Because of a new California law that passed last year, starting January 1, 2017, any worker cooperative corporation with seven or more members must now obtain workers compensation insurance for its worker-owners, even when everyone serves on the Board of Directors.

Although Assembly Bill (AB) 2883 was framed as a bill to clean up ambiguities in the code, it failed to take into account its impact on Cooperative Corporations. Many worker cooperatives are now being hit with enormous insurance bills costing worker-owners as much as 20% of their income. Prior to AB 2883, worker-owners had a choice in how this money was spent, sometimes setting it aside instead for higher wages that are paid directly to workers, or using it to provide comprehensive medical insurance. AB 2883 effectively takes this decision-making power away from worker-owners, undermining worker self-determination.  

This article provides background, steps that cooperatives can take to respond, and information about the worker cooperative community’s current efforts to change the law.

Worker cooperatives around California are being impacted by a new law requiring worker-owners to purchase workers compensation insurance. As a result, many cooperatives will have to cut worker pay and benefits. Will you join us in the effort to change the law?

Background on the Current Workers Compensation Legislation

In 2016, the California Legislature passed AB 2883, making changes to the workers compensation law that failed to take into account and will have an adverse impact on cooperatives. Previously, workers compensation insurance was not required for managing owners of businesses. This is still true for LLCs and partnerships, but AB 2883 made a very significant change for corporations, requiring that an owner hold at least 15% of the shares in order to waive workers compensation coverage. AB 2883 failed to consider the impact on cooperatives where members manage an enterprise collectively.

Previously, some worker cooperatives in California chose not to obtain workers compensation insurance for managing owners, opting instead to apply those funds toward health insurance, long-term disability insurance, or higher wages. In some industries, such as in food businesses, the cost of workers comp insurance will reduce workers’ take-home pay by as much as 15%. One worker-owned cafe has reported that AB 2883 will cause the cooperative to lose $200,000 in 2017. This is a substantial setback for the worker cooperative movement at a time when worker-ownership has been recognized as a path to better and more stable livelihoods in California. The new Labor Code laws as passed under AB 2883 have major implications. Read our guide on how to navigate the new worker's comp law on our blog here!

What's Next?

Worker-owners of a handful of cooperatives, including The Cheese Board Collective, Three Stone Hearth, Home Green Home, Drought Smart, Arizmendi Bakery, and Echo Adventures Team, have convened to form a campaign working group to change the law. Right now, we are gathering support from other cooperatives and organizations impacted by AB 2883.

Sign the Petition

This petition will call on California legislators to pass a bill that would give cooperatives the right to opt out of the workers compensation requirement. The bill would essentially restore the previous provisions of the law in its application to Cooperative Corporations: In cooperatives where all members serve as officers or directors, those members will be allowed to waive workers compensation coverage.

By adding your name to the petition, you are indicating your support for a bill that would allow cooperatives to opt out of the workers compensation requirement.

By Sustainable Economies Law Center (SELC) Director of Economic Democracy, Ricardo Nuñez

There has been a constant stream of depressing and demoralizing news this summer. A dysfunctional political system, continuing police violence against our black and brown brothers and sisters, and an economic system that continues to exacerbate income inequality. At times like these, we only need to look within our own communities to find hope and renewal. SELC Summer Institute interns teamed up with interns from Project Equity and the Community Economic Justice Clinic at EBCLC to take a day to visit spaces of an economy that redirects wealth and control back to communities; an economy based on solidarity. Below, our summer interns share their reflections on the spaces we visited, spaces where individuals are taking collective action to live out the solidarity economy SELC and our allies are working to build. 

Thank you to Design Action Collective, the Arizmendi Association of Cooperatives, Mandela Food Cooperative, Arizmendi Lakeshore Cooperative, the Addison Court Housing Cooperative and land trust, and Phat Beets for sharing your stories of resilience and solidarity! 

Host your own "Learning to Think Outside the Boss" workshop!

Thank you for your interest in hosting"Learning to Think Outside the Boss: An Introductory Workshop on the Legal Nuts and Bolts of Starting a Worker Cooperative!" Below, find resources we've created to teach about how the law works in, against, and for worker cooperatives. This is a shorter, participatory, discussion-orientated version of our half day "Think Outside the Boss" workshop.

View and download the Facilitator Guide here

View and download the Participant Guide here

View and download the Powerpoint Slides here

NOTE: These materials are updated at irregular intervals and might change from time to time. Updates are based on feedback from participants and those who facilitate the "Learning to Think Outside the Boss" workshop. Please send questions, feedback, or comments about this guide to [email protected].

What is it?

