Reward Work Act

Bill Number: H.R. 8612
Origin Chamber: House
Congress: 119th Congress, Session 2
Policy Area: Finance and Financial Sector
Status: Introduced
Latest Action: 2026-04-30: Referred to the House Committee on Financial Services.
Last Updated: 2026-06-30T08:07:08Z

AI-Generated Summary

Purpose

The "Reward Work Act" (H.R. 8612) aims to restrict certain corporate financial practices and increase employee influence in corporate governance. It prohibits public companies from buying back their own shares on public stock exchanges and requires companies to include employee-elected representatives on their boards of directors.

Key Provisions

Ban on Open-Market Stock Buybacks (Sec. 2):
Public companies (issuers) cannot purchase their own equity securities (shares) on national securities exchanges, such as the NYSE or NASDAQ.
Invalidates a current SEC rule (10b-18) that provides a "safe harbor" protecting companies from liability during buybacks.
Does not affect tender offers, where companies directly offer to buy shares from shareholders under specific SEC rules.
Worker Representation on Boards (Sec. 3):
At least one-third of a public company's board of directors must be elected by employees using a "one-employee, one-vote" system.
Applies to companies registering securities on national exchanges.
SEC, in consultation with the National Labor Relations Board (NLRB), must create rules for fair elections and ensure compliance within 2 years.
Regulatory Mandate (Sec. 4):
SEC must issue regulations to enforce the law on exchanges and companies.

Significant Changes to Existing Law

Amends Section 12 of the Securities Exchange Act of 1934 by adding a new requirement for employee board representation as a condition for listing securities on exchanges.
Nullifies SEC Rule 10b-18, removing legal protections for open-market repurchases.
Leaves tender offer rules intact, preserving one method for share repurchases.

Potential Impacts

On Companies: Limits a common way to return cash to shareholders (buybacks), potentially affecting stock prices, executive pay tied to shares, and capital allocation toward wages or investments.
On Employees/Citizens: Gives workers direct board seats, potentially influencing decisions on pay, benefits, and strategy; covers broad employee definitions, including railroad workers.
On Markets/Investors: Could reduce market liquidity from buybacks and alter governance, possibly deterring investment or listings on U.S. exchanges.
On Government Agencies: Increases workload for SEC (new rules and oversight) and involves NLRB in corporate elections.
No direct impact on international relations noted.

Main Stakeholders Affected

Public Companies/Issuers: Face buyback bans and mandatory board changes.
Employees/Workers: Gain voting rights for board seats.
Shareholders/Investors: Lose a buyback option; governance shifts toward employees.
Stock Exchanges (e.g., NYSE, NASDAQ): Must enforce new listing rules.
SEC and NLRB: Responsible for implementation and regulation.

Notable Legal, Constitutional, or Political Implications

Legal: Relies on SEC authority under securities laws; may require extensive rulemaking, with potential for lawsuits over enforcement.
Constitutional: Could face challenges on property rights (limiting company use of funds for buybacks), due process (mandating employee elections), or First Amendment issues (compelled board composition).
Political: Shifts power from shareholders/management to workers, aligning with debates on income inequality and corporate reform; introduced by Democrats, referred to House Financial Services Committee.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. García, Jesús G. "Chuy" [D-IL-4]

Cosponsors (17)

Rep. Khanna, Ro [D-CA-17], Rep. Hoyle, Val T. [D-OR-4], Rep. Pocan, Mark [D-WI-2], Rep. Casar, Greg [D-TX-35], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Johnson, Henry C. "Hank" [D-GA-4], Rep. Omar, Ilhan [D-MN-5], Rep. Grijalva, Adelita S. [D-AZ-7], Rep. Watson Coleman, Bonnie [D-NJ-12], Rep. Tlaib, Rashida [D-MI-12], Rep. Lee, Summer L. [D-PA-12], Rep. Jayapal, Pramila [D-WA-7], Rep. Ramirez, Delia C. [D-IL-3], Rep. Davis, Danny K. [D-IL-7], Rep. Schakowsky, Janice D. [D-IL-9], Rep. McGovern, James P. [D-MA-2], Rep. Carson, André [D-IN-7]

Recent Actions

2026-04-30: Referred to the House Committee on Financial Services.
2026-04-30: Introduced in House
2026-04-30: Introduced in House

Bill Versions

Reward Work Act — issued 2026-04-30 — PDF (3 pages)