New Federal Advocate Position Created to Boost Employee Ownership and Resolve ESOP Disputes

The Advocate for Employee Ownership Act establishes a new, dedicated position—the Advocate for Employee Ownership—within the Department of Labor’s existing Employee Ownership Initiative. Think of this as creating a specialized policy expert whose sole job is to promote, educate, and troubleshoot everything related to Employee Stock Ownership Plans (ESOPs) and other employee ownership structures. The goal is simple: make it easier for companies to adopt this model and ensure the system works for the employees who own a piece of the business.

This new Advocate gets appointed by the Secretary of Labor, and here’s a detail that stands out: the bill allows this person to be hired without the usual competitive federal hiring process (SEC. 2). The idea is to get the right expert in place fast. Once hired, the Advocate becomes the central hub, required to connect the Department of Labor with employers, workers, and existing ESOP sponsors. They are also tasked with educating the public on how to set up and maintain these structures.

The Go-To Person for ESOP Headaches

One of the most practical parts of this bill involves dispute resolution. If there’s a disagreement or communication breakdown between an ESOP sponsor, a fiduciary (the person legally managing the plan), or an employee participant and the Department of Labor, the Advocate steps in to mediate and smooth things over (SEC. 2). For an employee worried about their retirement plan or a small business owner trying to navigate complex regulations, this could mean having a dedicated, high-level contact to cut through the bureaucracy.

Beyond troubleshooting, the Advocate is required to look for ways to improve the system. This includes recommending changes to laws or rules, especially concerning how employee-owned businesses get access to capital. They must also coordinate efforts with other key agencies, like the Small Business Administration (SBA), Treasury, and Commerce, to promote employee ownership as a viable business succession strategy. This interagency coordination is crucial because setting up an ESOP touches on tax law, finance, and labor law all at once.

Impact on Rulemaking and Accountability

The Advocate won’t just be reacting; they’ll be proactive in shaping policy. The bill mandates that whenever the Secretary of Labor writes new rules or interprets existing laws related to ESOPs, they must first ask the Advocate for advice and feedback (SEC. 2). This gives the Advocate significant influence over the regulatory landscape, ensuring that new rules are practical and supportive of employee ownership.

To keep things transparent, the Advocate must submit an annual public report to Congress (SEC. 2). This report has to summarize all the help requests they received, evaluate their dispute resolution efforts, and, critically, identify any major problems or roadblocks they’ve spotted that are hindering the growth of employee ownership. For busy people, this annual report could become a valuable resource for tracking the health of the employee ownership movement and holding the Department of Labor accountable for its promotion.