Against a backdrop of papayas and clementines, Gov. Jared Polis signed an executive order creating the Commission on Employee Ownership in hopes of helping small business transition to the model, should they desire to.
Polis, a Democrat, signed the executive order in the produce section of the Colorado-based grocery chain Save-A-Lot in Colorado Springs. It’s the same store that was a part of his campaign launch tour two years ago.
“It’s participatory capitalism, allowing people to one part of the upside they create through the value of their labor,” Polis said while introducing the order.
The commission, which will be a part of the Office of Economic Development and created out of existing resources, will be tasked with creating a network of support for businesses aiming to change to an employee model.
Polis said he hopes it will encourage businesses to change to that model. The executive order states it will educate businesses on the benefits of doing so.
“This effort in employee ownership will identify and remove some of the red tape and some of the bureaucratic cost associated with companies going towards employee ownership,” Polis said.
The legal cost can be tens of thousands of dollars for small businesses to navigate through regulations in order to switch to an Employee Stock Ownership Plan (ESOP). The order would task the commission to find those costly barriers, help business owners get through them, and make recommendations to the state on what barriers are onerous and should be removed.
Polis said ESOPs and other employee-ownership models tend to have less turnover and higher wages for employees.
“Wages in Colorado haven’t kept up with the cost of living, and we’re tackling that in a number of ways.” Polis said. “Part of the solution is also making sure more people have the opportunity to participate in value creation.”
Stock options and gains from them are taxed like retirement plans. At Save-A-Lot, the stock gains are on top of contributions for employees’ 401k retirement accounts.
John Leevers, president and CEO of Safe-A-Lot parent company Leevers Supermarkets Inc., said he hasn’t seen any situations where the stock benefits replace 401k contributions.
“Not that I’ve seen,” said Leevers. “Because they don’t have to buy stock and they receive stock with their hours worked, the 401k is almost a separate benefit because it allows them to contribute.”
ESOP benefits are also regulated the same way as 401k plans, under the Employee Retirement Income Security Act, limiting the losses employees could incur, should the company’s value downturn.
This story will be updated.