The key changes to the law made by the California Worker Cooperative Act, 📝California AB 816, turned California's consumer-cooperative statute into a general Cooperative Corporation Law that recognizes worker ownership and lets worker cooperatives raise outside capital.
Before the act, the statute was written around consumer cooperatives, owned by the people who shop there, and offered little room for outside investors. The act renamed the statute (Corporations Code §12200) and defined a 📝Worker Cooperative as a corporation with a class of 📝Worker-Members whose patronage is labor. Worker-members need not be conventional employees; their patronage is the work they contribute, and at least 51 percent of workers must be worker-members or on track to become members.
The act reserved 📝Patronage Dividend distributions for the worker-member class, so surplus is shared according to each worker's patronage as measured under the cooperative's own bylaws. It created 📝Community Investor Shares, whose holders may approve only a merger, sale of major assets, reorganization, or dissolution, giving outside capital protections similar to preferred stock without ceding control. It also raised the securities exemption for member investments from $300 to $1,000, let collective-board cooperatives skip a separate annual meeting, and permitted indivisible reserves that are never distributed to members.
The Sustainable Economies Law Center led advocacy for the bill, which Governor Jerry Brown signed on August 12, 2015; the full text took effect January 1, 2016. This summary reflects the enacted text as of 2026 and is not legal advice.