Labor Secretary Vows to Strengthen ESOP Landscape in First Major Speech

Lori Chavez-DeRemer, the recently confirmed Secretary of Labor, gave the keynote address at The ESOP Association (TEA) National Conference in Washington, DC on Friday. It was her first public speech directly related to retirement since she was confirmed.

Chavez-DeRemer was formerly the Representative for Oregon’s 5th District, and was strongly supported by TEA to lead the Department of Labor (DOL). Known for being an advocate for employee stock ownership plans (ESOP), Chavez-DeRemer gave a shout out to Bob’s Red Mill, a large ESOP in her former district, which had members in attendance.

The Secretary opened by saying that “I want you to know that the Trump administration recognizes the real transformative power of employee stock ownership plans.” In reference to regulations and enforcement actions opposed by the ESOP community, she added “we’re here to undo the culture of harassment,” that has hurt the growth of ESOPs.

In the closing days of the Biden administration, the Employee Benefit Security Administration (EBSA) proposed a regulation to define “adequate consideration” or an appropriate process of appraising shares in an ESOP. This proposal was opposed by TEA in certain respects.

The Trump administration withdrew that proposal. In making a new proposal, Chavez-DeRemer explained that “we do value your comments through this process,” and the DOL should promote ESOPs “rather that discouraging them.”

She specifically highlighted the Employee Equity Investment Act, a bill proposed last Congress that would “make it easier for businesses to transition to employee ownership.” A similar bill, the American Ownership and Resilience Act, was proposed this Congress, and would create an investment facility to assist the financing of ESOP creation.

“I understand how poor regulation and misguided agency agendas can directly impact business success,” the Secretary said. “It is my mission to support you, not regulate you into oblivion.”

“We know that when workers have a voice and a stake, they are more invested in their company’s mission, outcome and future,” Chavez-DeRemer said. She noted that ESOPs have “more than $2 trillion in wealth producing assets,” and “the Department of Labor is with you in this mission.”

“Together we will make sure ESOPs are supported and thriving.”