(Oakland, CA) – Governor Brown announced today that he signed a bill into law to facilitate the creation of worker-owned cooperative businesses in California. The new law, Assembly Bill 816, will remove unnecessary barriers to the creation of new worker cooperatives in California and improve operations for some existing worker cooperatives.

“AB 816, the California Worker Cooperative Act, provides a clear legal template for the formation of worker-owned businesses,” said East Bay Community Law Center staff attorney Sushil Jacob. “By providing a pathway to incorporation and a clear legal structure, AB 816 will encourage the creation of new businesses and jobs that build the assets of working people throughout the state.”

“Worker owned businesses are central to a full economic recovery and to closing the income inequality gap,” explained State Assemblymember Bonta, who introduced the bill. “As low-income communities continue to struggle with the dual problems of high rates of unemployment and low-wages, worker-owned, worker-managed small businesses have emerged as an effective way to rebuild the local economy and address economic inequality.”

The law is the result of a multi-year effort on the part of a coalition called the California Worker Cooperative Policy Coalition, which includes representation from the Sustainable Economies Law Center, the East Bay Community Law Center, the US Federation of Worker Cooperatives, the Democracy at Work Institute, the Network of Bay Area Worker Cooperatives, the Arizmendi Association of Cooperatives, and several individual members and supporters of cooperatives.

AB 816 is the latest example of a growing movement to strengthen local economies through the creation of small businesses that are democratically owned and operated by their workers. Specifically, AB 816 establishes a worker cooperative corporate entity, a statutory definition of a “worker cooperative", and eases barriers to raising investment capital from within the local community. AB 816 mandates that a worker cooperative have a class of worker-members, and that the worker-members control the cooperative.

Anya Kamenskaya, a worker-owner at Oakland-based DIG Cooperative, Inc. commented that the new law was necessary to help expand her business, a graywater installation and servicing company. Kamenskaya stated that “DIG Cooperative, Inc was incorporated in 2006 using the consumer cooperative statute, as there was no way to legally form as a worker cooperative. The language in the existing statute does not accurately portray the organizational structure of a worker-owned coop. The updated provisions in AB 816 will enable our business to more easily raise operation and expansion capital by securing securities exemptions. This, in turn, will increase our capacity to employ Oakland residents at a workplace that puts the well-being of our members first."

For a more detailed summary of the bill, visit SELC's discussion page on the bill here.

For the full text of the bill at the State Legislature's website visit: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB816

Media contact at SELC regarding AB 816: Charlotte Tsui, Staff Attorney, [email protected].