In 1989, the California legislature added Section 14200 to the California Corporations Code:

The Legislature finds and declares that the formation of employee-owned businesses and the participation of employees in the management of businesses in this state will promote the stabilization of local economies, anchor business activity, and increase productivity. The Legislature further finds that the encouragement of employee-owned businesses will increase and broaden community investments in this state and encourage new capital formation through employee ownership.

The statute does not define what makes a business "employee-owned". For example, is a corporation employee-owned when a controlling shareholder is also an employee? The statute refers to the participation of employees in the management of businesses But isn't this almost always the case since officers are in many, if not most, cases also employees? The statute also does not explain what constitutes "community investment" or the relationship of employee ownership to broader "community investment".

On the positive side, the statute does not impose any burden other than to clutter up the Corporations Code.