NY State Senate Bill 2025-S648

Senate Bill S648

2025-2026 Legislative Session

Adds employee-owned enterprises to the list of preferred contractors for public contracts in the state

download bill text pdf

Current Bill Status - In Senate Committee Procurement And Contracts Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2025	referred to procurement and contracts

2025-S648 (ACTIVE) - Details

Current Committee:: Senate Procurement And Contracts
Law Section:: State Finance Law
Laws Affected:: Amd §§160 & 162, St Fin L
Versions Introduced in 2023-2024 Legislative Session:: S8844

2025-S648 (ACTIVE) - Summary

Adds employee-owned enterprises and worker cooperatives to the list of preferred contractors for public contracts in the state; authorizes such enterprises and cooperatives to make certain purchases from centralized contracts for commodities, subject to conditions of the office of general services; authorizes the comptroller to conduct certain audits of employee-owned enterprises and worker cooperatives.

2025-S648 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S648

SPONSOR: RYAN S
 
TITLE OF BILL:

An act to amend the state finance law, in relation to adding employee-
owned enterprises to the list of preferred contractors for public
contracts in the state

 
PURPOSE:

To strengthen the viability and economic opportunity of employee-owned
enterprises.

 
SUMMARY OF PROVISIONS:

Section 1: defines an employee-owned enterprise.

Section 2: amends subdivision 2 of section 162 of the state finance law
by adding employee-owned enterprises to the list of preferred sources
for state purchasing.

Section 3: amends subdivision 4 of section 162 of the state finance law
by including employee-owned enterprises in the priority list of
preferred sources for state purchasing.

Section 4: amends section 162 of the public service law by adding a new
subdivision 6-a to establish the rules regarding prices charged by
employee owned enterprises in public contracting.

Section 5: sets forth the effective date.

 
JUSTIFICATION:

New York State law defines an employee-owned enterprise, or more specif-
ically a worker cooperative, as a business that is democratically
controlled and owned by its employees. Employees not only own the busi-
ness but also allocate decision-making power on the basis of "one
member, one vote," in contrast with the shareholder model of corporate
governance.

The vast majority of worker cooperatives are small businesses with under
25 employees, according to the most recent report by the Democracy at
Work Institute (DAWI) and the U.S. Federation of Worker Cooperatives
(USWFC). A wealth of studies have illustrated that worker cooperatives
are more resilient to economic shocks, experience lower turnover, and
have higher productivity levels than conventional U.S. firms. Unlike
conventional firms, where CEOs earn on average 350 times more than the
typical worker, the pay ratio at a worker cooperative is typically no
more than 2:1 from the highest to lowest earner. During the COVID-19
pandemic, 80 percent of worker cooperatives remained open, and just one
in five worker cooperatives lost more than 50 percent of their revenue-
compared to nearly one in three traditional U.S. firms.

New York State is home to more than 110 worker cooperatives-the highest
total in the country, according to the joint DAWI/USFWC report. But 91
of these businesses are located in New York City, which saw a dramatic
rise in worker co-ops after establishing the $1.2 million Worker Cooper-
ative Business Development Initiative in 2014. The remaining employee-
owned businesses are scattered across Upstate New York, lacking both a
consistent funding mechanism and an organized trade association such as
the New York City Network of Worker Cooperatives.

This legislation seeks to amend the state finance law by adding employee
owned enterprises to the list of preferred sources for State contracts.
This list is currently composed of commodities produced by correctional
industries programs, as well as commodities and services produced by
nonprofit agencies or employment programs for blind persons, persons
with mental or physical disabilities, or veterans.  Designating employ-
ee-owned businesses as preferred public contractors would provide a
critical new revenue stream for these entities across the State, partic-
ularly those outside of New York City.

 
LEGISLATIVE HISTORY:

2024: S.8844 Referred to Procurement and Contracts, A.9081 Referred to
Governmental Operations

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law; provided, however, that the amendments to subparagraph
(iii) of paragraph a and the opening paragraph of paragraph b of subdi-
vision 4 of section 162 of the state finance law made by section three
of this act shall be subject to the expiration and reversion of such
subparagraph and opening paragraph pursuant to section four of chapter
565 of the laws of 2022, as amended, when upon such date the provisions
of section four of this act shall take effect. Effective immediately,
the addition, amendment and/or repeal of any rule or regulation neces-
sary for the implementation of this act on its effective date are
authorized to be made and completed on or before such effective date.

2025-S648 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    648
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  Sen. S. RYAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Procurement and Contracts
 
 AN ACT to amend the state finance law, in relation to  adding  employee-
   owned  enterprises  to  the  list  of preferred contractors for public
   contracts in the state
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivisions 6, 7, 8, 9 and 10 of section 160 of the state
 finance law are renumbered subdivisions 7, 8, 9, 10 and 11,  and  a  new
 subdivision 6 is added to read as follows:
   6.  "EMPLOYEE-OWNED ENTERPRISE" SHALL HAVE THE SAME MEANING AS DEFINED
 BY SECTION EIGHTEEN HUNDRED THIRTY-SIX-B OF THE PUBLIC AUTHORITIES LAW.
   § 2. Subdivision 2 of section 162 of the state finance law is  amended
 by adding a new paragraph g to read as follows:
   G.  COMMODITIES  AND SERVICES PRODUCED BY AN EMPLOYEE-OWNED ENTERPRISE
 OR A WORKER COOPERATIVE INCORPORATED UNDER THE LAWS OF  THIS  STATE  AND
 GOVERNED BY ARTICLE FIVE-A OF THE COOPERATIVE CORPORATIONS LAW.
   §  3.  Subparagraph  (iii) of paragraph a and the opening paragraph of
 paragraph b of subdivision 4 of section 162 of the state finance law, as
 amended by chapter 565 of the laws of  2022,  are  amended  to  read  as
 follows:
   (iii) When commodities are available, in the form, function and utili-
 ty  required by, a state agency or political subdivision or public bene-
 fit corporation having their own purchasing agency, and such commodities
 are not available pursuant to subparagraphs (i) and (ii) of  this  para-
 graph,  said  commodities  shall then be purchased from a qualified non-
 profit-making agency for other disabled  persons,  a  qualified  special
 employment  program for mentally ill persons, [or] a qualified veterans'
 entity, OR A QUALIFIED EMPLOYEE-OWNED ENTERPRISE OR WORKER  COOPERATIVE;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
 S                                                          LBD02465-01-5

