Employee Ownership Network

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.

About the Employee Ownership Commission

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:

  • Establishing a wide-reaching network of technical support for businesses wanting to become employee-owned;
  • Educating businesses and communities on the benefits of becoming employee-owned businesses;
  • And finally, identifying — and ultimately removing — any barriers to the development and advancement of employee-owned businesses.

Effective June 15, 2019 for terms expiring June 15, 2021

Minsun Ji of Denver, Colorado
Stephanie Lynee Gripne of Denver, Colorado
John Allen Tate of Centennial, Colorado
James Rashad Coleman of Denver, Colorado
Kerry Lynn Siggins of Durango, Colorado
Jennifer K. Briggs of Windsor, Colorado

Effective June 15, 2019 for terms expiring June 15, 2023

Halisi Dawn Vinson of Denver, Colorado
Jason Russell Wiener of Boulder, Colorado
Douglas Lee Dell of Arvada, Colorado
Daniel G. Hobbs of Avondale, Colorado
Steven Michael Johnson of Broomfield, Colorado
Sandra Lee Shoemaker of Larkspur, Colorado

Commissioner Biographies

July 31, 2019 – Agenda & Minutes

September 3, 2019 – Agenda & Minutes

October 1, 2019 – Agenda & Minutes

October 29, 2019 – Governors EO Legal Roundtable #1 Agenda & Minutes

November 5, 2019 – Agenda & Minutes

December 3, 2019 – Agenda & Minutes

December 3, 2019 – Governors EO Legal Roundtable #2 Agenda & Minutes

January 7, 2020- Agenda & Minutes

February 4, 2020 – Meeting postponed due to weather

March 3, 2020 – Agenda , MinutesEO Bankers Roundtable Agenda

April 7, 2020 – Canceled due to COVID-19

May 5, 2020 – Canceled due to COVID-19

June 2, 2020 – Virtual meeting Agenda & Minutes

July 7, 2020 – Virtual meeting Agenda & Minutes

August 4, 2020  – Virtual meeting Agenda

Planning Meeting:
June 24 – Agenda & Minutes
September 19 – Agenda & Minutes
September 26 – Agenda & Minutes 
October 10 –Agenda & Minutes
October 17 – Agenda & Minutes
October 24 – Agenda & Minutes
October 31 – Agenda & Minutes
November 7 Agenda & Minutes
November 14 Agenda & Minutes
November 21 Agenda & Minutes
November 27 Agenda & Minutes

January 7 – Agenda
February 18 – Agenda
March 3 – Agenda & Minutes

Policy & Finance:
September 24 – Agenda & Minutes
October 29 –  Agenda & Minutes
December 18 – Agenda & Minutes

January 22 – Agenda & Minutes
February 18 – Agenda


Types of Employee Ownership

The two primary forms of employee ownership are Worker Cooperatives and Employee Stock Ownership Plans (ESOPs).

What is a Worker Cooperative?

  • Cooperatives are member-owned companies in which governance control is on a one person/one vote basis. In a worker cooperative, only those who work in the business are eligible to become members.
  • Operational decisions can be participatory or more conventionally hierarchical.
  • Cooperatives are typically set up as corporations, and in some states, there are worker cooperative statutes.
  • Workers who are members are equal owners, elect the board, and vote on major company decisions on a one-person/one-vote basis.
  • Members receive a share of any annual net income, usually distributed on the basis of hours worked.

How Does a Cooperative Work?

  • Typically, employees become eligible for membership after working for the business for a period of time specified in the bylaws.
  • After the employee has been accepted for membership, they purchase a membership share which, in most cases, has a fixed value.
  • Most cooperatives establish an internal account for each member to which their share of net income is allocated, in proportion to hours worked or some other equitable measurement of their contribution. This share of income is deductible to the company, but taxable to the employee.
  • When employees leave, the co-op buys back their membership share and pays out their account balances. While members are employed, the cooperative must pay out at least 20% of their annual patronage allocation in cash, in order to help them pay taxes owed.

Benefits of Worker Cooperatives

  • Lower set-up costs than other forms of employee ownership.
  • Persons who sell at least 30% of the shares in a business to a worker cooperative are exempt from capital gains taxes if the gain is reinvested in U.S. securities.
  • Worker cooperatives allow members to build equity and participate in the governance of their workplace.

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?

