In a strong display of bipartisan support for employee ownership, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) unanimously advanced two bills this week designed to strengthen and expand the use of Employee Stock Ownership Plans (ESOPs). The legislation, aimed at providing greater regulatory clarity and formal representation for ESOPs at the Department of Labor (DOL), will now move to the full Senate for consideration.
Overview of Committee Action
The HELP Committee passed two ESOP-related bills:
- The Retire Through Ownership Act (S. 2403)
- The Employee Ownership Representation Act (S. 1728), which incorporates provisions from S. 2474
A third bill, the Employee Ownership Fairness Act of 2025, which would exempt ESOP contributions from the current annual defined contribution cap ($23,500 for 2025), was removed from the vote due to concerns about its fiscal cost. No vote was held.
Retire Through Ownership Act (S. 2403)
Sponsored by Senators Roger Marshall (R‑KS) and Tim Kaine (D‑VA), this bill seeks to provide ESOP fiduciaries with a statutory safe harbor when relying on independent business valuations and appraisals conducted in accordance with IRS Revenue Ruling 59-60.
The bill is designed to alleviate uncertainty around the “adequate consideration” standard that has made some plan sponsors and trustees hesitant to adopt or expand ESOPs due to potential fiduciary liability. If passed, the bill would bring long-sought clarity to valuation standards and streamline the implementation of new ESOPs and ESOP transactions.
Employee Ownership Representation Act (S. 1728 / S. 2474)
Introduced by Senate HELP Chair Bill Cassidy (R‑LA), with bipartisan support from Senators Bernie Sanders (I-VT), Maggie Hassan (D-NH), and Steve Daines (R-MT). This legislation would formalize a new “Advocate for Employee Ownership” position within the Department of Labor and designate two seats on the DOL’s ERISA Advisory Council for representatives with ESOP expertise.
This added representation is expected to help ensure ESOPs are better understood and more effectively supported in future ERISA-related rulemaking and policy discussions. The bill also extends the DOL’s ESOP initiative to include both S‑ and C‑corporation ESOPs, ensuring broader inclusivity in representation and outreach.
What This Means for Business Owners and ESOP Stakeholders
These developments mark a meaningful step forward for employee ownership advocates and companies exploring ESOPs as a business transition strategy. If enacted, the bills would reduce barriers to implementation, improve fiduciary guidance, and elevate ESOP voices within federal policymaking. Together, they represent the most significant legislative momentum around ESOPs in years.
What’s Next
The two passed bills now await scheduling for debate and a vote before the full U.S. Senate. No vote date has been announced.
How Grassi Can Help
Grassi’s ESOP advisors work closely with business owners and stakeholders at every stage of the ESOP lifecycle, from initial feasibility studies and transaction structuring to ongoing compliance and employee communication. As momentum for employee ownership grows at the federal level, now is the time to assess whether an ESOP could be the right succession or growth strategy for your company.
To learn more about our ESOP services and how we can help your company transition to employee ownership, visit: www.grassiadvisors.com/services/advisory/esop-services.
