Learning to Think Outside the Boss:

A Introductory Workshop on the Legal Nuts and

Bolts
of Starting a Worker Cooperative

Collaboratively developed by
Learning to Think Outside the Boss:
Today’s Agenda

 Introductions & Expectations

Starting a Coop Exercise (a reader’s digest version)
Cooperative Principles
Entity Formation
Governance, Management, & Control in Cooperatives
Employment Law Issues
How Money Flows Through a Coop
Resources
Discussion
 INTRODUCT
I ON S &
EXPECTATIO
NS
What’s your
name?
Where are y
What would ou from?
you like to l
earn during
this worksh
op?
ACT 1: Light Bulb!
 What is a Cooperative?
Cooperatives:
Cooperatives Cooperatives: Cooperatives:
a set of
: a legal a tax practices, values,
a legal entity structure category & principles
 What Make Worker Coops Different From
Typical Businesses & Other Coops?
Joint Ownership

Subordination of capital

Sovereignty of Labor

Democratic worker-member control

Patronage distribution of excess revenues

 Benefit Flexible Purpose
Corporations Corporations

ACT 2 – Entity Formation

 Why incorporate at all?
Some Common Considerations
What should you be thinking about when selecting which
business entity is right for you or your client?

Liability Pooling Resources Tax Treatment Mission/Formation

 ACT 3: GOVERNANCE,
MANAGEMENT, & LEADERSHIP
COOPERATIVE
GOVERNANCE

CONVENTIONAL
 Every member has one vote…
In the election of the board and major decisions

Power

Power
Alvarado Street Bakery Arizmendi Bakery
Elects a Board is a Collective

Boar
d Every Member
Members is on the
Board
ACT 4: Employment Law
Traditional Employment =
Working for Others
Cooperatives: Working WITH
Others
 True or False:
Coops do NOT have to worry about
employment laws.
FALSE!
▪ Why?
▪ Because coop members
might be considered
employees under
current labor and
employment laws.
▪ So, the coop might need
to comply with laws that
are designed to protect
workers!
ACT 5: FINANCING
YA! We’re officially
buying our shares in
the cooperative!

Member Loans/ Successful

Contributions/Out Alternative Worker
side Investors Financing Cooperative
Balancing Profits, Control, &
Principles
ACT 6: How Money Flows Through a
Coop
You made
me!
 In a typical business…
Why does it have
to be this way?!

profits

wages
 Profits? Surplus? Patronage?
Profits:
The net income after expenses during a fiscal year attributable to
non-Member labor.

Surplus:
The net income after expenses that is attributable to member labor.
 
Patronage Dividend:
A distribution that a cooperative pays to its members (sort of like an
annual bonus).
 Cooperative finances will
change our economy!
Cooperatives are meant to PROVIDE stable jobs,
reward workers EQUITABLY,
keep wealth LOCAL,
& create LASTING enterprises in our COMMUNITIES!
ACT 7: Final Act!
 Available Resources
ONLINE
 Co-opLaw.org
Think Outside the Boss Manual
 Worker Cooperatives: Pathways to Scale
 Prospera Coop Developer Resources page
NATIONAL
 US Federation of Worker Cooperatives
 Democracy at Work Institute
 Democracy at Work Network
SF BAY AREA
 Worker Coop Academy
 Attend a full Think Outside the Boss Workshop!
 Resilient Communities Legal Cafe