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H 7570Economic Development

State Affairs and Government - The Rhode Island Center for Employee Ownership

This bill creates a state office to help small business owners sell their companies to their employees upon retirement.

Held for study
Population
Affected
15
Email Legislator
Introduced Feb 6, 2026Committee House Small Business

Plain-English Summary

This legislation establishes the Rhode Island Center for Employee Ownership (RICEO) within the state's Business Development Center. The primary purpose of RICEO is to assist small business owners, particularly those nearing retirement, in transitioning their companies to employee-owned models such as worker cooperatives or Employee Stock Ownership Plans (ESOPs). The bill outlines the responsibilities of a new director to provide technical assistance, education, and referrals to legal and financial resources. It also creates an advisory committee comprised of government officials and business representatives to coordinate these efforts and promote business retention in the state.

For younger readers

This bill helps keep local stores and businesses open when the owner gets old and wants to stop working. Instead of closing the store, the bill creates a new helper group called a Center. This Center teaches the workers how to buy the business from the owner. This way, the workers become the new owners, keep their jobs, and the store stays open for the neighborhood. It is like a team of players buying the team from the coach so they can keep playing the game together.

Who & Where It Applies

Impacted groups
Small business ownersEmployees of small businessesWorker cooperativesRetiring business ownersFinancial institutions
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Promotes economic democracy by empowering workers to become owners, thereby enabling them to build wealth and share directly in the profits they help generate.
  • Helps prevent mass layoffs and economic instability in local communities by keeping legacy businesses open rather than allowing them to be closed or bought by large corporate conglomerates.
  • Encourages business models like worker cooperatives that traditionally offer better wages, benefits, and job security compared to standard corporate ownership structures.
  • The legislation focuses on technical assistance and referrals but does not appear to allocate direct financial grants or low-interest funding to help workers finance the initial purchase of these businesses.
  • While it supports worker cooperatives, it also supports Employee Stock Ownership Plans (ESOPs), which do not always guarantee democratic workplace management or voting rights for workers in the same way cooperatives do.
  • Relies on market mechanisms and voluntary participation by business owners rather than mandating worker first-right-of-refusal when a business is put up for sale.
For Conservatives
  • Supports the retention and survival of private small businesses, which are viewed as the backbone of the economy, without resorting to government bailouts or state ownership.
  • The program is voluntary and educational in nature, offering resources to business owners who choose to use them rather than imposing new mandates on how businesses must operate.
  • Encourages succession planning that keeps capital and commerce within the local economy, potentially stabilizing the tax base without raising taxes.
  • Expands the size of state government by creating a new office (RICEO) and a new director position, which will require taxpayer funding for salaries and administration.
  • Involves the government in the private marketplace by actively promoting specific business models over others, which could be seen as the state picking winners and losers.
  • Establishes a new advisory committee populated by government officials and appointees, creating more bureaucracy and potential red tape in the business sector.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 89 additions

It is enacted by the General Assembly as follows:

SECTION 1. Findings. The general assembly finds the following:

(1) Small businesses are the backbone of Rhode Island’s economy, comprising ninety-eight and nine-tenths percent (98.9%) of all businesses in the state; and

(2) The Small Business Administration’s Office of Advocacy found that retirement is the fastest-growing reason nationwide for small business closures; and

(3) Roughly fifty-six percent (56%) of small business owners in Rhode Island are aged fifty-five (55) or over, meaning many are at or approaching retirement age; and

(4) In a survey published by the Business Enterprise Succession Taskforce, a coalition of Rhode Island small business advocates assembled by Lt. Governor Matos, sixty-six percent (66%) of respondent small business owners have not recently conducted a business valuation, a crucial component in the process of selling a small business; and

(5) Employee Ownership presents an exciting opportunity to keep legacy small businesses in Rhode Island open while also extending the opportunity to a new class of prospective owners who, on their own, may not have the means to start or purchase a small business; and

(6) Studies have shown employee ownership can help reduce employee turnover, and can yield higher wages and better benefits for the community as well as the local economy compared to other ownership models; and

(7) At least twenty-four (24) other states in the U.S. already have existing Centers for Employee Ownership, including Massachusetts, Colorado, Vermont, Pennsylvania, and New Jersey.

SECTION 2. Title 42 of the General Laws entitled "STATE AFFAIRS AND GOVERNMENT" is hereby amended by adding thereto the following chapter: 42-169-1. Creation of the Rhode Island center for employee ownership.

