Amended IN Senate August 11, 2022 Amended IN Assembly May 19, 2022 Amended IN Assembly March 24, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Assembly Bill No. 2849Introduced by Assembly Member Mia Bonta(Coauthors: Assembly Members Haney and Lee)(Coauthor: Senator Becker)February 18, 2022An act to add Division 6 (commencing with Section 10000) to the Labor Code, relating to work worker cooperatives.LEGISLATIVE COUNSEL'S DIGESTAB 2849, as amended, Mia Bonta. The Promote Ownership by Workers for Economic Recovery Act.Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law, the Nonprofit Mutual Benefit Corporation Law, provides that subject to any other provision of law of this state applying to the particular class of corporation or line of activity, a corporation may be formed as a nonprofit mutual benefit corporation for any lawful purpose, except when a corporations assets are irrevocably dedicated to charitable, religious, or public purposes and which as a matter of law or according to its articles or bylaws are required, upon dissolution, to be distributed to a person carrying on a charitable, religious, or public purpose.Existing law, the Cooperative Corporation Law, authorizes the formation of a corporation for any lawful purpose that is organized and conducts its business primarily for the mutual benefit of its members as patrons of the corporation. Existing law authorizes a corporation organized under those provisions to elect to be governed as a worker cooperative, as specified.Existing law creates the Labor and Workforce Development Agency within state government and places the agency under the supervision of the Secretary of Labor and Workforce Development. Development, and provides that the agency consists of, among other entities, the California Workforce Development Board, the Employment Development Department, and the Department of Industrial Relations. Existing law provides specified protections for employees in regard to payment of wages, hours, working conditions, and labor organizations, among other protections.This bill would require the Secretary of Labor and Workforce Development (secretary) to organize, and members to maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law named the Association of Cooperative Labor Contractors (association) or a substantially similar name. The bill would require the association to function as a membership organization for cooperative labor contractors, establish or grant membership to cooperative labor contractors, as defined, in specific industries, provide management and other business services to its members, and improve business conditions for member cooperative labor contractors. The bill would require the initial board of directors to be appointed by the Governor, Speaker of the Assembly, and President pro Tempore of the Senate.This bill would provide that the association is a nonpublic entity, does not constitute a public agency or state employer for any purpose, and that once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors, there shall be no further control of the operation of the association by any governmental entity.This bill would require the association to establish or grant membership to cooperative labor contractors and imbue the association with the power to suspend or expel those member cooperative labor contractors, as provided. The bill would require the member cooperative labor contractors to have and maintain democratic worker control and have certain elements in its governing documents. The bill would also set certain minimum labor standards. The bill would also provide, among other things, that the association and member cooperative labor contractors are not labor contractors.This bill would enact the Promote Ownership by Workers for Economic Recovery Act. The act would establish a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The bill would require the study to consider specified issues, including how to promote tenets of democratic worker control and ensure that the associations members offer high-road jobs. The bill would require the panel, in preparing the study, to engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy. The bill would require the panel to complete the study and make it publicly available on the internet by December 31, 2023.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Division 6 (commencing with Section 10000) is added to the Labor Code, to read:DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.2.Definitions10005.(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.(h)Member means a CLC that holds membership in the association.(i)Secretary means the Secretary of Labor and Workforce Development.(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.3.Association of Cooperative Labor Contractors1.Organization and Membership10007.(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.10008.(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:(1)Democratic worker control requirements:(A)Having uniform hiring and ownership eligibility criteria.(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.(C)Having the majority of voting ownership interest held by worker-owners.(D)Having the majority of voting power held by worker-owners.(E)Having worker-owners exercise their vote on a one-person, one-vote basis.(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.(2)Operational requirements:(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.(G)Freely assuming employment responsibilities for workers consistent with Section 10022.(3)Workplace and civil rights requirements:(A)Compliance with labor standards established pursuant to Section 10024.(B)Compliance with laws and regulations governing workplace or civil rights.(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).10009.(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.2.Board of Directors10015.(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.(2)The board of directors shall be appointed as follows:(A)One director shall be appointed by the Governor.(B)One director shall be appointed by the Speaker of the Assembly.(C)One director shall be appointed by the President pro Tempore of the Senate.(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:(1)There shall be an odd number of voting directors.(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.(4)Directors shall be elected by member votes weighted pursuant to Section 10009.(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).3.Powers and Duties of the Association10020.(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.10021.(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.10022.(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.10024.The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.(d)Workers shall be provided with a retirement savings program that provides for any of the following:(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(e)Both the association and its members shall comply with Section 90.2.(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:(A)An arrest not leading to a conviction.(B)Participation in a diversion program.(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.(D)An adjudication in the juvenile justice system.(E)An offense other than a felony or misdemeanor, such as an infraction.(F)A conviction that is more than seven years old.(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.(g)Any worker aggrieved by any violation of this section may do both of the following:(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.10025.Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.10026.(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.10027.A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.4.Severability10028.The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities. CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development. CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
