Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H503 Compare Versions

Only one version of the bill is available at this time.

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1	1	1 of 1
2	2	HOUSE DOCKET, NO. 4078 FILED ON: 1/17/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 503
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Christopher J. Worrell and Sean Garballey
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act promoting entrepreneurship through employee ownership.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Christopher J. Worrell5th Suffolk1/17/2025Natalie M. Blais1st Franklin3/12/2025 1 of 5
16	16	HOUSE DOCKET, NO. 4078 FILED ON: 1/17/2025
17	17	HOUSE . . . . . . . . . . . . . . . No. 503
18	18	By Representatives Worrell of Boston and Garballey of Arlington, a petition (accompanied by
19	19	bill, House, No. 503) of Christopher J. Worrell for legislation to promote entrepreneurship
20	20	through employee ownership. Economic Development and Emerging Technologies.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Fourth General Court
24	24	(2025-2026)
25	25	_______________
26	26	An Act promoting entrepreneurship through employee ownership.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. Chapter 23D of the General Laws as appearing in the 2022 Official
30	30	2Edition is hereby amended by adding the following after Section 6:-
31	31	3 Section 6A
32	32	4 (a) As used in this section, the following words shall have the following meanings unless
33	33	5the context clearly requires otherwise:-
34	34	6 “Qualified Business”, an entity that: (i) Has operated a principal place of business in
35	35	7Massachusetts for at least one year (ii) Is a taxpayer subject to Massachusetts tax under relevant
36	36	8tax articles (MGL c. 62B), but not limited to a C corporation, S corporation, limited liability
37	37	9company, partnership, limited liability partnership, or a sole proprietorship (iii) Is a privately
38	38	10held business (iv) Has at least three workers not including the owner, or other similar pass-
39	39	11through entity (v) Meets the relevant size standards for a small business by industry, as set forth
40	40	12by the U.S. Small Business Administration in 13 CFR 121.201 (vi) Is not a medium or large 2 of 5
41	41	13business as defined by the US Small Business Administration (vii) Is not a publicly traded
42	42	14company
43	43	15 “Owner”, The owner(s) of a Qualified Business prior to a Qualified Business Sale
44	44	16 “Qualified Employee Group” (QEG), A group containing at least a simple majority of
45	45	17full-time and/or part-time workers at the Qualified Business, totaling a minimum of three, at the
46	46	18point of formal notice of business sale by the Owner to workers
47	47	19 “Employee Owned Business”, (i) An employee cooperative corporation organized under
48	48	20Chapter 157A of the Massachusetts General Laws, or (ii) A Limited Liability Company (LLC) or
49	49	21Limited Liability Partnership (LLP), in either case, whose bylaws, operating agreement or
50	50	22partnership agreement, as applicable, meets the following requirements: (A) All persons who
51	51	23meet the definition of employee owner (“worker owner”) according to the bylaws, operating
52	52	24agreement or partnership agreement of the business are voting members of the company, and
53	53	25have equal voting rights in all decisions brought before the membership, and (B) any profits
54	54	26distributed to said worker-owners by the company are distributed on the basis of their patronage
55	55	27in the company, with patronage measured based on the labor supplied to the company.
56	56	28 “Qualified Business Sale”, Any transaction between the Owner of a Qualified Business
57	57	29and a QEG that concludes in the Qualified Business becoming an Employee Owned Business or
58	58	30at least a 51% increment of total ownership of the Qualified Business being transferred to an
59	59	31Employee Owned Business. Such transaction shall not include transfers by inheritance, nor
60	60	32transfers or sales to immediate family, defined as siblings, spouses and/or children.
61	61	33 (b) (i) In the event the Owner of a Qualified Business decides to sell such Qualified
62	62	34Business or at least a 51% increment of total ownership of such Qualified Business in an equity 3 of 5
63	63	35sale, they must notify all current full-time and part-time workers at the business within seven
64	64	36days of the decision in a dated written notice as specified below. Such notice must be posted on
65	65	37the date listed in the notice in a prominent location to which all workers have access, or if no
66	66	38such place exists, via an existing electronic medium used to communicate with workers. Such
67	67	39notice must communicate: (A) Date of the notice (B) The Owner’s intent to sell the business (C)
68	68	40Contact information for the Massachusetts Center for Employee Ownership (MassCEO),
69	69	41including the MassCEO website, specifying MassCEO as a resource to assist workers
70	70	42considering buying the business (D) Any price the Owner of the Qualified Business proposes for
71	71	43the business sale.
72	72	44 (ii) In the event a QEG does not purchase 100% of total ownership of the Qualified
73	73	45Business, such as where Owners or other parties retain or purchase a stake in the business, the
74	74	46provisions of this section shall apply only if the QEG holds the sole voting rights and decision-
75	75	47making power in the resulting business. Sales of the Qualified Business that include agreements
76	76	48infringing on this requirement for democratic governance by worker-owners shall nullify the
77	77	49benefits to the Owner from this section.
78	78	50 (iii) Any group of workers that is eligible to form a QEG has 30 days from the date the
79	79	51Owner’s notice was posted or upon the workers’ electronic receipt thereof, to signal in writing
80	80	52via registered mail to the Owner their intent to compete to buy the Qualified Business, and list all
81	81	53members of the QEG. The Owner shall immediately make available any financial records
82	82	54necessary for evaluating the health and value of the business, following the signing of a non-
83	83	55disclosure agreement between the Owner and the QEG. If after 30 days no QEG has signaled
84	84	56interest in a purchase, the Owner shall be free to sell the business as they choose. 4 of 5
85	85	57 (iv) From the date any QEG signals intent to buy the business, the Owner and the
86	86	58applicable QEG shall have 180 days to have the value of the business assessed by a qualified
87	87	59independent business valuation consultant agreed by the Owner and the QEG, and to reach
88	88	60agreement on a price; or alternatively if a competitive good-faith offer is made by a third party,
89	89	61the QEG shall have the opportunity to match that offer.
90	90	62 (v) In the event the Owner and QEG reach a price that is substantially equivalent or
91	91	63superior to all other good-faith offers received on the open market within the 180-day period, the
92	92	64Owner shall be obligated to sell the business to the QEG. However, the highest bid need not be
93	93	65the winning bid, and the Owner may sell to a QEG for reasons other than preferring the highest
94	94	66bid.
95	95	67 (vi) In the event of a completed Qualified Business Sale, the Owner shall be exempted
96	96	68from obligation under Chapter 62 Section 4 of the General Laws, to pay the state capital gains
97	97	69tax on any gains from the sale of the Qualified Business under $1,000,000.00. Any gains from
98	98	70the sale of the Qualified Business over $1,000,000.00 shall continue to be subject to the relevant
99	99	71capital gains tax. In the event of a partial sale of the Qualified Business to the QEG, this
100	100	72exemption shall apply only to the proportion of the business being sold to the QEG.
101	101	73 (vii) All labor union membership or collective bargaining agreements existing prior to a
102	102	74Qualified Business Sale shall continue to be in effect under the new ownership structure.
103	103	75 (viii) Upon the completion of a Qualified Business Sale, the resulting business shall not
104	104	76be subject to external governance, decision-making or management influence from non-worker
105	105	77or non-member parties, including non-member shareholders or outside investors. Any contract 5 of 5
106	106	78enabling control of the company by outside investors shall not be in compliance with this
107	107	79section.
108	108	80 (ix) In the event that the Owner of a Qualified Business fails to comply with the terms of
109	109	81this Section, the QEG shall have the right to demand a court injunction to stop such improper
110	110	82sale and require compliance with this Section.