TRENTON – The Senate Budget and Appropriations Committee advanced legislation sponsored by Senators Andrew Zwicker and Shirley Turner, which would require the New Jersey Economic Development Authority (EDA) to establish an “Employee Ownership Transition Program” to provide financial assistance and educational resources to encourage businesses to explore transitioning their ownership structure to an employee ownership model.

“New Jersey is facing a generational transition in business ownership, so we need new policies that will keep successful companies throughout the state operating and growing in the years to come,” said Senator Zwicker (D-Middlesex/Mercer/ Somerset/Hunterdon). “Employee ownership is a proven model that helps workers build wealth, strengthen their businesses, and preserve well-paying jobs in their communities. This legislation will allow the EDA to help businesses make the transition to employee ownership possible.”

The bill, S-4218, would define “employee ownership model” to mean an arrangement in which a business’s employees own shares in the business or the right to the value of shares in the business. Employee ownership models would include employee stock ownership plans, worker cooperatives, employee ownership trusts, direct employee ownership, stock options, stock grants, synthetic equity, and any other broad-based employee ownership structure.

“In helping more companies transition to employee ownership structures, we will keep them rooted in New Jersey, protecting the jobs that make up the fabric of our communities, all while giving employees a meaningful stake in the work they already do every day,” said Senator Turner (D-Mercer/Hunterdon). “This program will provide businesses with the guidance and financing they need to turn succession challenges into long-term security.”

Currently, the EDA administers the “Employee Stock Ownership Plan Assistance Program,” which provides partially covered feasibility study services for New Jersey businesses interested in transitioning to employee-owned businesses. This bill would codify and expand this program. Additionally, under this bill, any eligible contractors that are approved under the existing program would automatically qualify as eligible contractors for the “Employee Ownership Transition Program.”

Under the bill, the EDA would designate an authority employee or appoint a qualified individual to serve as the Director of Employee Ownership, who would report directly to the EDA's Chief Executive Officer. The EDA would also establish an Advisory Commission on Employee Ownership, which would be required to advise the EDA and the Director of Employee Ownership on strategies to expand employee ownership models in the state and make recommendations regarding program design, outreach, and metrics for success.

Additionally, the bill would allow the EDA to issue low-interest loans from the revolving loan fund to eligible businesses, participating businesses, and any other entities determined appropriate by the EDA, for the purpose of facilitating majority employee ownership transitions and reasonable transaction-related and post-transition needs that support the long-term sustainability of an employee-owned business.