What’s the Deal with Worker-Owned Cooperatives?

As with any other type of cooperative, the genius behind worker-owned cooperatives is the democratic element infused in the system. Worker-owned cooperatives offer employees stability where  traditional jobs waver. Because they are employee-owned, these types of coops often mirror the ethos of many European companies and trade unions: make the company/product/service better through employee satisfaction. In other words, the answer to enhanced company performance is not layoffs and cutbacks (i.e. moving backwards) but rather innovating and investing in your workers (i.e. moving forward).

This general environment tends to create a flourishing micro-economy around the coop. For example, recently in Maine, the workers of three major retailers bought out their companies from their former employers to form the Island Employee Cooperative (IEC). As the company-owners, the IEC employees were able to increase their salary, obtain benefits, share in dividend-like profits and even educate their employees about practical business skills through a partnership with a local community college. Thus, coops not only equip their employee-owners with a possible antidote to the economic wage gap in this country but also serve as strengthening force in their communities!

Like all good things, implementing and investing in this model takes time. There are numerous considerations a company or person needs to internalize before going ahead with the cooperative structure. Some hallmark things to consider are:

  1. Working jointly in a commonly owned business;
  2. One-vote per member in governance and control decisions of the business;
  3. Slower decision making time than traditional corporate structures;
  4. Vetting your employee-owners before offering them a position;
  5. Personal worker responsibility for the risks and benefits associated with being a cooperative;
  6. Determining how profits and losses will be allocated.

Additionally, the legal nuances of cooperatives also may present a challenge. Unlike other areas of law, there is no uniformity among the state laws governing cooperatives. If you or your organization is really interested in becoming a worker-cooperative, finding an experienced cooperative attorney is key to a successful formation process.

If you have any questions about starting a worker-owned cooperative or any other type of cooperative structure,  call the social enterprise attorneys at (310) 883-7923 or email us at info@sustainable-lawyer.com.

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