The Joint Committee on Economic Development and Emerging Technologies heard hours of testimony in support of bills that would include worker‑owned businesses in state economic development programs and give employees a formal right to purchase firms when owners sell.

Supporters said the package — filed as H.491 and H.503 (and companion S.305 in the Senate) — would preserve jobs, expand local ownership, and give retiring owners an additional buyer option. “Before the closure ... I realized that without taking the power directly into the workers' hands, employees would not be able to mitigate the impact of these sorts of business decisions,” Caleb Zadehk, a founding co‑owner of Circus Cooperative Cafe in Cambridge, told the committee.

Backers described three main pillars in the proposals: (1) explicitly naming worker‑owned businesses as eligible for state economic development programs; (2) creating a formal right of first refusal that gives employee groups advance notice and time to organize if an owner seeks to sell; and (3) a capital‑gains tax exemption aimed at small businesses (an exemption applied to gains up to $1 million in the current drafts).

“The owner must give advance notice of the sale,” Alex Papali of the Center for Economic Democracy told the panel. “There's a 30 day window for initially for the owner to give advance notice of the sale. And that 30 day window is for, for the employees to decide whether or not they want to just bid ... After that, as soon as they give notice formally, it starts a 6 month, 180 day clock ticking.” Papali said the bills would require employees to meet any substantially equivalent market bid in good faith to trigger the right of first refusal and would exempt family transfers.

Speakers described practical examples and local scale. Halsey Platt, who said he is converting his residential construction business to an employee cooperative, told the committee, “we've built about $200,000,000 worth of residential, remodeling projects. We've got 55 employees, and I have currently got about 20 employees who are just terribly excited to, take over the business.”

Sarah Acefa, a board member of the Dorchester Food Co‑op, told lawmakers her cooperative currently employs 17 people — “half of whom are worker owners” — and has 2,152 member households. Technical‑assistance groups and lenders said they can finance and advise conversions but that owners and employees often lack time or notice to complete a sale without a statutory window and outreach.

Policy witnesses and practitioners cited national and state statistics to frame the bills. John Abrams, a business adviser and author, told the committee there are “approximately 3,000,000 American small businesses with employees, with founders over 55,” and warned of a large wave of ownership transfers if no additional succession options are provided. Papali and other witnesses said roughly 80 percent of Massachusetts businesses have revenues under $1 million and that only about 20 percent of businesses listed for sale actually find buyers.

Proponents argued employee ownership can improve resilience and local economic stability. “Worker cooperatives were much more likely to stay afloat” during COVID, Papali said, and Ethan Tupelo of the Massachusetts Advisory Board for Employee Ownership said worker cooperatives reduce pay inequality by narrowing CEO‑to‑worker pay ratios — “for corporations, the average median pay ratio between CEOs and workers was 268 to 1 … By contrast, worker cooperatives average a ratio of 4 to 1.”

Committee members pressed witnesses about details: why the $1 million exemption was chosen, how “substantially equivalent” price will be judged, and how long owners must wait while an employee group organizes. Witnesses said the $1 million threshold targets smaller firms (they said most Massachusetts businesses fall under that revenue level) and that the bill’s language is meant to preserve owners’ choice while creating a ready buyer when markets are thin.

No committee vote was taken. The committee accepted additional written testimony on the record and will consider drafting changes before reporting the bills out of committee.