Employee stock ownership plans: contractors: certification: bid preferences.

Senator Valladares's proposal establishes a certification program for employee stock ownership plan (ESOP) contractors and introduces bid preferences for state-funded construction projects. The legislation creates a process through which the Director of General Services will issue ESOP contractor certificates to qualified public works contractors who present valid IRS determination letters, with the certificate indicating the percentage of employee ownership.

Beginning January 2027, the Department of Transportation must provide tiered bid preferences on state-funded construction contracts based on the percentage of ESOP ownership: 2% for contractors with 30-74% employee ownership, 3% for those with 75-99% ownership, and 4% for fully employee-owned companies. An additional 1% preference applies to contractors whose employees are covered by collective bargaining agreements. The certificates require renewal every three years, and the Director may establish fees to cover administrative costs.

The bill expands the duties of the California Employee Ownership Hub, housed within the Office of Small Business Advocate, to include maintaining a comprehensive list of certified ESOP contractors. The Hub serves as a central resource for employee ownership transitions, providing referrals to legal and financial services while coordinating with state agencies to facilitate access to capital programs for employee-owned businesses.