  • An ESOP is an ERISA-qualified employee benefit plan that invests primarily in stock of the sponsoring company.
  • It is a qualified retirement plan, like a profit sharing plan, which is able to borrow money. Allocations to individual employees’ accounts are typically based on salary.
  • ESOPs are often used in closely-held companies to buy some or all of the shares of existing owners.
  • As a qualified plan, it is subject to the retirement plan qualification rules in the Internal Revenue Code and under the Employee Retirement Income Security Act (“ERISA”).

How does an ESOP work?

  • Employees have indirect ownership as “beneficial owners” of company stock through a trust which invests primarily in “employer securities” for the benefit of eligible employees.
  • The company contributes to the plan — not the employees.
  • Contributions are tax deductible.
  • Employee voting rights can be, but don’t have to be, limited to major company decisions.
  • When employees leave, they are paid out their account balances, based on the value of the company stock which is determined annually.

Benefits of ESOPs

  • An ESOP creates an opportunity for an owner to diversify his or her investment holdings away from the business and establishes a market for stock which can be useful over time.
  • It can also be a tax-advantaged corporate financing tool.
  • For an S-corporation there are additional benefits; in the case of a 100% ESOP-owned S-corporation there is no Federal income tax.
  • An ESOP can be used to motivate employees to think and act as owners in the way they do their jobs every day.
  • Employees benefit from an added source of retirement savings.
  • Persons who sell at least 30% of the shares in a business to an ESOP are exempt from capital gains taxes if the gain is reinvested in U.S. securities.

Colorado Employee Ownership Loan Pilot Program

The pilot program will fund approximately 10 business loans, up to $10,000 per loan. Loan funding is available for no greater than fifty percent of the cost of technical assistance costs, not to exceed $10,000. Loans must be held by the owner of the existing business. Favorable loan rates and terms offered by participating lenders.

Application Requirements

  • Colorado business in existence for at least two years
  • Minimum of three employees
  • Annual net revenue equal to or less than $5 million
  • Offering employee ownership opportunity to every employee
  • Plans to enter, or has entered into, an employee-ownership agreement with at least half of its employees

Colorado businesses interested in applying or learning more, please contact John Kovacs at 303-892-3840 or via email at john.kovacs@state.co.us.

Non-profit lenders, CDFIs and banks interested in learning more about becoming a lender partner, please contact Nikki Maloney, 303-892-3840 or via email nikki.maloney@state.co.us.

Colorado Employee Ownership Grant Pilot Program

Colorado businesses meeting the following criteria are welcome to apply. The first round of grant funding closes Monday, June 1, 2020.

Application Requirements
Grant funding of $2500 is available to Colorado small businesses to pay for professional technical services required for Employee Ownership (EO) business structural transitions (accounting, legal, and business valuation services), or to repay the Colorado EO Loan they received for the transition. Applicants are required to be Colorado businesses that have fully transitioned to an employee ownership structure, such as Cooperative, Stock Appreciation Rights, Profit Sharing, Employee Ownership Trust, etc. and must meet the following requirements:

  • Complete transition to employee ownership structure within 12 months
  • Operate in Colorado for at least two years
  • 3 or more full time employees
  • Annual revenue equal to or less than $1 million
  • Employee Ownership is offered to 100% of the company’s employees
  • Matching Fund Requirement for $1: $1 (non-State funding: State funding) in cash

Grant Application

business idea sketch and businessman in arrow exit
Provide an exit strategy.

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.

Smiling African American male employee look at colleague chattin
Attract and retain good employees.

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.

Woman bicycle engineer is repairing a bike in the workshop. Bicycle mechanic in a workshop in the repair process. Technical expertise taking care Bicycle Shop
Improve performance.

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).

Young employee startup workers group stacking hands at urban studio during entrepreneurship brainstorming project - Business concept of human resources on working time - Start up internship at office
Improve wages and benefits.

Employee-owned businesses tend to pay higher wages and provide better benefits.

man with open banner at bar or restaurant window
Provide tax benefits.

Certain employee ownership structures qualify for tax benefits, which can be substantial.

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John Kovacs John Kovacs Business Navigator & Employee Ownership Program Analyst John.Kovacs@state.co.us
Glenn Plagens Glenn Plagens Director of Business Support & Rural Prosperity glenn.plagens@state.co.us
Nikki Maloney Employee Ownership Grant & Operations Manager nikki.maloney@state.co.us