WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, delivered remarks during today’s hearing on strengthening Employee Stock Ownership Plans (ESOPs), empowering workers to have a stake in their company and build wealth for themselves and their families. ESOPs are employee retirement plans in which a company’s employees collectively hold stock in the company, often supplementing a 401(k).
Click here to watch the hearing live.
Cassidy’s speech as prepared for delivery can be found below:
The Senate Committee on Health, Education, Labor, and Pensions will please come to order.
Strengthening America’s retirement system is a bipartisan priority for this Committee. Republicans and Democrats agree: every worker deserves the ability to retire with dignity and security.
Congress has made great progress improving Americans’ retirement through SECURE 2.0, but there’s more to do. A recent study showed that 86 percent of Americans believe Congress needs to focus more on retirement.
We must enhance our retirement system to give the worker the power; ensuring they have financial security after finishing his or her career.
A place we can start expanding opportunity for employee ownership is through supporting Employee Stock Ownership Plans (ESOPs); retirement plans in which a company’s employees collectively hold stock in the company.
Today, around 11 million Americans participate in an ESOP, including almost 39,000 workers in my home state. Louisiana workers who retired from ESOPs received a total sum of over $575 million in payouts in 2023.
The ESOP model is pro-worker, pro-family, and pro-business. Studies show that ESOPs result in higher employee satisfaction, lower turnover, and greater financial success that puts more money directly into workers’ pockets.
By the way, Louisiana Senator Russell Long and Rep. John Breaux led the effort to create ESOPs when Congress passed ERISA in 1974. Today, we will hear from Acadian Companies, who will give firsthand testimony on how ESOPs empower Louisiana workers and create economic growth.
While ESOPs are proven to help workers succeed, outdated federal law makes it difficult for companies to implement this model without being in legal jeopardy.
In ERISA, Congress required the Employee Benefits Security Administration (EBSA) to develop clear regulations making it easier for ESOPs to sell stock to their employees. 51 years later, EBSA has failed to put in place any rules on this issue, despite repeated bipartisan requests from this Committee. 51 years later; that’s long even for a federal bureaucracy.
Additionally, the ERISA Advisory Council, which advises the Department of Labor on regulating employee benefit plans, does not have any ESOP representation. Workers who are also owners should have a seat at the table in shaping policies that affect their future.
As Chair of the HELP Committee, I am committed to enacting a pro-worker, pro-family agenda that helps all Americans succeed in their career and after. That is why this Committee is leading multiple efforts to strengthen ESOPs, so workers can have a stake in their company and build wealth for themselves and their families.
Senators Marshall and Kaine are leading legislation to clarify federal law to ensure ESOPs can sell shares of their company without the fear of frivolous lawsuits.
I introduced two pieces of pro-worker legislation to better support ESOPs.
The Employee Ownership Fairness Act authorizes ESOPs to provide generous and diversified benefits by permitting ESOPs to contribute into 401(k) plans without exceeding contribution limits. As a result, employees will save more money for retirement and can invest more in their employer’s stock.
The Employee Ownership Representation Act would add two new ESOP board members to the ERISA Advisory Council. This would give ESOP owners and workers representation to advocate for policies that improve their lives.
I look forward to discussing these bills.
Thank you to our witnesses for being here to highlight the power of ESOPs in creating a better life for workers and their families.
With that, I recognize Senator Sanders.
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