HOUSE BILL NO. 5201

November 06, 2019, Introduced by Reps. Shannon, Hammoud, Ellison, LaGrand, Lasinski, Sowerby, Hood, Clemente, Tate, Manoogian, Cherry, Sabo, Brixie, Pagan, Haadsma, Wittenberg, Guerra and Bolden and referred to the Committee on Commerce and Tourism.

"The employee-owned corporation act,"

by amending sections 2, 3, 4, and 5 (MCL 450.732, 450.733, 450.734, and 450.735).

the people of the state of michigan enact:

Sec. 2. As used in this act:

(a) "Closing" means the permanent shutting down of operations at any establishment at which at least 25 persons are employed.

(b) "Department" means the department of labor and economic opportunity.

(c) "Employee-owned corporation" means a business operation that is controlled by, and designed to maintain control by, its employees, and in which control is distributed among its employees according to a democratic formula, if the business operation is 1 of the following:

(i) A business operation the management rights of which are represented by voting stock that may be owned only by : employees of the operation, a nonprofit community development corporation, or an employee-owned stock ownership plan in which that has not less than 50% of the employees participate in each portion of the plan. The operation shall must be controlled by a board of directors which that is selected by the shareholders on the basis of 1 vote per shareholder or on the basis of 1 vote per share.

(ii) A corporation operating pursuant to under a cooperative plan as described in section 99 of Act No. 327 of the Public Acts of 1931, being section 450.99 of the Michigan Compiled Laws.1931 PA 327, MCL 450.99.

(iii) A business operation in which that has not less than 3/4 of each class of voting security is owned by an employee stock ownership trust set up under an employee stock ownership plan as defined in the internal revenue code, 26 U.S.C. USC 4975(e)(7), if that employee stock ownership plan requires pass-through of all voting rights possessed by voting securities as the securities are allocated to accounts of individual participants.

(iv) A worker cooperative.

(v) An industrial cooperative.

If a business operation adopts a plan by which that provides that it will become under this section an employee-owned corporation within 5 years after the adoption of the plan, it shall be considered an employee-owned corporation.

(d) "Establishment" includes a factory, plant, office, or other facility, but does not include a construction site or other work place that was intended to be a temporary work place.

(e) "Relocation" means the transfer of a part of a corporation's operation from 1 establishment to another existing or proposed establishment located at a distance from the first establishment which that results in at least a 25-person reduction in the number of employees at the first establishment, but does not include a transfer from an establishment in 1 part of a political subdivision to an establishment in another part of the same political subdivision.

(f) "Worker cooperative" or "industrial cooperative" means an establishment in which that the owners or members all work in the establishment and are the only persons who work in the establishment. In a worker cooperative or industrial cooperative the workers hold the basic ownership or membership rights of the establishment which that consist of the voting rights to elect the board of directors, which in turn appoints the management or staff, and the rights to the profits or net income of the establishment. Each worker has an equal vote in accordance with the democratic principle of 1-person, 1-vote. The net income, which may be positive or negative, is shared among the workers pursuant to an agreed upon formula.

Sec. 3. The department, in cooperation with the department of commerce, Michigan strategic fund, shall establish a program to assist in developing employee-owned corporations. The program may operate when an establishment is closing or transferring operations resulting in a loss of jobs and when a request for assistance is made by an affected individual or group of individuals. When such a request is made, it shall be held in confidence by the department. The program also shall operate when workers of an existing or new establishment wish to develop an employee-owned corporation and request assistance. The department shall inform local government, business and trade organizations, financial institutions, labor organizations, economic development organizations, nonprofit entities, and others in the this state of the availability of this program and services authorized by this act.

Sec. 4. The department may do all of the following:

(a) Develop, collect, and disseminate information useful to persons and organizations throughout the this state in undertaking or promoting the establishment and successful operation of employee-owned corporations.

(b) Evaluate the feasibility and economic viability of a proposed employee-owned corporation.

(d) Provide assistance, counseling, educational workshops, and training in the operation of an employee-owned corporation.

(e) Assist persons in obtaining financing for the purchase and operation of an employee-owned corporation.

(f) Promote and coordinate the efforts of local, state, and federal government, business and trade organizations, financial institutions, labor organizations, economic development organizations, nonprofit entities, and private agencies to assist in the formation or operation of an employee-owned corporation.

(g) Recommend appropriate legislative or executive action to enhance opportunities for employee-owned corporations in this state.

Sec. 5. Each principal department and the economic advisory council, as established by law, shall assist the department, of labor, upon its request, in implementing section 4.