Housed in the Colorado Office of Economic Development and International Trade, the Employee Ownership Network brings together subject matter experts such as employee-owned businesses, attorneys and economic development experts to promote employee ownership in Colorado. Employee-owned businesses promote a higher quality of living for the employee-owners themselves – including higher wages and a longer job tenure — and secure greater economic stability for the communities.
The Commission on Employee Ownership was established on April 10, 2019 by Executive Order. Governor Polis established the commission to support the Employee Ownership Network by:
The two primary forms of employee ownership are Employee Stock Ownership Plans (ESOPs) and Worker Cooperatives.
What is a Worker Cooperative?
How Does a Cooperative Work?
Benefits of Worker Cooperatives
Employee Stock Ownership Plans, or ESOPs, were designed as a way to put ownership into the hands of American workers. Begun in 1974 with the passage of federal laws, ESOPs comprise an estimated 11,000 companies in the U.S., employing an estimated 11.5 million workers. The laws enacted to encourage employee ownership allow certain incentives for lenders, selling owners, and ESOP companies. The tax advantages of ESOPs often make them a lower-cost source of corporate financing than conventional sources.
What is an ESOP?
How does an ESOP work?
Benefits of ESOPs
In almost every small business, the owner or owners will eventually want to leave. Selling the business to employees can be a way to provide continuity and preserve the culture of the business.
Many small businesses have trouble attracting and retaining good employees. Using employee ownership as an employee benefit can be an important way to address this problem.
Several reliable studies indicate that, on average, employee-owned firms perform substantially better than non-employee-owned firms when ownership is combined with employee participation in decisions affecting their work. A survey published in the ESOP Report (August 2003) revealed that ESOP companies outperformed the three major stock indices in 2002: the Dow Jones Industrial Average, the NASDAQ composite, and the S&P 500. This means “once again that the decision to become employee-owned through an ESOP means better company performance and greater wealth creation for the employee owners.” (ESOP Report 8/03).
Employee-owned businesses tend to pay higher wages and provide better benefits.
Certain employee ownership structures qualify for tax benefits, which can be substantial.
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