Employee ownership through employee stock ownership plans (ESOPs) was first mentioned in federal legislation in the Regional Rail Reorganization Act of 1973. Since then, at least 19 pieces of federal legislation have been enacted that deal with employee ownership in some way, including the Employee Retirement Income Security Act (ERISA) and tax legislation. Among the results of such legislation have been the slight broadening of the holding of stock, the provision of an important employee benefit, and the ability of entrepreneurs to manage financial needs. These benefits have come without decreases in company performance, but there is evidence that increased performance is possible if ownership is coupled with participative decision making. To encourage employee ownership, the U.S. Department of Labor should (1) support the formation of state-level organizations to facilitate employee ownership and to help implement the necessary changes in labor relations; (2) make available information on Internal Revenue Form 5500C so researchers can study whether companies use employee ownership to replace pension plans or offer it as simply an additional benefit; and (3) develop a simplified ESOP document. Securities and Exchange regulations should give employee shareholders the same rights held by bondholders in firms of 500 or more employees. (53 references) (CML)