This workshop provides an introduction to the practical steps individuals and groups need to take to establish, build, and successfully manage a cooperative enterprise. This introductory workshop attempts to bring forward basic legal and structural questions such as what is a cooperative, what is a legal entity, what rules govern fundraising and financing for cooperatives, and more. This workshop provides an overview of the content contained in Sustainable Economies Law Center's Think Outside the Boss: How to Create a Worker-Owned Business manual.

Why Do it?

This workshop is meant to provide an introduction for those looking to support cooperative development and for entrepreneurs and activists seeking to build a worker cooperative. By the end of the workshop, participants should be able to

• have a basic understanding of the cooperative form from a functional and principled perspective,
• understand the Cooperative Principles in practice,
• distinguish cooperatives from other business forms,
• distinguish between the different kinds of cooperatives,
• understand basic questions that should be asked when founding a worker cooperative,
• and think about cooperatives as they relate to the needs in their lives.

Method

Facilitators should use a combination of lecture (minimal), experiential learning, and popular education techniques to engage the group actively in the process of learning about worker cooperatives and cooperative business development.

Background

Beginning in 2013, SELC and the East Bay Community Law Center have been hosting half day workshops called "Think Outside the Boss" three times per year in the San Francisco Bay Area. These Think Outside the Boss workshops provide community members an introduction into the nuts and bolts of starting and running a cooperatively owned business. We go over legal issues in an accessible way to help you understand the relationships between cooperatives, employment, and community wealth-building. Attorneys, law students, and experienced cooperative professionals give short presentations on legal issues, governance structures, financing, and more. We also typically host breakout sessions on specialized topics with attorneys, cooperative accountants, business planning specialists, and discussions led by cooperative worker-members. To find the next Think Outside the Boss workshop, please visit theselc.org/events. 

This facilitator’s guide was originally prepared for the 2014 JACKSON RISING: NEW ECONOMIES CONFERENCE in Jackson, Mississippi. Their clarion call to build a broad based solidarity economy in the southern US led us to deepen our intention of making legal education accessible to those building economic democracy all around the country. With feedback from the worker cooperative community, allies, and others who use our resources, we have attempted to refine this facilitator’s guide in order to increase its usefulness to the movement. We hope this guide can introduce cooperative entrepreneurs, practitioners, and cooperative developers to the basic legal concepts when starting and operating a worker-owned cooperative.

DISCLAIMER

THIS GUIDE WAS PREPARED FOR A 2016 WORKSHOP ON STARTING A WORKER-OWNED BUSINESS. THE CONTENTS OF THIS GUIDE AND ACCOMPANYING THINK OUTSIDE THE BOSS MANUAL SHOULD NOT BE RELIED ON AS LEGAL ADVICE.

ALSO, SOME OF THIS INFORMATION COULD BECOME OUTDATED, AND LAWS VARY FROM PLACE-TO-PLACE. FURTHERMORE, ALTHOUGH WE TRIED TO COLLECT ACCURATE INFORMATION AND GIVE THE LAWS OUR BEST INTERPRETATION, SOME INFORMATION IN THIS GUIDE AND ACCOMPANYING MANUAL COULD EVEN TURN OUT TO BE INCORRECT OR SUBJECT TO OTHER INTERPRETATIONS BY COURTS OR REGULATORS! WE SURE HOPE THAT’S NOT THE CASE, BUT, WHAT CAN WE SAY? LAW IS COMPLICATED STUFF! THAT'S WHY WE STRONGLY RECOMMEND THAT YOU CONSULT WITH AN ATTORNEY BEFORE USING THIS INFORMATION TO FORM OR OPERATE A COOPERATIVE.

Araz Hachadourian of Yes! Magazine covers the passing of a co-op resolution in Berkeley, CA which requires the city to create an ordinance that supports worker owned cooperatives. Sustainable Economies Law Center (SELC) Policy Director, Yassi Eskandari-Qajar, is quoted extensively about how worker cooperatives benefit cities and communities.

A Discussion with Jessica Gordon Nembhard

The US has the world's largest prison population at over 2,217,000 inmates. What would happen, though, if we began looking at worker cooperatives not only as an economic development tool but also as a tool for those incarcerated by the prison industrial complex? What transformational effects could this lead to? Are there examples of cooperatives made primarily of incarcerated or formerly incarcerated individuals and what can we learn from them? How can worker coops be an effective tool for those who were formerly incarcerated and how would it support re-entry? 

For those seeking new, real solutions for our incarcerated or formerly incarcerated brothers and sisters, SELC hosted a discussion with Jessica Gordon Nembhard, professor at John Jay College, CUNY and author of Collective Courage: A History of African American Cooperative Economic Thought and Practice.

Listen below!

