2026 -- H 7570

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LC004776

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND CENTER

FOR EMPLOYEE OWNERSHIP

     Introduced By: Representatives Diaz, McEntee, Shallcross Smith, and Edwards

     Date Introduced: February 06, 2026

     Referred To: House Small Business

     (Lieutenant Governor)

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:

CHAPTER 169

THE RHODE ISLAND CENTER FOR EMPLOYEE OWNERSHIP

     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

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     (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:

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     (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.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- THE RHODE ISLAND CENTER

FOR EMPLOYEE OWNERSHIP

***

     This act would establish the Rhode Island center for employee ownership to facilitate

businesses in transitioning to an employee-owned business model.

     This act would take effect upon passage.

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