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S 2744Labor Relations

Labor and Labor Relations - The Rhode Island Opportunity for Employee Ownership Act

Business owners must give current employees a thirty-day opportunity to buy the company before selling it to the general public.

Introduced
Population
Affected
15
Email Legislator
Introduced Feb 27, 2026Committee Senate Labor & Gaming

Plain-English Summary

This legislation establishes the "Rhode Island Opportunity for Employee Ownership Act." It requires owners of qualifying small businesses to notify their employees if they intend to sell the business. Before the owner can publicly list the business for sale, they must provide employees with a 30-day window to consider purchasing the company as a worker cooperative. The bill outlines exceptions for sales to family members or transfers caused by emergencies. Additionally, it directs state agencies to maintain a resource list to assist employees interested in converting a business into a cooperative.

For younger readers

Imagine a person owns a store or a small company and decides they want to sell it. This new rule says that before they can put a "For Sale" sign up for strangers to see, they have to tell the people who work there first. The workers get thirty days to decide if they want to put their money together and buy the business themselves. This gives the workers a special chance to become the owners. This rule does not apply if the owner is selling the business to their own family or during an emergency.

Who & Where It Applies

Impacted groups
Small Business OwnersEmployees of Small BusinessesWorker CooperativesRhode Island Commerce CorporationRhode Island Small Business Development Center
Impacted communities
All

Constitutional & Fiscal Check

Moderate risk

There is a moderate constitutional risk regarding the First and Fifth Amendments. By mandating a delay before an owner can "share the intent to sell publicly," the bill restricts commercial speech. Furthermore, restricting the sale process of private assets to a specific group (employees) for a set time could be challenged as an interference with property rights, though courts often uphold "rights of first refusal" if they do not destroy the property's value.

Estimated cost
None
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Promotes economic democracy and reduces wealth inequality by giving workers a legal pathway to own the means of production and share in the profits of their labor.
  • Helps prevent predatory buyouts by private equity firms or large corporations, keeping capital within the local community and preserving the character of local businesses.
  • Increases job security for the working class, as employee-owned cooperatives are statistically less likely to lay off staff or relocate operations compared to traditional corporate ownership.
  • The thirty-day window is likely too short for employees to organize, secure financing, and form a legal cooperative structure, potentially making the opportunity symbolic rather than practical.
  • Lacks provisions for state-backed financial assistance or loan guarantees, meaning low-income workers may still be unable to afford the purchase even with the exclusive window.
  • Does not strictly penalize owners who fail to comply, potentially allowing businesses to bypass the requirement with little consequence to the detriment of the workers.
For Conservatives
  • Encourages local ownership and anchors capital within the state, preventing Rhode Island businesses from being absorbed by out-of-state conglomerates or global entities.
  • Promotes the values of private property ownership and personal responsibility by giving employees a chance to become entrepreneurs and business owners.
  • Includes reasonable exemptions for family transfers, ensuring that business owners retain the right to pass their legacy to their children without government interference.
  • Infringes upon private property rights by restricting a business owner's freedom to sell their asset to the highest bidder when they choose, potentially devaluing the business.
  • Imposes a mandatory thirty-day delay on sales, which could cause owners to miss favorable market conditions or lose potential buyers who are unwilling to wait.
  • Creates additional government intrusion and regulatory hurdles for small business owners who are already burdened by excessive state mandates.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 58 additions

SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR RELATIONS" is hereby amended by adding thereto the following chapter: 28-61-1. Definitions. As used in this chapter, the following words shall have the following meanings unless the context clearly requires otherwise:

(1) "Owner" means the owner(s) of a qualified business prior to a qualified business sale.

(2) "Qualified business" means an entity that:

(i) Has operated a principal place of business in Rhode Island for at least one year;

(ii) Is a taxpayer subject to Rhode Island taxes pursuant to title 44 including, but not limited to, a C corporation, S corporation, limited liability company, partnership, limited liability partnership, or a sole proprietorship;

(iii) Is a privately held business;

(iv) Has at least three (3) employees not including the owner, or other similar pass-through entity;

(v) Meets the relevant size standards for a small business by industry, as set forth by the U.S. Small Business Administration in 13 CFR§ 121.201;

(vi) Is not a publicly traded company; and

(vii) Is not an exempt business as defined by one of the following circumstances: the sale or transfer of ownership to a family member; the sale or transfer of the business is necessitated by death or medical condition; the sale or transfer is compelled by court order; the sale or transfer of the business is necessitated in the event of deployment, natural disaster, or other emergency circumstance

(3) "Worker cooperative business" means:

(i) A workers' cooperative corporation organized under chapter 6.2 of title 7; or

(ii) A limited liability company (LLC) or limited liability partnership (LLP), in either case, whose bylaws, operating agreement or partnership agreement, as applicable, meets the following requirements:

(A) All persons who meet the definition of employee-owner ("worker-owner") according to the bylaws, operating agreement or partnership agreement of the business are voting members of the company, and have equal voting rights in all decisions brought before the membership; and

(B) Any profits distributed to said worker-owners by the company are distributed on the basis of their patronage in the company, with patronage measured based on the labor supplied to the company.

(4) "Worker cooperative business resource list" means a list of local and regional entities qualified to offer guidance, support, and/or technical assistance with starting, converting, or maintaining an employee-owned business. This resource list shall be created and maintained by the Rhode Island small business development center, or its designee, publicly visible and searchable on their website and updated on a regular basis. 28-61-2. Notifying current employees about the sale of a qualified business.

(a) In the event the owner of a qualified business decides to sell the qualified business, the owner shall notify all current full-time and part-time employees at the business.

(b) The notice shall be posted on the date listed in the notice in a prominent location to which all employees have access, or if no such place exists, via an existing electronic medium used to communicate with employees.

(c) The notice shall communicate:

(1) Date of the notice;

(2) The owner's intent to sell the business;

(3) A date thirty (30) days from date of the written notice within which employees have an exclusive opportunity to officially initiate a process to potentially purchase the business as a worker cooperative. After this date, the qualified business owner may share the intent to sell publicly;

(4) Information about the worker cooperative business resource list, including the URL or website; and

(5) Any price the owner of the qualified business proposes for the business sale. 28-61-3. Electronic notification of requirements. Notification of the provisions of this chapter shall be included in the worker cooperative business resource list and communicated to potential qualifying businesses by the Rhode Island commerce corporation established pursuant to § 42-64-4. 28-61-4. Rules and regulations. The commerce corporation may issue reasonable rules and regulations consistent with this chapter to carry out the implementation of the responsibilities of this chapter.

SECTION 2. This act shall take effect January 1, 2027.