California Worker Cooperative Act

Policy Type Policy
Policy Jurisdiction State — California
Status Passed
Tags Climate Finance, Democratization, JEDI, Labor/Workforce

Policy Summary

The California Worker Cooperative Policy Coalition introduced Assembly Bill 816 in 2015 to amend the Consumer Cooperative Corporation Law governing consumer cooperative corporations in California. As a result, California became the 12th state to legally establish a clear pathway for companies to incorporate and operate worker cooperatives under the California Worker Cooperative Act.

Worker-owned cooperatives are part of a growing movement to strengthen the local economy by empowering workers to democratically share ownership and govern the business. AB 816 authenticates the importance of worker-cooperatives by stating: “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.”

AB 816 will help small businesses, create jobs, and empower California communities by providing a business entity specifically for worker cooperatives within the existing Consumer Cooperative Corporations Law. 

AB 816 clarifies that the existing Cooperative Law applies to cooperatives in general, not just consumer cooperatives. It also creates more visibility for worker cooperatives and provides a framework for worker cooperative business formation. Worker cooperatives that organize under the amended Coop Law may elect to be governed as a worker cooperative, ensuring that workers will control the business in the future. AB 816 also raises the existing exemption from securities registration for the sale of memberships up to $1,000 (the current law only allows $300). That means you can crowdfund from your local community to invest (that’s right, not donate, but actually invest!) in the creation and expansion of democratic, worker-owned businesses! AB 816 also provides strict guidelines for those outside investors regarding voting power and influence on the business.

Read a detailed summary of the bill prepared by the California Worker Cooperative Policy Coalition.

Policy summary courtesy ofSustainable Economies Law Center

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