(a) There shall be established in the State of Rhode Island an office known as the Rhode Island center for employee ownership (RICEO), which shall be under the charge of an officer known as the director of the Rhode Island center for employee ownership. The RICEO shall be housed under the business development center as established in § 42-64-39. The purpose of the RICEO will be to secure resources, provide technical assistance, and serve generally as a concierge service both to legacy business owners and worker owners interested in transitioning a small business to an appropriate employee-owned business model.

(b) Responsibilities of the director. The director shall have responsibility for the organization, administration, and operation of the RICEO and shall have the ability to contract out services as required to provide sufficient technical assistance to relevant small business enterprises. Specifically, the director shall:

(1) Provide a referral service to help qualified business owners and worker owners find appropriate legal, financial, and technical employee ownership resources and services; and

(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, chambers of commerce, unions, small business development centers, economic and workforce development organizations, and nonprofit entities to promote and educate employee ownership benefits and succession models; and

(3) Work with state agencies whose regulations and program affect employee-owned businesses, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers; and

(4) Create a network of technical support and service providers for businesses considering employee-owned business models including, but not limited to, certified professional accountants, lawyers, municipal and state government agencies; and

(5) Work with financial institutions and appropriate state, private, and nonprofit entities to shape and implement guidance on lending to broad-based employee-owned business models; and

(6) Develop programming to raise awareness broadly about employee ownership models, especially as a remedy to the state’s ongoing small business succession crisis; and

(7) Create and maintain an inventory of employee-owned businesses in the state, including employee stock ownership plans, worker cooperatives, and employee-ownership trusts; and

(8) Measure the success of program outreach and conduct research to determine whether Rhode Island’s small business owners experience increased growth, stability, or viability of their businesses and additional employee engagement in employee ownership structures as a result of the efforts of the RICEO; and

(9) Organize, chair, and call to order the RICEO advisory committee. 42-169-2. RICEO advisory committee.

(a) Established. There shall be within the RICEO a committee known as the RICEO advisory committee (“the committee”).

(b) Purpose. The purpose of the committee is to coordinate state resources, increase partnership and collaboration between state agencies and the small business community about employee-owned business models and succession planning, and to promote the work of the RICEO generally. State agencies assigned to serve on the committee shall provide relevant information and technical assistance when appropriate. The committee may request, through the relevant state agency, any clerical and technical assistance it may deem necessary to accomplish its purpose. Any vacancy of an appointed member, which may occur in the committee shall be filled by appointment by the respective appointing authority.

(c) Organization.

(1) The membership of the committee shall consist of the following five (5) individuals ex officio, or their designee:

(i) The director of the department of labor and training;

(ii) The director of the department of business regulation;

(iii) The director of the secretary of state’s business services division;

(iv) A representative from the Rhode Island commerce corporation;

(v) The director of the Rhode Island district of the small business administration;

(2) The membership of the committee shall consist of the following eleven (11) individuals, to be designated by their respective bodies, for two (2) year terms:

(i) One member from each of the two (2) major caucuses of the house of representatives to be appointed by the speaker of the house and one member from each of the two major caucuses of the senate to be appointed by the president of the senate; and

(ii) The following members appointed by the lieutenant governor:

(A) One representative from a worker cooperative business;

(B) One representative from an employee stock ownership plan business;

(C) One representative from an employee-ownership trust business model;

(D) One representative from any of the chambers of commerce in Rhode Island;

(E) One representative from a Rhode Island-based academic institution with recognized expertise in employee ownership;

(F) One representative from the small business development center; and

(G) One representative from the Rhode Island Society of CPAs.

(3) The committee shall be led by a chair selected and voted on by members of the committee. The chair shall serve a one-year term,+ but may serve more than one term if selected to do so by members of the committee, and shall remain in place until a successor is voted on and approved by the members of the committee. The director of the RICEO shall chair the first meeting prior to the election of the chair. 42-169-3. Definitions. For the purposes of this section, unless the context otherwise requires:

(1) “Employee-owned business model” means any arrangement in which a company’s employees own shares in their company or the right to the value of shares in their company including, but not limited to, worker cooperatives, as defined in § 7-6.2-2, or Employee Stock Ownership Plan (ESOP), as defined in 26 U.S.C. § 4975(e)(7), or Employee Ownership Trust, in which a trust holds a controlling stake in a business and benefits all employees on an equal basis;

(2) “Legacy small business” means any existing small business enterprise currently incorporated in Rhode Island not presently incorporated under any employee-ownership business model; and

(3) “Succession planning” means the general practice of replacing or passing on leadership roles within a business. 42-169-4. Severability. If any portion of this law is found by a court of competent jurisdiction to be unlawful, such finding shall not affect any other portion of said law not specifically so found.

SECTION 3. This act shall take effect upon passage.