Amended IN Senate August 11, 2022 Amended IN Assembly May 19, 2022 Amended IN Assembly March 24, 2022 CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION Assembly Bill No. 2849Introduced by Assembly Member Mia Bonta(Coauthors: Assembly Members Haney and Lee)(Coauthor: Senator Becker)February 18, 2022An act to add Division 6 (commencing with Section 10000) to the Labor Code, relating to work worker cooperatives.LEGISLATIVE COUNSEL'S DIGESTAB 2849, as amended, Mia Bonta. The Promote Ownership by Workers for Economic Recovery Act.Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law, the Nonprofit Mutual Benefit Corporation Law, provides that subject to any other provision of law of this state applying to the particular class of corporation or line of activity, a corporation may be formed as a nonprofit mutual benefit corporation for any lawful purpose, except when a corporations assets are irrevocably dedicated to charitable, religious, or public purposes and which as a matter of law or according to its articles or bylaws are required, upon dissolution, to be distributed to a person carrying on a charitable, religious, or public purpose.Existing law, the Cooperative Corporation Law, authorizes the formation of a corporation for any lawful purpose that is organized and conducts its business primarily for the mutual benefit of its members as patrons of the corporation. Existing law authorizes a corporation organized under those provisions to elect to be governed as a worker cooperative, as specified.Existing law creates the Labor and Workforce Development Agency within state government and places the agency under the supervision of the Secretary of Labor and Workforce Development. Development, and provides that the agency consists of, among other entities, the California Workforce Development Board, the Employment Development Department, and the Department of Industrial Relations. Existing law provides specified protections for employees in regard to payment of wages, hours, working conditions, and labor organizations, among other protections.This bill would require the Secretary of Labor and Workforce Development (secretary) to organize, and members to maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law named the Association of Cooperative Labor Contractors (association) or a substantially similar name. The bill would require the association to function as a membership organization for cooperative labor contractors, establish or grant membership to cooperative labor contractors, as defined, in specific industries, provide management and other business services to its members, and improve business conditions for member cooperative labor contractors. The bill would require the initial board of directors to be appointed by the Governor, Speaker of the Assembly, and President pro Tempore of the Senate.This bill would provide that the association is a nonpublic entity, does not constitute a public agency or state employer for any purpose, and that once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors, there shall be no further control of the operation of the association by any governmental entity.This bill would require the association to establish or grant membership to cooperative labor contractors and imbue the association with the power to suspend or expel those member cooperative labor contractors, as provided. The bill would require the member cooperative labor contractors to have and maintain democratic worker control and have certain elements in its governing documents. The bill would also set certain minimum labor standards. The bill would also provide, among other things, that the association and member cooperative labor contractors are not labor contractors.This bill would enact the Promote Ownership by Workers for Economic Recovery Act. The act would establish a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The bill would require the study to consider specified issues, including how to promote tenets of democratic worker control and ensure that the associations members offer high-road jobs. The bill would require the panel, in preparing the study, to engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy. The bill would require the panel to complete the study and make it publicly available on the internet by December 31, 2023.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Amended IN Senate August 11, 2022 Amended IN Assembly May 19, 2022 Amended IN Assembly March 24, 2022
Amended IN Senate August 11, 2022
Amended IN Assembly May 19, 2022
Amended IN Assembly March 24, 2022
CALIFORNIA LEGISLATURE 20212022 REGULAR SESSION
Assembly Bill
No. 2849
Introduced by Assembly Member Mia Bonta(Coauthors: Assembly Members Haney and Lee)(Coauthor: Senator Becker)February 18, 2022
Introduced by Assembly Member Mia Bonta(Coauthors: Assembly Members Haney and Lee)(Coauthor: Senator Becker)
February 18, 2022
An act to add Division 6 (commencing with Section 10000) to the Labor Code, relating to work worker cooperatives.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 2849, as amended, Mia Bonta. The Promote Ownership by Workers for Economic Recovery Act.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law, the Nonprofit Mutual Benefit Corporation Law, provides that subject to any other provision of law of this state applying to the particular class of corporation or line of activity, a corporation may be formed as a nonprofit mutual benefit corporation for any lawful purpose, except when a corporations assets are irrevocably dedicated to charitable, religious, or public purposes and which as a matter of law or according to its articles or bylaws are required, upon dissolution, to be distributed to a person carrying on a charitable, religious, or public purpose.Existing law, the Cooperative Corporation Law, authorizes the formation of a corporation for any lawful purpose that is organized and conducts its business primarily for the mutual benefit of its members as patrons of the corporation. Existing law authorizes a corporation organized under those provisions to elect to be governed as a worker cooperative, as specified.Existing law creates the Labor and Workforce Development Agency within state government and places the agency under the supervision of the Secretary of Labor and Workforce Development. Development, and provides that the agency consists of, among other entities, the California Workforce Development Board, the Employment Development Department, and the Department of Industrial Relations. Existing law provides specified protections for employees in regard to payment of wages, hours, working conditions, and labor organizations, among other protections.This bill would require the Secretary of Labor and Workforce Development (secretary) to organize, and members to maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law named the Association of Cooperative Labor Contractors (association) or a substantially similar name. The bill would require the association to function as a membership organization for cooperative labor contractors, establish or grant membership to cooperative labor contractors, as defined, in specific industries, provide management and other business services to its members, and improve business conditions for member cooperative labor contractors. The bill would require the initial board of directors to be appointed by the Governor, Speaker of the Assembly, and President pro Tempore of the Senate.This bill would provide that the association is a nonpublic entity, does not constitute a public agency or state employer for any purpose, and that once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors, there shall be no further control of the operation of the association by any governmental entity.This bill would require the association to establish or grant membership to cooperative labor contractors and imbue the association with the power to suspend or expel those member cooperative labor contractors, as provided. The bill would require the member cooperative labor contractors to have and maintain democratic worker control and have certain elements in its governing documents. The bill would also set certain minimum labor standards. The bill would also provide, among other things, that the association and member cooperative labor contractors are not labor contractors.This bill would enact the Promote Ownership by Workers for Economic Recovery Act. The act would establish a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The bill would require the study to consider specified issues, including how to promote tenets of democratic worker control and ensure that the associations members offer high-road jobs. The bill would require the panel, in preparing the study, to engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy. The bill would require the panel to complete the study and make it publicly available on the internet by December 31, 2023.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law, the Nonprofit Mutual Benefit Corporation Law, provides that subject to any other provision of law of this state applying to the particular class of corporation or line of activity, a corporation may be formed as a nonprofit mutual benefit corporation for any lawful purpose, except when a corporations assets are irrevocably dedicated to charitable, religious, or public purposes and which as a matter of law or according to its articles or bylaws are required, upon dissolution, to be distributed to a person carrying on a charitable, religious, or public purpose.