 S. 648                              2
 
 provided,  however,  the preferred source shall perform fifty percent or
 more of the work;
   When  services  are  available,  in  the  form,  function  and utility
 required by, a state agency or political subdivision or  public  benefit
 corporation  having their own purchasing agency, equal priority shall be
 accorded the services rendered and offered for sale  by  qualified  non-
 profit-making  agencies  for the blind and those for the other disabled,
 by qualified special employment programs for mentally ill persons [and],
 by qualified veterans' entities, AND BY QUALIFIED EMPLOYEE-OWNED  ENTER-
 PRISES  OR  WORKER COOPERATIVES; provided, however, the preferred source
 shall perform fifty percent  or  more  of  the  work.  In  the  case  of
 services:
   §  4.  Subparagraph  (iii) of paragraph a and the opening paragraph of
 paragraph b of subdivision 4 of section 162 of the state finance law, as
 added by chapter 83 of the laws of 1995, are amended to read as follows:
   (iii) When commodities are available, in the form, function and utili-
 ty required by, a state agency or political subdivision or public  bene-
 fit corporation having their own purchasing agency, and such commodities
 are  not  available pursuant to subparagraphs (i) and (ii) of this para-
 graph, said commodities shall then be purchased from  a  qualified  non-
 profit-making  agency for other [severely] disabled persons, a qualified
 special employment program for mentally ill persons,  [or]  a  qualified
 veterans' [workshop] ENTITY, OR A QUALIFIED EMPLOYEE-OWNED ENTERPRISE OR
 WORKER COOPERATIVE;
   When  services  are  available,  in  the  form,  function  and utility
 required by, a state agency or political subdivision or  public  benefit
 corporation  having their own purchasing agency, equal priority shall be
 accorded the services rendered and offered for sale  by  qualified  non-
 profit-making  agencies for the blind and those for the other [severely]
 disabled, by qualified special  employment  programs  for  mentally  ill
 persons [and], by qualified veterans' [workshops] ENTITIES, AND BY QUAL-
 IFIED  EMPLOYEE-OWNED ENTERPRISES OR WORKER COOPERATIVES. In the case of
 services:
   § 5. Section 162 of the state finance law is amended by adding  a  new
 subdivision 6-a to read as follows:
   6-A.  PRICES  CHARGED  BY EMPLOYEE-OWNED ENTERPRISES OR WORKER COOPER-
 ATIVES.
   A. QUALIFIED EMPLOYEE-OWNED ENTERPRISES  OR  WORKER  COOPERATIVES  MAY
 MAKE PURCHASES OF MATERIALS, EQUIPMENT OR SUPPLIES, EXCEPT PRINTED MATE-
 RIAL,  FROM CENTRALIZED CONTRACTS FOR COMMODITIES IN ACCORDANCE WITH THE
 CONDITIONS SET BY THE OFFICE OF GENERAL  SERVICES;  PROVIDED  THAT  SUCH
 QUALIFIED  EMPLOYEE-OWNED  ENTERPRISE OR WORKER COOPERATIVE SHALL ACCEPT
 SOLE RESPONSIBILITY FOR ANY PAYMENT DUE TO THE VENDOR.
   B. THE STATE COMPTROLLER MAY CONDUCT AUDITS AND  EXAMINATIONS  OF  ALL
 RECORDS, BOOKS AND DATA OF ANY EMPLOYEE-OWNED ENTERPRISE OR WORKER COOP-
 ERATIVE  QUALIFIED UNDER THIS SECTION TO DETERMINE THE COSTS OF MANUFAC-
 TURING OR THE RENDERING OF SERVICES AND THE  MANNER  AND  EFFICIENCY  OF
 PRODUCTION AND ADMINISTRATION OF SUCH EMPLOYEE-OWNED ENTERPRISE OR WORK-
 ER  COOPERATIVE  WITH RELATION TO ANY PRODUCT OR SERVICES PURCHASED BY A
 STATE AGENCY OR POLITICAL SUBDIVISION OR PUBLIC BENEFIT CORPORATION  AND
 TO FURNISH THE RESULTS OF SUCH AUDIT AND EXAMINATION TO THE COMMISSIONER
 FOR  SUCH  ACTION  AS  SUCH COMMISSIONER MAY DEEM APPROPRIATE UNDER THIS
 SECTION.
   § 6. This act shall take effect on the ninetieth day  after  it  shall
 have  become  a  law; provided, however, that the amendments to subpara-
 graph (iii) of paragraph a and the opening paragraph of paragraph  b  of
 S. 648                              3
 
 subdivision  4  of  section 162 of the state finance law made by section
 three of this act shall be subject to the expiration  and  reversion  of
 such  subparagraph  and  opening  paragraph  pursuant to section four of
 chapter  565  of  the  laws of 2022, as amended, when upon such date the
 provisions of section four of this  act  shall  take  effect.  Effective
 immediately,  the addition, amendment and/or repeal of any rule or regu-
 lation necessary for the implementation of this  act  on  its  effective
 date are authorized to be made and completed on or before such effective
 date.

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