Worker cooperative is a business owned and democratically controlled by the people who work in it, with each worker-member holding one vote and sharing in surplus according to the labor contributed.
Worker cooperatives differ from consumer cooperatives, which are owned by their customers, and from employee stock ownership plans, in which employees hold shares through a trust but usually do not govern on a one-member, one-vote basis. Members share profits through 📝Patronage Dividends allocated by hours worked, pay, or another measure of contribution rather than by capital invested, and many cooperatives also retain part of their earnings to reinvest in the business.
In California, 📝California AB 816, signed on August 12, 2015 and effective January 1, 2016, gave worker cooperatives their own statutory definition within the renamed Cooperative Corporation Law: a corporation that includes a class of 📝Worker-Members, natural persons whose patronage consists of labor contributed to the corporation (Corporations Code §12253.5). At least 51 percent of workers must be worker-members or on track to become members, and a worker cooperative may raise outside capital through 📝Community Investor Shares with tightly limited voting rights; the 📝Key Changes to the Law summarize the rest. 📝Why a Co-Op explains why the form suited a new organization, and Brian Swichkow's 📝Worker Cooperative offers a companion definition.