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What is employee ownership?

Employee ownership, also known as worker ownership, gives workers a financial stake in their company.

There are different forms of employee ownership, including:

• Employee stock ownership plans (ESOPs): ESOPs are federally regulated retirement benefit plans that are managed by plan fiduciaries who must administer them prudently and with undivided loyalty to the plan, its participants, and beneficiaries. That means that the fiduciaries must act solely in the interests of the plan, its participants and beneficiaries. In an ESOP, the owner of the company sells all or a portion of the shares of the company to the ESOP, and the employees of the company who participate in the ESOP have an ownership stake in the company.
• Worker cooperatives: A democratic model where workers own and govern the business.
• Employee ownership trusts: In this model, a trust owns part or all of the business and ensures it operates for the benefit of workers.

All of these forms of employee ownership enable workers to share in the profits that their labor makes possible and, at their best, foster a more inclusive and engaged workplace.

Employee ownership is open to all workers, not just senior leaders, so long as they meet basic requirements that are set forth in the documents that govern the arrangement.

What is the Employee Ownership Initiative?

The Department of Labor’s Employee Ownership initiative was launched in 2023 as part of the Worker Ownership, Readiness, and Knowledge (WORK) provisions of the SECURE 2.0 Act of 2022. These provisions, set forth in Section 346 of the SECURE 2.0 Act, include a number of different ways in which Congress sought to promote worker ownership and educate both workers and employers about the options available.

As part of the Department’s Employee Ownership Initiative, EBSA established a new Division of Employee Ownership within EBSA’s Office of Outreach, Education and Assistance. The division’s primary mandate is to encourage new and existing state programs that promote employee ownership and employee participation. EBSA leadership and the Division of Employee Ownership have been working closely with members of the worker ownership community since the division was created to receive input and suggestions regarding how the division can best serve the community and accomplish the goals of the law.

As its first major project, the Division of Employee Ownership is creating a clearinghouse of tools and resources that state agencies and other stakeholders can use to carry out programs such as:

• Outreach and education about different forms of worker ownership, business succession planning, and worker participation
• Technical assistance for companies transitioning to worker ownership, beginning with assessing feasibility
• Training in worker participation and financial education techniques

Our ultimate objective is to foster broad-based worker ownership that increases workers’ financial security and enhances their participation in the workplace.

Are government grants available for employee ownership programs?

Currently, no government funds are available through the Department of Labor to administer a grant program to support new and existing employee ownership programs in the states. If Congress provides appropriations so that funds become available, details about the grant program will be posted on this website.

Where can I learn more about employee ownership and the Employee Ownership Initiative?

Please contact the Division of Employee Ownership at Ownership@dol.gov.

We look forward to engaging with workers, business owners and employers, service providers, trade and professional organizations, unions, state and local government leaders, and other stakeholders as we develop this initiative.