New law aims to help NJ workers buy the businesses that employ them
Sherrill signs measure offering financial and technical support for employee-ownership conversions
Gov. Mikie Sherrill signed legislation Friday expanding state assistance for New Jersey businesses seeking to transfer ownership to their employees.
The new law, S4218/A5016, sponsored by Sen. Andrew Zwicker, directs the New Jersey Economic Development Authority to establish an Employee Ownership Transition Program. It will support conversions to employee stock ownership plans, worker cooperatives, employee ownership trusts, and other arrangements that give workers shares in a company or rights to their value.
Eligible New Jersey businesses with at least 20 full-time employees may receive up to 90% of the cost of an employee-ownership feasibility study, capped at $35,000. The studies will examine factors such as a company’s earnings, management structure, workforce, benefits, value, and possible ownership arrangements.
The program will also offer businesses consulting, education, outreach, and early technical assistance.
The law creates a revolving fund that can provide low-interest loans for majority employee-ownership conversions and expenses needed to sustain companies after a transition. As borrowers repay their loans, the money can be used for additional projects.
The Governor’s Office called it the first state fund in the country created to directly finance employee-ownership conversions.
The legislation does not specify how much money will be put in the fund. Sources may be state appropriations, federal funding, private contributions, money transferred by the Economic Development Authority, and loan repayments.
The nonpartisan Office of Legislative Services said the program’s cost cannot yet be determined because loan amounts, interest rates, repayment terms, and the fund’s initial capitalization have not been established. The authority’s existing Employee Stock Ownership Plan Assistance Program is supported by a $2.7 million state appropriation.
Sherrill said employee ownership can help keep businesses and jobs in New Jersey as owners retire or make succession plans.
The Governor’s Office said New Jersey has nearly 90 employee stock ownership plans holding almost $65 billion in assets for more than 423,000 employees and retirees.
Krystal Knapp is the founder, executive director, and publisher of The Jersey Vindicator and the founder of Planet Princeton. She has more than two decades of experience reporting in New Jersey, including 10 years at The Trenton Times, where she was the newsroom’s public records and computer-assisted reporting expert. Her work has been recognized by the New Jersey Press Association and the Center for Cooperative Media. You can reach her at Krystal AT jerseyvindicator.org.