WASHINGTON, D.C. – The Senate Small Business and Entrepreneurship Committee has approved two bipartisan bills introduced by U.S. Senator Gary Peters (MI) that support small businesses. Peters’ bills will increase awareness of Employee Stock Ownership Plans (ESOPs) and help small businesses protect their intellectual property through patents. Peters introduced both bills with U.S. Senator Jim Risch (R-ID).
Peters’ first bill, the Small Business Employee Ownership Promotion Enhancement Act, helps provide information and resources for businesses to transition to Employee Stock Ownership Plans (ESOPs). ESOPs are workplace benefit plans that allow employees to save for retirement while sharing in a business’ profits by ensuring a majority of a business’ holdings are owned by employees.
“Employee Stock Ownership Plans have a proven track record of helping small businesses grow faster, increase productivity, and retain talented employees,” said Senator Peters. “My bipartisan legislation will help more small businesses transition into an employee stock ownership model and ensure loyal, hardworking employees can carry on their company’s legacy.”
The bill tasks the SCORE Association – a nonprofit outreach organization supported by the U.S. Small Business Administration (SBA) and comprised of volunteer business owners to deliver free small business services – with a new role in administering informational resources regarding ESOPs. The bill establishes a position within SCORE to lead efforts to provide information and general technical assistance that promotes or facilitates employee ownership plans.
Under an ESOP model, employees see a direct gain from a company’s long-term success by allowing employees to share in the gains when a business is profitable. ESOPs are commonly formed when an owner of a privately owned company departs the business, often for retirement. With owners of small businesses across the nation reaching retirement age, forming an ESOP can be an attractive option for those that want to keep a business’ legacy in the hands of its loyal employees.
Nationally, more than 13.5 million employees participate in 7,000 ESOPs, and employees participating in ESOPs receive 5-12% more in wages and see retirement accounts that are 2.5 times larger than those of their peers. In Michigan, more than 276,000 employees participate in approximately 215 ESOP businesses. Despite the success of the ESOP model, the National Center for Employee Ownership found that many business owners are not familiar with ESOPs and lack the resources to transition into an ESOP model.
Peters’ second bill, the Small Business Innovation Protection Act, helps small businesses protect their intellectual property by improving education on obtaining and protecting patents. The bill requires the U.S. Small Business Administration (SBA) and the U.S. Patent and Trademark Office (USPTO) to work together to leverage existing outreach programs to better educate small businesses on domestic and international patents.
“Small businesses that want to sell their products in markets around the world need the right tools and information to protect their intellectual property,” said Senator Peters. “This commonsense bill will help ensure that small businesses are able to secure and enforce patents for their innovations, so they can focus on making great products, growing their businesses and creating jobs.”
Obtaining a patent from the U.S. Patent and Trademark Office (USPTO) protects against infringement in the U.S. However, if a small business does not register in a foreign market, such as China, it has no protection there. Patent protection is necessary to ensure the ability to enforce a businesses’ rights both at home and abroad. Peters’ legislation will help ensure small businesses are aware of the need and mechanisms available to accurately and effectively pursue an international patent.