New Bill to Spur Growth of Worker Coops in California

A new bill in California is a step toward recognizing worker cooperatives as a solution to the state’s growing income inequality and worsening prospects for low- and middle-income people.

AB 816 clarifies language in the existing coop statute and creates the legal structure, capital structure, and certain exemptions from registration requirements to make it easier to form worker cooperatives.


“One of the biggest confusions,” explains Sushil Jacob, director of the Community Enterprise Development Clinic at the East Bay Community Law Center, and member of the California Worker Cooperative Policy Coalition steering committee, “is that the existing law in California is called the California Consumer Cooperative Corporation Law. It’s actually a misnomer because it’s the general cooperative corporation law—it applies to all coops...One thing the bill is doing is renaming the law the General Cooperative Law so people understand that it applies to both consumer and worker coops.”

If passed, the bill could help create a policy environment that could vastly increase the number of worker cooperatives in California. It could also lead to potential lobbying for tax benefits for workers cooperatives, including those through an indivisible reserve where coops allocate a percentage of profits to a reserve dedicated to cooperative development, management and expansion. This is common practice in other countries with stronger coop ecosystems, and there are tax incentives to participating.

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