Existing law, the Cooperative Corporation Law, authorizes the formation of a corporation for any lawful purpose that is organized and conducts its business primarily for the mutual benefit of its members as patrons of the corporation. Existing law authorizes a corporation organized under those provisions to elect to be governed as a worker cooperative, as specified.
Existing law creates the Labor and Workforce Development Agency within state government and places the agency under the supervision of the Secretary of Labor and Workforce Development. Development, and provides that the agency consists of, among other entities, the California Workforce Development Board, the Employment Development Department, and the Department of Industrial Relations. Existing law provides specified protections for employees in regard to payment of wages, hours, working conditions, and labor organizations, among other protections.
This bill would require the Secretary of Labor and Workforce Development (secretary) to organize, and members to maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law named the Association of Cooperative Labor Contractors (association) or a substantially similar name. The bill would require the association to function as a membership organization for cooperative labor contractors, establish or grant membership to cooperative labor contractors, as defined, in specific industries, provide management and other business services to its members, and improve business conditions for member cooperative labor contractors. The bill would require the initial board of directors to be appointed by the Governor, Speaker of the Assembly, and President pro Tempore of the Senate.
This bill would provide that the association is a nonpublic entity, does not constitute a public agency or state employer for any purpose, and that once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors, there shall be no further control of the operation of the association by any governmental entity.
This bill would require the association to establish or grant membership to cooperative labor contractors and imbue the association with the power to suspend or expel those member cooperative labor contractors, as provided. The bill would require the member cooperative labor contractors to have and maintain democratic worker control and have certain elements in its governing documents. The bill would also set certain minimum labor standards. The bill would also provide, among other things, that the association and member cooperative labor contractors are not labor contractors.
This bill would enact the Promote Ownership by Workers for Economic Recovery Act. The act would establish a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The bill would require the study to consider specified issues, including how to promote tenets of democratic worker control and ensure that the associations members offer high-road jobs. The bill would require the panel, in preparing the study, to engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy. The bill would require the panel to complete the study and make it publicly available on the internet by December 31, 2023.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Division 6 (commencing with Section 10000) is added to the Labor Code, to read:DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.2.Definitions10005.(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.(h)Member means a CLC that holds membership in the association.(i)Secretary means the Secretary of Labor and Workforce Development.(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.3.Association of Cooperative Labor Contractors1.Organization and Membership10007.(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.10008.(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:(1)Democratic worker control requirements:(A)Having uniform hiring and ownership eligibility criteria.(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.(C)Having the majority of voting ownership interest held by worker-owners.(D)Having the majority of voting power held by worker-owners.(E)Having worker-owners exercise their vote on a one-person, one-vote basis.(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.(2)Operational requirements:(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.(G)Freely assuming employment responsibilities for workers consistent with Section 10022.(3)Workplace and civil rights requirements:(A)Compliance with labor standards established pursuant to Section 10024.(B)Compliance with laws and regulations governing workplace or civil rights.(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).10009.(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.2.Board of Directors10015.(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.(2)The board of directors shall be appointed as follows:(A)One director shall be appointed by the Governor.(B)One director shall be appointed by the Speaker of the Assembly.(C)One director shall be appointed by the President pro Tempore of the Senate.(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:(1)There shall be an odd number of voting directors.(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.(4)Directors shall be elected by member votes weighted pursuant to Section 10009.(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).3.Powers and Duties of the Association10020.(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.10021.(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.10022.(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.10024.The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.(d)Workers shall be provided with a retirement savings program that provides for any of the following:(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(e)Both the association and its members shall comply with Section 90.2.(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:(A)An arrest not leading to a conviction.(B)Participation in a diversion program.(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.(D)An adjudication in the juvenile justice system.(E)An offense other than a felony or misdemeanor, such as an infraction.(F)A conviction that is more than seven years old.(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.(g)Any worker aggrieved by any violation of this section may do both of the following:(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.10025.Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.10026.(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.10027.A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.4.Severability10028.The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities. CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development. CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Division 6 (commencing with Section 10000) is added to the Labor Code, to read:DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.2.Definitions10005.(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.(h)Member means a CLC that holds membership in the association.(i)Secretary means the Secretary of Labor and Workforce Development.(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.3.Association of Cooperative Labor Contractors1.Organization and Membership10007.(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.10008.(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:(1)Democratic worker control requirements:(A)Having uniform hiring and ownership eligibility criteria.(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.(C)Having the majority of voting ownership interest held by worker-owners.(D)Having the majority of voting power held by worker-owners.(E)Having worker-owners exercise their vote on a one-person, one-vote basis.(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.(2)Operational requirements:(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.(G)Freely assuming employment responsibilities for workers consistent with Section 10022.(3)Workplace and civil rights requirements:(A)Compliance with labor standards established pursuant to Section 10024.(B)Compliance with laws and regulations governing workplace or civil rights.(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).10009.(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.2.Board of Directors10015.(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.(2)The board of directors shall be appointed as follows:(A)One director shall be appointed by the Governor.(B)One director shall be appointed by the Speaker of the Assembly.(C)One director shall be appointed by the President pro Tempore of the Senate.(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:(1)There shall be an odd number of voting directors.(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.(4)Directors shall be elected by member votes weighted pursuant to Section 10009.(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).3.Powers and Duties of the Association10020.(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.10021.(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.10022.(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.10024.The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.(d)Workers shall be provided with a retirement savings program that provides for any of the following:(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(e)Both the association and its members shall comply with Section 90.2.(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:(A)An arrest not leading to a conviction.(B)Participation in a diversion program.(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.(D)An adjudication in the juvenile justice system.(E)An offense other than a felony or misdemeanor, such as an infraction.(F)A conviction that is more than seven years old.(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.(g)Any worker aggrieved by any violation of this section may do both of the following:(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.10025.Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.10026.(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.10027.A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.4.Severability10028.The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities. CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development. CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
SECTION 1. Division 6 (commencing with Section 10000) is added to the Labor Code, to read:
### SECTION 1.
DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.2.Definitions10005.(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.(h)Member means a CLC that holds membership in the association.(i)Secretary means the Secretary of Labor and Workforce Development.(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.3.Association of Cooperative Labor Contractors1.Organization and Membership10007.(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.10008.(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:(1)Democratic worker control requirements:(A)Having uniform hiring and ownership eligibility criteria.(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.(C)Having the majority of voting ownership interest held by worker-owners.(D)Having the majority of voting power held by worker-owners.(E)Having worker-owners exercise their vote on a one-person, one-vote basis.(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.(2)Operational requirements:(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.(G)Freely assuming employment responsibilities for workers consistent with Section 10022.(3)Workplace and civil rights requirements:(A)Compliance with labor standards established pursuant to Section 10024.(B)Compliance with laws and regulations governing workplace or civil rights.(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).10009.(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.2.Board of Directors10015.(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.(2)The board of directors shall be appointed as follows:(A)One director shall be appointed by the Governor.(B)One director shall be appointed by the Speaker of the Assembly.(C)One director shall be appointed by the President pro Tempore of the Senate.(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:(1)There shall be an odd number of voting directors.(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.(4)Directors shall be elected by member votes weighted pursuant to Section 10009.(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).3.Powers and Duties of the Association10020.(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.10021.(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.10022.(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.10024.The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.(d)Workers shall be provided with a retirement savings program that provides for any of the following:(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(e)Both the association and its members shall comply with Section 90.2.(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:(A)An arrest not leading to a conviction.(B)Participation in a diversion program.(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.(D)An adjudication in the juvenile justice system.(E)An offense other than a felony or misdemeanor, such as an infraction.(F)A conviction that is more than seven years old.(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.(g)Any worker aggrieved by any violation of this section may do both of the following:(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.10025.Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.10026.(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.10027.A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.4.Severability10028.The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities. CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development. CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.2.Definitions10005.(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.(h)Member means a CLC that holds membership in the association.(i)Secretary means the Secretary of Labor and Workforce Development.(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.3.Association of Cooperative Labor Contractors1.Organization and Membership10007.(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.10008.(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:(1)Democratic worker control requirements:(A)Having uniform hiring and ownership eligibility criteria.(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.(C)Having the majority of voting ownership interest held by worker-owners.(D)Having the majority of voting power held by worker-owners.(E)Having worker-owners exercise their vote on a one-person, one-vote basis.(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.(2)Operational requirements:(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.(G)Freely assuming employment responsibilities for workers consistent with Section 10022.(3)Workplace and civil rights requirements:(A)Compliance with labor standards established pursuant to Section 10024.(B)Compliance with laws and regulations governing workplace or civil rights.(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).10009.(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.2.Board of Directors10015.(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.(2)The board of directors shall be appointed as follows:(A)One director shall be appointed by the Governor.(B)One director shall be appointed by the Speaker of the Assembly.(C)One director shall be appointed by the President pro Tempore of the Senate.(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:(1)There shall be an odd number of voting directors.(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.(4)Directors shall be elected by member votes weighted pursuant to Section 10009.(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).3.Powers and Duties of the Association10020.(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.10021.(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.10022.(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.10024.The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.(d)Workers shall be provided with a retirement savings program that provides for any of the following:(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.(e)Both the association and its members shall comply with Section 90.2.(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:(A)An arrest not leading to a conviction.(B)Participation in a diversion program.(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.(D)An adjudication in the juvenile justice system.(E)An offense other than a felony or misdemeanor, such as an infraction.(F)A conviction that is more than seven years old.(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.(g)Any worker aggrieved by any violation of this section may do both of the following:(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.10025.Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.10026.(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.10027.A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.4.Severability10028.The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities. CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development. CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act
DIVISION 6. The Promote Ownership by Workers for Economic Recovery Act
CHAPTER 1. General Provisions10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.10001.The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.10002.This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.
CHAPTER 1. General Provisions
CHAPTER 1. General Provisions
10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.
