CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 713Introduced by Senator ValladaresFebruary 21, 2025 An act to amend Sections 12100.32 and 12100.33 of, and to add Sections 12100.34 and 14112 to, the Government Code, relating to economic development.LEGISLATIVE COUNSEL'S DIGESTSB 713, as introduced, Valladares. Employee stock ownership plans: contractors: certification.Existing law creates within the Governors Office of Business and Economic Development the Office of Small Business Advocate in order to advocate the causes of small business and to provide small businesses with the information they need to survive in the marketplace to be led by the Small Business Advocate. The California Employee Ownership Act requires, upon appropriation by the Legislature, the Office of Small Business Advocate to establish the California Employee Ownership Hub (hub) and to appoint an Employee Ownership Hub Manager (manager) to administer the hub. The act authorizes the manager to be responsible for certain duties, including working with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.This bill would require the Director of General Services to issue an employee stock ownership plan (ESOP) contractor certificate to a qualified contractor, as defined, with an ESOP that meets certain criteria, including that at least an unspecified percentage of the qualified contractors employees participate in the ESOP, as specified. The bill would additionally authorize the manager to be responsible for compiling and maintaining a comprehensive bidders list of qualified contractors that have received that certificate from the Director of General Services. The bill would also require, beginning January 1, 2027, the Department of Transportation to ensure that an unspecified percentage of state funded construction contracts and construction-related procurements involve contractors who have received that certificate.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 12100.32 of the Government Code is amended to read:12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.SEC. 2. Section 12100.33 of the Government Code is amended to read:12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.SEC. 3. Section 12100.34 is added to the Government Code, to read:12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.SEC. 4. Section 14112 is added to the Government Code, to read:14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Senate Bill No. 713Introduced by Senator ValladaresFebruary 21, 2025 An act to amend Sections 12100.32 and 12100.33 of, and to add Sections 12100.34 and 14112 to, the Government Code, relating to economic development.LEGISLATIVE COUNSEL'S DIGESTSB 713, as introduced, Valladares. Employee stock ownership plans: contractors: certification.Existing law creates within the Governors Office of Business and Economic Development the Office of Small Business Advocate in order to advocate the causes of small business and to provide small businesses with the information they need to survive in the marketplace to be led by the Small Business Advocate. The California Employee Ownership Act requires, upon appropriation by the Legislature, the Office of Small Business Advocate to establish the California Employee Ownership Hub (hub) and to appoint an Employee Ownership Hub Manager (manager) to administer the hub. The act authorizes the manager to be responsible for certain duties, including working with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.This bill would require the Director of General Services to issue an employee stock ownership plan (ESOP) contractor certificate to a qualified contractor, as defined, with an ESOP that meets certain criteria, including that at least an unspecified percentage of the qualified contractors employees participate in the ESOP, as specified. The bill would additionally authorize the manager to be responsible for compiling and maintaining a comprehensive bidders list of qualified contractors that have received that certificate from the Director of General Services. The bill would also require, beginning January 1, 2027, the Department of Transportation to ensure that an unspecified percentage of state funded construction contracts and construction-related procurements involve contractors who have received that certificate.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Senate Bill
No. 713
Introduced by Senator ValladaresFebruary 21, 2025
Introduced by Senator Valladares
February 21, 2025
An act to amend Sections 12100.32 and 12100.33 of, and to add Sections 12100.34 and 14112 to, the Government Code, relating to economic development.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
SB 713, as introduced, Valladares. Employee stock ownership plans: contractors: certification.
Existing law creates within the Governors Office of Business and Economic Development the Office of Small Business Advocate in order to advocate the causes of small business and to provide small businesses with the information they need to survive in the marketplace to be led by the Small Business Advocate. The California Employee Ownership Act requires, upon appropriation by the Legislature, the Office of Small Business Advocate to establish the California Employee Ownership Hub (hub) and to appoint an Employee Ownership Hub Manager (manager) to administer the hub. The act authorizes the manager to be responsible for certain duties, including working with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.This bill would require the Director of General Services to issue an employee stock ownership plan (ESOP) contractor certificate to a qualified contractor, as defined, with an ESOP that meets certain criteria, including that at least an unspecified percentage of the qualified contractors employees participate in the ESOP, as specified. The bill would additionally authorize the manager to be responsible for compiling and maintaining a comprehensive bidders list of qualified contractors that have received that certificate from the Director of General Services. The bill would also require, beginning January 1, 2027, the Department of Transportation to ensure that an unspecified percentage of state funded construction contracts and construction-related procurements involve contractors who have received that certificate.
