Reward Work Act
- Sponsor
- Rep. García, Jesús G. "Chuy" [D-IL-4]
- Committees
- Financial Services Committee (primary)
- Last action
- Apr 30, 2026
Bottom line
The bill aims to fundamentally reshape corporate governance and capital allocation by restricting stock buybacks and empowering workers with direct representation on corporate boards.
What it actually does
This bill prohibits public companies from repurchasing their own shares on national securities exchanges and mandates that at least one-third of a public company's board of directors be elected by its employees. It directs the Securities and Exchange Commission (SEC) to promulgate regulations to ensure fair employee elections and compliance with these new requirements.
Proponents argue
Proponents argue that the bill will curb corporate short-termism, encourage long-term investment in research and development, boost worker wages and benefits, reduce wealth inequality, and give employees a meaningful voice in the strategic direction of their companies.
Opponents contend
Opponents contend that the bill would interfere with efficient capital allocation, reduce shareholder value, make U.S. companies less competitive globally, and potentially lead to less efficient or conflicted corporate governance structures.
The bill is very concise and clearly written, allowing for a quick and thorough understanding of its core provisions by any informed reader.
Section 2
Prohibition on Stock Buybacks on the Open Market
This section amends the Securities Exchange Act of 1934 to prohibit any public company (issuer) from buying back its own stock on a national securities exchange. It explicitly nullifies SEC Rule 240.10b-18, which currently provides a safe harbor for such repurchases. The provision clarifies that tender offers, where a company directly offers to buy shares from shareholders, are not affected by this prohibition.
Supporters argue
Supporters argue this prohibition will force companies to invest in long-term growth, research and development, and worker compensation rather than using profits to artificially inflate stock prices and enrich executives.
Critics contend
Critics contend that restricting buybacks interferes with companies' ability to efficiently manage their capital structure, return value to shareholders, and could lead to lower stock valuations and reduced market liquidity.
Tradeoffs
The provision balances the desire for long-term investment and worker welfare against corporate flexibility in capital allocation and shareholder returns.
Section 3
Worker Representation on Corporate Board of Directors
This section requires that for a public company to register its securities on a national exchange, at least one-third of its board of directors must be elected by the company's employees. These elections must follow a 'one-employee-one-vote' process. The bill directs the SEC, in consultation with the National Labor Relations Board (NLRB), to create regulations to ensure these elections are fair and democratic, and that the 1/3 employee representation is achieved within two years of the Act's enactment.
This subsection explicitly states that Section 240.10b-18 of title 17, Code of Federal Regulations, shall have no force or effect. This SEC rule currently provides a 'safe harbor' for companies conducting share repurchases, protecting them from certain market manipulation charges.
Section 2(c)
Why it matters:This is standard legislative practice for directly repealing or nullifying existing regulations to ensure the new statutory prohibition is comprehensive and effective.
Case for: Proponents argue that explicitly nullifying the safe harbor rule ensures that the prohibition on open market buybacks is complete and cannot be circumvented by existing regulatory frameworks that previously facilitated them.
Case against: Critics of the overall buyback prohibition would also oppose this specific repeal, as it removes a key mechanism that allowed companies to manage their capital structure without fear of legal repercussions.
Estimated impact: Eliminates the primary regulatory protection that has facilitated open market share repurchases by public companies for decades.