10000. This act shall be known, and may be cited, as the Promote Ownership by Workers for Economic Recovery Act.
The Legislature finds and declares that the creation of an Association of Cooperative Labor Contractors will spur the growth of democratically run, high-road cooperative labor contractors, thereby promoting equitable economic development, reducing inequality, and increasing access to living-wage jobs.
This division has no effect on worker cooperatives that do not elect to become members of the Association of Cooperative Labor Contractors.
(a)Applicant worker means an individual who applies to work at a cooperative labor contractor.
(b)Association means the entity operating under the name Association of Cooperative Labor Contractors or a substantially similar name, as described in Section 10007.
(c)Association manager means an employee of the association that provides services to the members of the association pursuant to the contract required by Section 10022.
(d)Contracting services means work, labor, or services provided by a member to a person, as defined by Section 5065 of the Corporations Code.
(e)Cooperative labor contractor or CLC means a legal entity owned and led by its worker-owners.
(f)Employ means to meet the employment requirements of Section 2775, and to meet the federal common law agency test.
(g)Laws and regulations governing workplace or civil rights refers to the provisions of this code, any provision of any order of the Industrial Welfare Commission, the Unruh Civil Rights Act (Section 51 of the Civil Code), the California Fair Employment and Housing Act (Part 2.8 (commencing with Sections 12900) of Division 3 of Title 2 of the Government Code), Section 11135 of the Government Code, and any other substantive local, state, or federal employment, labor, or civil rights law or regulation.
(h)Member means a CLC that holds membership in the association.
(i)Secretary means the Secretary of Labor and Workforce Development.
(j)Total association workforce means the total number of worker-owners of all members that meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.
(k)Worker means a natural person contributing labor or services to a cooperative labor contractor, other than a bona fide independent contractor under paragraph (1) of subdivision (b) of Section 2775. Unless otherwise specified, the term worker includes a worker-owner.
(l)Worker-owner means a worker who holds an ownership interest in a cooperative labor contractor.
(m)Worker voice expert means an organization dedicated to advocating on behalf of workers, one or more of which shall be designated in the associations bylaws.
(n)Workforce means the total number of worker-owners in a member who meet the uniform threshold of hours of work established by the association pursuant to subdivision (c) of Section 10009.
(a)The secretary shall organize, and the members shall maintain, a corporation under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) operating under the name Association of Cooperative Labor Contractors or a substantially similar name.
(b)The association shall function as a membership organization for CLCs. The association shall establish CLCs in specific industries, set labor policy for its members, manage workers for its members, provide other business services to its members, and improve business conditions for its members.
(c)(1)The association is a nonpublic entity, and shall not constitute a public agency or state employer for any purpose, including, but not limited to, Sections 3501 and 3513 of the Government Code, nor shall it constitute an employer pursuant to any statute administered by the Public Employment Relations Board.
(2)Once the secretary organizes the association as a nonprofit mutual benefit corporation and the Governor, Speaker of the Assembly, and President pro Tempore of the Senate appoint the initial board of directors pursuant to subdivision (a) of Section 10015, there shall be no further control of the operation of the association by any governmental entity.
(d)Whenever a provision of this division applicable to the association is inconsistent with a provision of law applicable to nonprofit mutual benefit corporations generally, this division shall control.
(a)Membership in the association shall be restricted to CLCs that meet all of the following requirements:
(1)Democratic worker control requirements:
(A)Having uniform hiring and ownership eligibility criteria.
(B)Having worker-owners work the majority of the hours worked by workers over a six-month period for the CLC.
(C)Having the majority of voting ownership interest held by worker-owners.
(D)Having the majority of voting power held by worker-owners.
(E)Having worker-owners exercise their vote on a one-person, one-vote basis.
(F)Having the majority of earnings distributed or allocated based on the quantity or value of work performed rather than ownership interest.
(2)Operational requirements:
(A)Having governing documents that provide the association the reserve powers described in paragraph (1) of subdivision (b) of Section 10021.
(B)Carrying employment practices liability insurance for all workers with coverage limits equivalent to at least 5 percent of payroll applicable to the CLC covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the CLC is required to carry the most protective coverage available.
(C)Making any employment practices liability insurance policy purchased pursuant to subparagraph (B) available for inspection by any covered worker during and for four years after their work with the CLC.
(D)Promptly reporting to the association any instance, including those resulting in a settlement agreement or an arbitration decision, where the CLC has been alleged in a formal proceeding to be in violation of any laws and regulations governing workplace or civil rights.
(E)Not materially failing in any other responsibilities set forth in the associations bylaws pursuant to subdivision (b).
(F)Not materially breaching any management contracts under subdivision (b) of Section 10022.
(G)Freely assuming employment responsibilities for workers consistent with Section 10022.
(3)Workplace and civil rights requirements:
(A)Compliance with labor standards established pursuant to Section 10024.
(B)Compliance with laws and regulations governing workplace or civil rights.
(b)The associations board of directors may set forth additional rights and responsibilities for its members in its bylaws.
(c)There is a rebuttable presumption that a CLC formed as a California worker cooperative corporation under Section 12253.5 of the Corporations Code meets the democratic worker control requirements of paragraph (1) of subdivision (a).
(a)Each member shall designate one voting representative to cast the members vote in association elections or other association decisions requiring a vote of the members.
