California Amends Code To Authorize Worker Cooperatives

I’ve written in the past about various efforts to create a workers cooperative law here in California.  See Are Worker Cooperatives A “Sea Water Fish In A Freshwater Pond”? and In The Year 2525, If Man Is Still Alive, If Woman Can Survive, They May Find Limited Liability Worker Cooperatives.  This summer, the California legislature enacted legislation, AB 816 (Bonta), that will authorize a cooperative corporation to elect to designate itself as a worker cooperative in its articles of incorporation.

The California Corporations Code has included a cooperative corporation law for more than three decades.  That law, Corporations Code Section 12200 et seq., is inaptly named the Consumer Cooperative Corporation Law.  AB 816 renames the law as simply the Cooperative Corporation Law. The legislature also included the following uncodified “findings” that explain its purposes:

(a) A worker cooperative has the purpose of creating and maintaining sustainable jobs and generating wealth in order to improve the quality of life of its worker-members, dignify human work, allow workers’ democratic self-management, and promote community and local development in this state.
(b) The purpose of this act is to amend the Consumer Cooperative Corporation Law to clarify that the law applies to cooperatives in general, not just consumer cooperatives, and to create more visibility for worker cooperatives. This act is intended to provide a definition of worker cooperative for purposes of this act, and not for purposes of other laws.

What exactly is a worker cooperative corporation?  The legislature defined the term as follows:

“Worker cooperative” or “employment cooperative” means a corporation formed under this part that includes a class of worker-members who are natural persons whose patronage consists of labor contributed to or other work performed for the corporation. Election to be organized as a worker cooperative or an employment cooperative does not create a presumption that workers are employees of the corporation for any purposes. At least 51 percent of the workers shall be worker-members or candidates.

According to Kathleen O’Malley, principal consultant to the Assembly Banking & Finance Committee, California will be joining eleven other states in providing for worker cooperatives: Alabama, Connecticut, Delaware, Maine, Massachusetts, Oregon, Vermont, New York, Washington, Pennsylvania and Colorado.