Building an economy that is truly just and resilient means putting worker ownership at the center of economic development policies. Local governments can play a critical role in cultivating a friendly policy environment for worker cooperative development. The question for cooperative advocates is, where do we start? This page provides some helpful resources for jump starting local campaigns to promote and remove barriers to worker-owned businesses.

The free advocacy materials available throughout this page are intended to help you start your own campaign! All of the content created and published by the Law Center is licensed under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).

In 2015, the Sustainable Economies Law Center started building a sample "City Ordinance for the Promotion of Worker Cooperatives" with the support and collaboration of cooperative allies across the country. We used Oakland, California as a case city, and tailored the ordinance to fit Oakland's municipal code. By going through this exercise, we had created an ordinance that would lead to our local campaign, and created a model for others to use in other cities. To discuss the ordinance in more detail, please contact Sara Stephens.  

>> Click here for the sample city ordinance.

>> Click here for the sample city ordinance summary.

In collaboration with our partners, we have compiled an informational packet aimed at educating local legislators about worker cooperatives and their local economic development benefits. We offer this here for cooperative advocates who aim to introduce policies to promote cooperative economies. 

Packet includes: What is worker cooperative, economic and social benefits, how local governments can support business conversions to worker ownership, and more! 

      >> Click here for the informational packet. 

Berkeley, CA

Click here for updates and milestones from our Berkeley campaign. 

Background:

Following on the heels of the Oakland Resolution Supporting Worker Cooperative Development, the Sustainable Economies Law Center and our allies worked with then Berkeley City Council member (now Mayor) Jesse Arreguín to develop a Berkeley resolution to promote worker cooperatives.

On February 9, 2016, Berkeley City Council unanimously voted in favor of the resolution. Not merely a symbolic gesture, Berkeley's resolution directs City staff to develop a comprehensive policy package that supports and incentivizes the growth of local worker-owned cooperatives. The policy package would, at minimum, add a worker cooperative preference to the existing Buy Local contracting preference, create business tax and land use incentives for worker cooperatives, and develop cooperative-specific educational materials to supplement the City’s business support services.

Evolution:

Visit our press release page to read about major campaign milestones from 2016 to present. Highlights include a $100,000 budget appropriation for worker cooperative technical assistance and innovative changes to the City's revolving loan fund to expand business lending to worker cooperatives. 

>> Click here for the Berkeley City Ordinance. Check out our two page summary of the Berkeley ordinance here. 

>> Click here for the Berkeley City Council resolution and informational packet we provided to Berkeley City Council.

Oakland, CA

The Sustainable Economies Law Center worked with Oakland City council members and a coalition of supporters to introduce a Resolution Supporting the Development of Worker Cooperatives on September 8th, 2015. This resolution was an important step toward adopting a more substantial policy in that it publicly recognized the positive impact of the local worker cooperative ecosystem, and built momentum for the ordinance, which will be introduced in 2017.  

>> Click here for the press release for the resolution's passage.

>> Click here for the text of the Oakland City Council Resolution.

>> Click here to watch the resolution hearing (fast forward to minute 52)!

Worker cooperative legislation is spreading like wildfire as cities and states recognize the profound positive role worker cooperatives play on the individual and community levels.

For information on policy efforts across the country, we recommend visitng the Democracy at Work Institute's Becoming Employee Owned, Community Economic Development, and Tools for Communities.

Do you want to stay up to date with our city policy work promoting resilient economies and worker cooperatives? Do you want to join the movement of worker coop policy activists pushing for an economy that is truly just? Sign up below to hear important updates and calls to action!

OAKLAND, CA (September 8, 2015) — The day after Labor Day, Oakland City Council made a bold proclamation in support of democratic and equitable workplaces, passing the “Resolution Supporting the Development of Worker Cooperatives In Oakland.” The Sustainable Economies Law Center championed this resolution in partnership with District 4 Councilmember Annie Campbell Washington, Council President and District 3 Councilmember Lynette Gibson McElhaney, and many organizational partners and allies.

We've come down to the wire!

The 2015 Worker Coop Act passed out of the California Assembly with bi-partisan support and passed out of the California Senate 39 votes to zero! Now it goes to Governor Brown's desk for his signature. BUT, there is still a chance that Governor Jerry Brown won't sign the Worker Coop Act. 

After our month-long #PeoplePoweredEconomies campaign, the results are in: you rock! We continue to be motivated by a sense of both urgency and opportunity to create people powered economies everywhere, and YOU give us the inspiration and support we need to make that happen. This is what a People Powered SELC looks like:

• Over 150 donors during the month of May
• 50 new Community Members
• Over $20,000 pledged
• Hundreds of dollars raised for our allies Richmond Grows Seed Library (Richmond, CA), Cooperation Jackson (Jackson, MS), and Phat Beets Produce (Oakland, CA)
• Oh yeah, and this…