(b)On any matter brought to the members for a vote, including, but not limited to, election of the associations board of directors, each member shall be allocated voting power proportionate to its workforces share of the total association workforce, provided that no member shall have greater than 30 percent of the voting power. This 30-percent threshold shall be enforced as follows:
(1)If there are one to three members, each shall exercise 30 percent of the voting power and the remaining voting power shall be exercised by one or more worker voice experts.
(2)If there are four or more members, each members voting power shall be capped at 30 percent and the remaining voting power shall be distributed among the other members based proportionately upon their workforces shares of the total association workforce, subject to the same 30-percent cap.
(3)The board of directors shall set forth in the bylaws the specific procedures by which the 30-percent cap shall be implemented.
(c)The board of directors shall set a uniform threshold of minimum hours worked for a worker-owner to count towards their CLCs workforce and the total association workforce.
(a)(1)The associations initial board of directors shall have three voting directors, representing the gender, ethnic, racial, and geographic diversity of the state, and at least one of whom is a worker-owner.
(2)The board of directors shall be appointed as follows:
(A)One director shall be appointed by the Governor.
(B)One director shall be appointed by the Speaker of the Assembly.
(C)One director shall be appointed by the President pro Tempore of the Senate.
(3)The initial board of directors shall serve at the pleasure of the appointing entity and shall be appointed for a term of office until December 31, 2023, or until the first regular meeting of members, whichever comes later.
(b)The initial board of directors shall set forth rules in the bylaws for the composition of future boards of directors. Those rules shall provide, at a minimum, that:
(1)There shall be an odd number of voting directors.
(2)Following the term of the initial board of directors, no voting directors shall be appointed by the Governor, the Speaker of the Assembly, the President pro Tempore of the Senate, the Legislature, or any other governmental entity.
(3)Nonmembers and nondirectors shall not have voting power with respect to election of directors, amendment of the bylaws, amendment of the articles of incorporation, or any other decision of the members or board of directors.
(4)Directors shall be elected by member votes weighted pursuant to Section 10009.
(c)Subsequent boards of directors may amend the sections of the bylaws governing the composition of the board, provided that those amendments shall comply with subdivision (b).
(a)Within the initial board term set forth in paragraph (3) of subdivision (a) of Section 10015, the association shall establish or grant membership to at least one cooperative labor contractor.
(b)By December 31, 2024, the board of directors shall approve a plan to establish or grant membership to additional members.
(c)The governing documents of any member established or granted membership under this section shall provide the association reserve powers as provided in paragraph (1) of subdivision (b) of Section 10021.
(a)Before granting membership to a CLC and at least once per year during a CLCs membership, the association shall conduct an audit of each member and CLC being considered for membership to confirm compliance with the requirements of subdivision (a) of Section 10008.
(b)(1)If the association determines that a member has violated or is violating the democratic worker control requirements of paragraph (1) of subdivision (a) of Section 10008, the association shall have the right, which shall be provided in the members governing documents, to unilaterally restore that control in the members governing documents, corporate governance, and employment practices, and shall exercise that right to cure any violations within 90 days. In addition, it shall require the CLC to make workers whole for any such violations within 90 days as a condition of continued membership in the association. If it determines that a CLC being considered for membership is not in compliance with the democratic worker control requirements, it shall not admit that CLC for membership.
(2)If the association determines that a member has violated or is violating the operational requirements of paragraph (2) of subdivision (a) of Section 10008, it may either suspend a members membership, expel a member, or provide a member a period of no more than 90 days to cure a violation. If it elects to provide a member with the opportunity to cure a violation and the member does not do so within 90 days, it shall suspend the members membership until it cures the violation or expel the member. If the association determines that a CLC being considered for membership is not in compliance with the operational requirements, it shall not admit that CLC for membership.
(3)For purposes of paragraph (3) of subdivision (a) of Section 10008, a CLC shall be found to not be in compliance if, during the preceding three years, it has been found to be in violation of the labor standards established under Section 10024 or laws and regulations governing workplace or civil rights two or more times. The association may, at its discretion, excuse violations under this paragraph based on consideration of whether the violation was minor, systemic, or intentional. The association may not excuse any violation that results in a monetary judgment or administrative determination exceeding the lesser of one hundred thousand dollars ($100,000) or 5 percent of the annual payroll applicable to the CLC. The association shall suspend the membership of or expel any CLC found to not be in compliance with this paragraph. In addition, the association shall not admit for membership any CLC found to be in violation of this paragraph.
(c)Notwithstanding subdivision (b), the association may, at its discretion and without providing the opportunity to cure, deny membership to, suspend the membership of, or expel any CLC it finds to have engaged in repeat or flagrant violations of the membership requirements in subdivision (a) of Section 10008.
(d)Any suspension or expulsion shall be conducted in compliance with Section 7341 of the Corporations Code.
(e)All workers shall have a right to bring a civil action for injunctive relief to require the association to carry out its duties under this section.
(a)Subject to the provisions of this division, the association shall set the labor policies of the members, including, but not limited to, policies for hiring, firing, promotion, discipline, compensation, and assignment of work.
(b)The association shall provide all association managers to the members. A member shall not directly employ its own association managers. Any association manager shall be an employee of the association, provided to the member via a contract between that member and the association.
(c)Management provided by the association shall be responsible for executing the labor policy set by the association. Members are authorized to implement labor policy under the direction of an association manager.
(d)The purpose of this section is to provide that the association shall be deemed the employer of the association managers and each members workers under federal law, regardless of whether a member is also deemed an employer. Under state law, workers are employees of both the association and the applicable member, while association managers are employees of the association. The association and each member shall freely accept employment responsibilities consistent with this subdivision.
