ESOP Proposals Clear Senate HELP Committee

The Senate Health, Education, Labor and Pensions (HELP) Committee unanimously advanced two bills to strengthen Employee Stock Ownership Plans (ESOPs). S. 1728, the Employee Ownership Representation Act—sponsored by Senator Bill Cassidy (R-LA)—would add two ESOP board members to the ERISA Advisory Council. Also included in the bill were amendments offered by Senator Bernie Sanders (I-VT) that would do the following.

• Direct the Secretary of Labor to establish the Office of Employee Ownership.
• Establish a seven-member Advisory Council on Employee Ownership.
• Direct the Secretary of Labor to establish the Office of Employee Ownership in the Department of Labor (DOL) separate from the Employee Benefits Security Administration for the purposes of carrying out the Employee Ownership Initiative established under section 346 of the SECURE 2.0 Act.

Another amendment included in the bill was put forward by Senator Maggie Hassan (D-NH) to establish the Advocate for Employee Ownership within the Employee Ownership Initiative.

Also advanced out of committee is S. 2403, the Retire Through Ownership Act, sponsored by Senator Roger Marshall (R-KS) and co-sponsor Tim Kaine (D-VA). The bill would amend the definition of adequate consideration under ERISA to provide a fiduciary with good faith reliance on the principles and methodologies set forth under Internal Revenue Service Revenue Ruling 59-60 in determining the fair market value of an asset. Included in the bill was an amendment by Senator Sanders clarifying that the change to the definitions does not preclude the DOL from providing interpretive guidance nor would it expand the regulatory authority of the DOL or modify a fiduciary’s obligations under section 404 of ERISA.