Illinois Limited Worker Cooperative Association Act

The Illinois Limited Worker Cooperative Association Act (LWCAA) provides a pathway for workers to maintain control of their business by recognizing worker cooperatives as a Limited Corporate Association (LCA). An LCA is a mix between a worker cooperative corporation and a limited liability company (LLC). Limited worker cooperative associations are a subset of an LCA.

Workers establishing their operation as an LCA have more structure and flexibility for members to govern their business. The bill targets start-ups by changing the relationship between worker-owners and investors to ensure worker-owners maintain majority control. A few distinct details of the act include:

1. Workers of the cooperative must own at least 51% of the business.
2. Investors do not have voting power on the business unless worker-owners decide otherwise.
3. Other stakeholders (producers and consumers) may participate as owners.
4. A securities exemption that lifts barriers for worker-cooperatives to raise money from investors.
5. Worker-owners do not need work authorization to become members of a co-op.
6. The act classifies all members as owners (as opposed to employees), which allows the worker-cooperative to receive various financial and tax benefits.

The Illinois Coalition for Cooperative Advancement – a group of public and private stakeholders – helped change the state law to support worker cooperatives. They have been organizing cooperatives and cooperation in Chicago for more than a decade to empower Chicago’s working-class Black and Latinx communities. The coalition recognizes that worker-owned cooperatives provide consistent, dependable work placing the community’s needs first.

Read more: https://peopleseconomy.org/illinois-resolution/

Policy summary developed with resources from Pathways to a People’s Economy and Chicago Food Policy Action Council