Employee ownership trusts in the United States: advantages and challenges of an emerging form of ownership

Employee ownership trusts (EOTs) are an indirect form of employee ownership where a trust holds shares in a company for the collective benefit of employees. This paper explores the origins and legal structure of employee ownership trusts in the United States, which emerged in the 2010s following the rapid growth of a similar structure in the United Kingdom. I compare EOTs to two other forms of employee ownership, employee stock ownership plans (ESOPs) and worker cooperatives. I identify five characteristics that distinguish employee ownership trusts: a regulatory environment based in trust law; the legal separation of employee returns and employee voices; limited but legally enforced employee control; structured profit-sharing with employees; and legal resistance to future sales. Grounded in these key characteristics, I identify the advantages and challenges of the model from the perspectives of the owners who are selling their businesses, the employees, and policymakers. I then offer recommendations for how each group can maximize those benefits and address those challenges, before concluding with suggestions for future research on this emerging form of ownership.