Existing law creates within the Governors Office of Business and Economic Development the Office of Small Business Advocate in order to advocate the causes of small business and to provide small businesses with the information they need to survive in the marketplace to be led by the Small Business Advocate. The California Employee Ownership Act requires, upon appropriation by the Legislature, the Office of Small Business Advocate to establish the California Employee Ownership Hub (hub) and to appoint an Employee Ownership Hub Manager (manager) to administer the hub. The act authorizes the manager to be responsible for certain duties, including working with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.
This bill would require the Director of General Services to issue an employee stock ownership plan (ESOP) contractor certificate to a qualified contractor, as defined, with an ESOP that meets certain criteria, including that at least an unspecified percentage of the qualified contractors employees participate in the ESOP, as specified. The bill would additionally authorize the manager to be responsible for compiling and maintaining a comprehensive bidders list of qualified contractors that have received that certificate from the Director of General Services. The bill would also require, beginning January 1, 2027, the Department of Transportation to ensure that an unspecified percentage of state funded construction contracts and construction-related procurements involve contractors who have received that certificate.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 12100.32 of the Government Code is amended to read:12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.SEC. 2. Section 12100.33 of the Government Code is amended to read:12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.SEC. 3. Section 12100.34 is added to the Government Code, to read:12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.SEC. 4. Section 14112 is added to the Government Code, to read:14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 12100.32 of the Government Code is amended to read:12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.
SECTION 1. Section 12100.32 of the Government Code is amended to read:
### SECTION 1.
12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.
12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.
12100.32. For purposes of this article, the following definitions apply:(a) Advocate means the Small Business Advocate.(b) Broad-based employee ownership vehicle means any of the following:(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.(2) An eligible worker-owned cooperative, as defined in subdivision (e).(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.(j) Manager means the Employee Ownership Hub Manager.(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.(k)(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.
12100.32. For purposes of this article, the following definitions apply:
(a) Advocate means the Small Business Advocate.
(b) Broad-based employee ownership vehicle means any of the following:
(1) An employee-owned corporation, as that term is defined in subdivision (c) of Section 91502.1.
(2) An eligible worker-owned cooperative, as defined in subdivision (e).
(3) A business wherein the majority of stock is owned by an employee stock ownership plan, as defined in subdivision (f), or by another trust on behalf of the companys employees.
(4) A business wherein the majority of which is owned by a trust that has the purposes of creating employee ownership and of promoting the financial and nonfinancial interests of all employees.
(5) A worker cooperative or employment cooperative, as defined in subdivision (k). (l).
(6) A member-owned organization that includes workers as members and where the voting interest or stock is held by members, and the majority of the governing body is elected by the members on the basis of one vote per member.
(c) California capital programs means state programs offering capital assistance to businesses, including, but not limited to, the Small Business Loan Guarantee Program, the State Small Business Credit Initiative, the California Rebuilding Fund, and the California Capital Access Program.
(d) CalOSBA or office means the Office of Small Business Advocate within the Governors Office of Business and Economic Development.
(e) Eligible worker-owned cooperative has the same definition as that term is defined in paragraph (2) of subsection (c) of Section 1042 of the Internal Revenue Code, as that provision read on January 1, 2022.
(f) Employee stock ownership plan or ESOP has the same definition as that term is defined in paragraph (7) of subsection (e) of Section 4975 of the Internal Revenue Code, as that provision read on January 1, 2022.
(g) Employee ownership transition means the process of a business entering a broad-based employee ownership vehicle.
(h) Feasibility assessment means a financial assessment of a companys debt capacity and other factors that will determine viable employee ownership transition scenarios.
(i) Independent ESOP trustee means an ESOP trustee that is unrelated to the company, its officers, and its shareholders, and is in the business of serving as an ESOP fiduciary.
(j) Manager means the Employee Ownership Hub Manager.
