LABOR AND LABOR RELATIONS -- THE RHODE ISLAND OPPORTUNITY FOR EMPLOYEE OWNERSHIP ACT, the official text

H7964 2026 -- H 7964 ======== LC005164 ======== STATE OF RHODE ISLAND IN GENERAL ASSEMBLY JANUARY SESSION, A.D. 2026 ____________ 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: 1 SECTION 1. Title 28 of the General Laws entitled LABOR AND LABOR RELATIONS 2 is hereby amended by adding thereto the following chapter: 3 CHAPTER 61 4 THE RHODE ISLAND OPPORTUNITY FOR EMPLOYEE OWNERSHIP ACT 5 28-61-1. Definitions. 6 As used in this chapter, the following words shall have the following meanings unless the 7 context clearly requires otherwise: 8 (1) Owner means the owner(s) of a qualified business prior to a qualified business sale. 9 (2) Qualified business means an entity that: 10 (i) Has operated a principal place of business in Rhode Island for at least one year; 11 (ii) Is a taxpayer subject to Rhode Island taxes pursuant to title 44 including, but not limited 12 to, a C corporation, S corporation, limited liability company, partnership, limited liability 13 partnership, or a sole proprietorship; 14 (iii) Is a privately held business; 15 (iv) Has at least three (3) employees not including the owner, or other similar pass-through 16 entity; 17 (v) Meets the relevant size standards for a small business by industry, as set forth by the 18 U.S. Small Business Administration in 13 CFR§ 121.201; 1 (vi) Is not a publicly traded company; and 2 (vii) Is not an exempt business as defined by one of the following circumstances: the sale 3 or transfer of ownership to a family member; the sale or transfer of the business is necessitated by 4 death or medical condition; the sale or transfer is compelled by court order; the sale or transfer of 5 the business is necessitated in the event of deployment, natural disaster, or other emergency 6 circumstance 7 (3) Worker cooperative business means: 8 (i) A workers cooperative corporation organized under chapter 6.2 of title 7; or 9 (ii) A limited liability company (LLC) or limited liability partnership (LLP), in either case, 10 whose bylaws, operating agreement or partnership agreement, as applicable, meets the following 11 requirements: 12 (A) All persons who meet the definition of employee-owner ( worker-owner ) according 13 to the bylaws, operating agreement or partnership agreement of the business are voting members 14 of the company, and have equal voting rights in all decisions brought before the membership; and 15 (B) Any profits distributed to said worker-owners by the company are distributed on the 16 basis of their patronage in the company, with patronage measured based on the labor supplied to 17 the company. 18 (4) Worker cooperative business resource list means a list of local and regional entities 19 qualified to offer guidance, support, and/or technical assistance with starting, converting, or 20 maintaining an employee-owned business. This resource list shall be created and maintained by the 21 Rhode Island small business development center, or its designee, publicly visible and searchable 22 on their website and updated on a regular basis. 23 28-61-2. Notifying current employees about the sale of a qualified business. 24 (a) In the event the owner of a qualified business decides to sell the qualified business, the 25 owner shall notify all current full-time and part-time employees at the business. 26 (b) The notice shall be posted on the date listed in the notice in a prominent location to 27 which all employees have access, or if no such place exists, via an existing electronic medium used 28 to communicate with employees. 29 (c) The notice shall communicate: 30 (1) Date of the notice; 31 (2) The owner s intent to sell the business; 32 (3) A date thirty (30) days from date of the written notice within which employees have an 33 exclusive opportunity to officially initiate a process to potentially purchase the business as a worker 34 cooperative. After this date, the qualified business owner may share the intent to sell publicly; LC005164 - Page 2 of 4 1 (4) Information about the worker cooperative business resource list, including the URL or 2 website; and 3 (5) Any price the owner of the qualified business proposes for the business sale. 4 28-61-3. Electronic notification of requirements. 5 Notification of the provisions of this chapter shall be included in the worker cooperative 6 business resource list and communicated to potential qualifying businesses by the Rhode Island 7 commerce corporation established pursuant to § 42-64-4. 8 28-61-4. Rules and regulations. 9 The commerce corporation may issue reasonable rules and regulations consistent with this 10 chapter to carry out the implementation of the responsibilities of this chapter. 11 SECTION 2. This act shall take effect January 1, 2027. ======== LC005164 ======== LC005164 - Page 3 of 4 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 *** 1 This act would establish an opportunity for employee ownership and the process whereby, 2 if the owner of a qualified business decides to sell said qualified business, the owner would notify 3 all current full-time and part-time employees and provide them with a thirty (30) day window in 4 which to initiate a process to potentially purchase the business as a workers cooperative. 5 This act would take effect January 1, 2027. ======== LC005164 ======== LC005164 - Page 4 of 4