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UC, Berkeley, School of Law 590 Simon Hall Berkeley, CA 94720 T: 510.643.1076 F: 510.643.

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MEMORANDUM TO: FROM: DATE: RE: Worker Cooperative Coalition Policy Advocacy Clinic November 19, 2013 Worker Cooperatives and Unionization

Question: Under what circumstances can members of a worker cooperative unionize? Analysis: Any worker can elect to join a union, including worker-owners in a worker cooperative. This remains true whether the worker cooperative is formed as an LLC or a corporation. However, members of a worker cooperative cannot elect to be protected by the National Labor Relations Act (NLRA). NLRA protections may only be enforced against a worker cooperative if the National Labor Relations Board (NLRB) determines that the workers comprising a bargaining unit are “employees” without “effective voice.” The tests for determining when a worker is an employee with or without effective voice are discussed next. “Employee” Test: The NLRA defines “employee” according to the common law agency test.1 This test is fact-based and looks at several different factors to gauge whether the principal (the employer) has the right of control over the worker, in which case an employment relationship exists.2 The most important of these factors tends to be the principal’s right to discharge the worker without cause.3 Generally, the larger and more hierarchical the cooperative, the more likely it is that the NLRB will recognize an employment relationship. “Effective Voice” Test: Once an employment relationship is established, the NLRB presumes that an employee with a proprietary interest the company is protected by the NLRA unless the employee-owner’s interest is sufficient to give him or her an “effective voice” in determining corporate policy.4 The NLRB applies a two-factor test to determine whether proprietary workers have an “effective voice”: (1) the degree of control that the employee has over the board of directors and corporate decision-making, and (2) whether there is a conflict of interest between proprietary and non-proprietary workers.5 If proprietary workers are found to have an “effective voice” in company policy, they do not have a protected right to bargain collectively under the NLRA.
Bonnie Bogue, et al., Advising California Employers and Employees, § 3.34 (2013). Id. at § 3.9. 3 Id. at §§ 3.9, 3.34; 22 Cal. Code Regs. § 4304-1. 4 Deborah G. Olson, Union Experiences with Worker Ownership: Legal and Practical Issues Raised by ESOPs, TRASOPs, Stock Purchases and Cooperatives, 1982 WIS. L. REV. 729, 782 (1982). 5 Neil Helfman, The Application of Labor Law to Workers’ Cooperatives (1992); United Furniture Co., 67 NLRB 1307, 1309-10 (1946).
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