(k) Qualified contractor means a business that has a valid license issued by the Contractors State License Board and is currently registered with the Department of Industrial Relations as a public works contractor.
(k)
(l) Worker cooperative or employment cooperative has the same definition as those terms are defined in Section 12253.5 of the Corporations Code.
SEC. 2. Section 12100.33 of the Government Code is amended to read:12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.
SEC. 2. Section 12100.33 of the Government Code is amended to read:
### SEC. 2.
12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.
12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.
12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:(A) The ESOP has appointed an independent ESOP trustee.(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.(C) CalOSBA shall also post the report to its internet website.(7) Report employee ownership transition related concerns and recommendations to the advocate.(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.
12100.33. (a) Upon appropriation by the Legislature, CalOSBA shall establish the California Employee Ownership Hub, administered by an Employee Ownership Hub Manager, appointed by the advocate.
(b) The manager shall administer the Employee Ownership Hub, and may be responsible for the following duties:
(1) Work with all California state agencies whose regulations and programs affect employee-owned companies, and businesses with the potential to become employee-owned, to enhance opportunities and reduce barriers.
(2) Partner with relevant private, nonprofit, and public organizations including, but not limited to, professional and trade associations, financial institutions, labor unions, worker centers, Small Business Development Centers, economic and workforce development organizations, and nonprofit entities to educate business owners and employees about the benefits of employee ownership and employee ownership transition succession models.
(3) Share materials regarding employee ownership benefits and employee ownership transition succession models.
(4) Provide a referral service to help business owners, labor unions, workers, and worker centers find appropriate legal, financial, and technical employee ownership resources and services to assist in employee ownership transitions and the growth of employee-owned businesses.
(5) Work with the California Infrastructure and Economic Development Bank, the California Pollution Control Financing Authority, and related entities to develop recommendations and enhance the ability of broad-based employee ownership vehicles to access California capital programs. Those recommendations shall only apply to ESOPs to the extent that the ESOPs satisfy one of the following conditions:
(A) The ESOP has appointed an independent ESOP trustee.
(B) The ESOP has, as a trustee, a person or entity that has completed education on ESOP trustee best practices.
(6) Report to the Legislature, in accordance with Section 9795, on activities undertaken by the hub during the prior fiscal year, including recommendations for improvement.
(A) The first report shall be due on January 15, following the first fiscal year in which funding is provided to implement any portion of this article.
(B) This reporting requirement may be met separately or the information may be included in the annual report required by subdivision (b) of Section 12098.4.
(C) CalOSBA shall also post the report to its internet website.
(7) Report employee ownership transition related concerns and recommendations to the advocate.
(8) Compiling and maintaining a comprehensive bidders list of qualified contractors that have received a certificate from the Director of General Services pursuant to Section 12100.34.
SEC. 3. Section 12100.34 is added to the Government Code, to read:12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.
SEC. 3. Section 12100.34 is added to the Government Code, to read:
### SEC. 3.
12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.
12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.
12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:(1) The ESOP has an independent ESOP trustee.(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.(3) The ESOP employs at least a total of ____ full-time workers.(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.
12100.34. (a) The Director of General Services shall issue an ESOP contractor certificate to a qualified contractor with an ESOP that meets all of the following criteria:
(1) The ESOP has an independent ESOP trustee.
(2) The ESOP has a trustee, person, or entity that has completed education on ESOP trustee best practices.
(3) The ESOP employs at least a total of ____ full-time workers.
(4) The ESOP has a valid and favorable ESOP determination letter from the Internal Revenue Service.
(5) At least ____ percent of the qualified contractors employees participate in the ESOP without any single employee owning more than ____ percent of the total value of the outstanding shares.
(b) The Director of General Services may establish a fee for an applicant that collectively covers the costs to administer the certification program and may require the certificate to be renewed every three years.
SEC. 4. Section 14112 is added to the Government Code, to read:14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
SEC. 4. Section 14112 is added to the Government Code, to read:
### SEC. 4.
14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.(b) This section shall become operative on January 1, 2027.
14112. (a) The department shall ensure that at least ____ percent of state funded construction contracts and construction-related procurements involve contractors who have received a certificate pursuant to Section 12100.34.
(b) This section shall become operative on January 1, 2027.