ESOPs or worker owned cooperatives that are more than 51 percent employee owned and to save closing plants via an ESOP purchase.”

During Thursday’s hearing, the committee’s chair, Senator Bill Cassidy, R-Louisiana, spotlighted the current legislative efforts designed to address longstanding barriers to ESOP expansion and give workers a larger stake in the businesses they help build.

Retire Through Ownership Act

 The Retire Through Ownership Act would address ESOPs’ valuation risk by aligning ESOP valuations with IRS standards, offering a “safe harbor” for trustees who rely on certified appraisers using these guidelines.

During the hearing, Senator Tim Kaine, D-Virgina, emphasized the need for fairness and clarity in valuations, noting that ambiguous appraisal standards often deter potential ESOP sponsors due to legal exposure. Jim Bonham, CEO of the ESOP Association, endorsed the bill’s approach, saying it would finally give fiduciaries the legal certainty they need to move forward with confidence.

Employee Ownership Fairness Act

A measure called the Employee Ownership Fairness Act would revise ERISA rules to exclude ESOP contributions from annual defined contribution limits, currently capped at $23,500 for 2025.

The bill addresses a longstanding quirk: While many ESOPs are paired with 401(k)s or other retirement plans, contributions to both count against the same cap. This limits how much employers and employees can collectively save for retirement across all plans. By exempting ESOP contributions from this calculation, the bill would allow workers to benefit from ownership without sacrificing retirement security.

Employee Ownership Representation Act

The Employee Ownership Representation Act would assign two designated representatives to the ERISA Advisory Council, which advises the Department of Labor on employee benefits policy.

Currently, the 15-member Council includes voices from business, labor and the general public—but none representing the unique perspective of ESOPs. Adding ESOP-specific seats would give employee-owned firms more visibility and influence in the policymaking process.