2026 -- H 7964

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LC005164

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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 LABOR AND LABOR RELATIONS -- THE RHODE ISLAND

OPPORTUNITY FOR EMPLOYEE OWNERSHIP ACT

     Introduced By: Representatives Stewart, Potter, Cruz, Kislak, Cotter, Morales, Furtado,
McEntee, Tanzi, and Donovan

     Date Introduced: February 27, 2026

     Referred To: House Labor

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR RELATIONS"

is hereby amended by adding thereto the following chapter:

CHAPTER 61

THE RHODE ISLAND OPPORTUNITY FOR EMPLOYEE OWNERSHIP ACT

     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;

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     (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.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO LABOR AND LABOR RELATIONS -- THE RHODE ISLAND

OPPORTUNITY FOR EMPLOYEE OWNERSHIP ACT

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     This act would establish an opportunity for employee ownership and the process whereby,

if the owner of a qualified business decides to sell said qualified business, the owner would notify

all current full-time and part-time employees and provide them with a thirty (30) day window in

which to initiate a process to potentially purchase the business as a workers' cooperative.

     This act would take effect January 1, 2027.

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