(e)The association shall carry employment practices liability insurance for all workers at the association and its members with coverage limits equivalent to at least 5 percent of corresponding payroll covering class and individual claims under laws and regulations governing workplace or civil rights, provided that if a policy covering any of those claims or coverage limits is not available on the market, the association is required to carry the most protective coverage available. All workers shall have a right to inspect any employment practices liability insurance policy covering their employment and held by the association during and for four years after their employment.
(f)All workers shall have the right to bring a civil action for injunctive relief to require the association or the workers corresponding member to comply with this section.
The association shall establish and oversee the implementation of labor standards for itself and its members that meet at least all of the following minimum requirements. Nothing herein shall be deemed to reduce the members or the associations separate obligation to comply with all other laws.
(a)A workers wages shall not be less than 125 percent of the applicable minimum wage, for all hours worked, in the jurisdiction where work is performed, whether set by federal law, state law, local ordinance, or other law.
(b)(1)The maximum hourly total compensation of any association manager or worker at a member may not exceed an amount 10 times greater than the minimum hourly total compensation paid to any association manager or worker at the same member.
(2)Every member shall annually disclose to its workers the total compensation of its highest paid association manager or worker.
(c)(1)A monthly required health care expenditure shall be made to, or on behalf of, each worker in the amount of five dollars ($5.00) per hour worked, subject to annual adjustments based on the medical inflation rate, as set forth in paragraph (3).
(2)There shall be discretion as to the form of the monthly required health care expenditures, subject to any applicable collective bargaining agreement. Monthly obligations shall be met through one or more of the following forms:
(A)Additional compensation paid directly to the worker, provided that any additional compensation paid to the worker to meet the monthly required health care expenditure shall be paid as ordinary income no later than the workers last regular pay date of each calendar month.
(B)Payments to a third party, such as to an insurance carrier or trust, or into a tax-favored health program, including health savings accounts, medical savings accounts, health flexible spending arrangements, and health reimbursement arrangements, for the purpose of providing health care services to the worker or the spouse, domestic partner, or dependents of the worker, if applicable.
(C)Average per capita monthly expenditures for health care services made to or on behalf of workers or the spouses, domestic partners, or dependents of the worker, if applicable, by the members or the associations self-insured or self-funded insurance programs.
(3)The health care expenditure rates shall be adjusted annually based upon the average annual rate of growth of spending in the health insurance market, as determined annually by the Consumer Price Index for medical care or, if that data is unavailable, an equivalent alternative measure selected by the association.
(d)Workers shall be provided with a retirement savings program that provides for any of the following:
(1)Participation in the California Secure Choice Retirement Savings Program under the terms and conditions prescribed by the California Secure Choice Retirement Savings Investment Board, including an employer contribution of 3 percent of the workers annual wages to the program. This amount shall not be withheld from each workers wages, but rather shall be an additional payment on top of those wages.
(2)Any employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, if the plan qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(3)An automatic enrollment payroll deduction IRA that qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(e)Both the association and its members shall comply with Section 90.2.
(f)(1)Except as provided in paragraph (2), none of the following shall be considered in making an offer of employment to an applicant worker:
(A)An arrest not leading to a conviction.
(B)Participation in a diversion program.
(C)A conviction that has been dismissed, expunged, otherwise invalidated, or rendered inoperative.
(D)An adjudication in the juvenile justice system.
(E)An offense other than a felony or misdemeanor, such as an infraction.
(F)A conviction that is more than seven years old.
(G)A conviction for decriminalized conduct, including the use and cultivation of cannabis.
(2)This section shall not be construed to prevent consideration of an applicant workers pertinent criminal history in making an offer of employment for a position that requires a high degree of public trust, such as one working with children, working with dependent adults, involving private chauffeuring, or providing in-home services.
(3)The association and member shall include a statement of its fair chance policy, as described in this subdivision, in all solicitation materials to prospective applicant workers.
(g)Any worker aggrieved by any violation of this section may do both of the following:
(1)Bring a civil action against any employer who violates the minimum standards of this section or higher standards as established by the association and, upon prevailing, recover damages, including, but not limited to, lost wages and reasonable attorneys fees and costs, as well as obtain any appropriate injunctive relief.
(2)Enforce any other applicable law that provides an alternative vehicle for enforcing provisions of this code, including, but not limited to, the Labor Code Private Attorneys General Act of 2004 (Part 13 (commencing with Section 2698) of Division 2) and the Unfair Competition Law (Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code).
(h)Notwithstanding any other law, all relief provided for in this subdivision is supplementary to additional relief available under any other law.
Notwithstanding any other provision of this code or any provision of any order of the Industrial Welfare Commission (IWC), workers may, under specific industry or occupational wage orders of the IWC, waive through a valid collective bargaining agreement any of those rights provided in the wage orders of the IWC, provided that any right for which this code provides an independent, overlapping, or corresponding right shall not be waivable.
(a)The Legislature recognizes the importance of holding all parties responsible for violations of workplace standards accountable for those violations. In particular, abuse of franchiser-franchisee relationships, independent contractor misclassification, and the use of low-road labor market intermediaries can leave workers without meaningful recourse for those violations, if only an insolvent or otherwise underresourced entity is subject to liability. Accordingly, it is the policy of the state that joint employment liability be construed broadly in favor of workers.
(b)Notwithstanding subdivision (a), a person, as defined by Section 5065 of the Corporations Code, that contracts with a member for the provision of contracting services shall not be deemed an employer or joint employer of workers, as long as the members membership in the association is not suspended pursuant to Section 10021. This limited exception to employer and joint employer status shall not apply to the extent the person causes, is directly responsible for, or knows of any violations of the membership requirements included in subdivision (a) of Section 10008.
A member and the association are not labor contractors, as defined in paragraph (3) of subdivision (a) of Section 2810.3.
The provisions of this division are severable. If any provision of this division or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities.
10001. (a) On August 14, 2019, the Governor signed Executive Order No. N-17-19 establishing the Future of Work Commission tasked with studying, among other matters, the potential jobs of the future and opportunities to shape those jobs for the improvement of life for all of California, policies and practices that will help Californias businesses, workers, and communities thrive economically, while responding to rapid changes in technology and workplace structures and practices, policies and practices that will close the employment and wage gap for Californians, strategies for engaging employers in the creation of good, high-wage jobs of the future, and workforce development, training, education, and apprenticeship programs for the jobs of the future.
(b) In March 2021, the Future of Work Commission issued its report, A New Social Compact for Work and Workers, recommending that, among other actions, California help (1) ensure the creation of sufficient numbers of jobs for everyone who wants to work, including by extending financial and technical assistance to mission-oriented businesses, (2) eliminate working poverty, including by creating supports for workers to organize in unions and worker associations as well as supporting high-road employment, (3) create a 21st-century worker benefits model and safety net, including by developing a portable benefits platform and encouraging apprenticeship and other skill-building programs, (4) raise the standard and share of quality jobs, including by creating a California Job Quality Incubator to support the increase of high-quality jobs, and (5) futureproof California with jobs and skills to prepare for technology, climate, and other shocks, including by providing incentives to the private sector to invest in worker training.
(c) The Legislature finds and declares that a California-focused federated worker cooperative system may advance these objectives by encouraging the expansion of democratically run high-road cooperative businesses that promote equitable economic development, reduce inequality, and increase access to living-wage jobs. Worker cooperatives have been shown to convey wealthbuilding and other significant benefits to workers, including autonomy from larger economic forces, more resiliency during economic downturns, lower workforce turnover, greater voice in health, safety, and other workplace issues, and more equitable pay. The Legislature wishes to study how a federated worker cooperative system could advance the goals of the Future of Work Commission, particularly as they apply to historically underresourced communities.
CHAPTER 2. Definitions10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development.
CHAPTER 2. Definitions
CHAPTER 2. Definitions
10005. For purposes of this division, the following terms have the following meanings:(a) Association means the Association of Cooperative Labor Contractors.(b) Secretary means the Secretary of Labor and Workforce Development.
10005. For purposes of this division, the following terms have the following meanings:
(a) Association means the Association of Cooperative Labor Contractors.
(b) Secretary means the Secretary of Labor and Workforce Development.
CHAPTER 3. Study10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
CHAPTER 3. Study
CHAPTER 3. Study
10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.(b) The panel shall consist of all of the following members:(1) The secretary or the director of a subsidiary department thereof selected by the secretary.(2) The Director of the Governors Office of Business and Economic Development.(3) An appointee of the Speaker of the Assembly.(4) An appointee of the President pro Tempore of the Senate.(5) A representative from the Future of Work Commission selected by the Governor.(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.(d) The study shall consider, at a minimum, how to do all of the following:(1) Advance the goals of the Future of Work Commission within the association.(2) Incentivize the growth of the association and its members.(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.
10010. (a) There is hereby established in state government a panel to conduct a study regarding the creation of an Association of Cooperative Labor Contractors for the purpose of facilitating the growth of democratically run high-road cooperative labor contractors. The panel shall be assisted in this task by staff from the Labor and Workforce Development Agency or a subsidiary department thereof selected by the Secretary of Labor and Workforce Development.
(b) The panel shall consist of all of the following members:
(1) The secretary or the director of a subsidiary department thereof selected by the secretary.
(2) The Director of the Governors Office of Business and Economic Development.
(3) An appointee of the Speaker of the Assembly.
(4) An appointee of the President pro Tempore of the Senate.
(5) A representative from the Future of Work Commission selected by the Governor.
(c) In preparing the study, the panel may retain outside experts on high-road jobs, worker cooperatives, business formation, and other topics pertinent to the association.
(d) The study shall consider, at a minimum, how to do all of the following:
(1) Advance the goals of the Future of Work Commission within the association.
(2) Incentivize the growth of the association and its members.
(3) Promote tenets of democratic worker control, including, but not limited to, uniform hiring and ownership eligibility criteria, worker-owners working most hours worked, most voting ownership interest being held by worker-owners, most voting power being held by worker-owners, and worker-owners exercising their vote on a one-person, one-vote basis.
(4) Ensure that the associations members offer high-road jobs, which include, but are not limited to, jobs with the right to organize and participate in labor organizations and jobs with minimum labor standards, such as a minimum wage in excess of the otherwise applicable minimum wage, a compensation ratio between the highest and lowest paid employees, minimum health expenditures, minimum retirement expenditures, and protections for individuals who have gone through the criminal justice system.
(e) In preparing the study, the panel shall engage in a stakeholder process by which it consults with, at a minimum, organized labor, worker cooperatives, and business groups that can assess the opportunities and challenges associated with expanding workplace democracy in the major sectors of the economy throughout the state.
(f) The panel shall complete the study and make it publicly available on the internet no later than December 31, 2023.