New GCI Report: Policy Recommendations for Amendments to the State of Illinois Worker Cooperative Statute

Alex Linares, author of the report, will present his research at the Chicago Cooperative Alliance’s Chicago’s 1st Cooperative Economy Summit being held August 25.

We are pleased to release another report from the Great Cities Institute that we hope will be of value to those interested in promoting or establishing business cooperatives.  We have long been proponents of worker cooperatives and small business incubators as a potential for addressing employment needs through a cooperative structure.  One of the best models of worker cooperatives comes from the Basque region in Spain. The Mondragon Project goes back to the early 1940s. Ganados del Valle in New Mexico (now Tierra Wools) also has a long history as a successful cooperative based in the wool industry. Here in Chicago, the New Era Windows Cooperative is another example of successful worker ownership. Throughout the world and locally, interest in worker cooperatives is growing – both in urban and rural settings.  Yet establishing the structure is not always easy and in some instances state law needs to be changed to either remove obstacles to cooperative formation or to create the necessary enabling legislation.

In this newest report from the Great Cities Institute, we share the results of extensive research on the relevant Illinois state statutes, including recent effort to improve state law, and conclude with policy recommendations for amendments to the State of Illinois Worker Cooperative Statute.

From the report summary:

Worker cooperatives are a business model where people employed in the business also receive dividends from the surplus earnings of the business, and have voting power within the business. It is a potential model for increasing wages, and instituting democratic values in the workplace. Illinois currently has two statutes on worker cooperatives, the Agricultural Co-operative Act (805 ILCS 315/1) and the Co-operative Act (805 ILCS 310/1).

This report gives an overview of what worker cooperatives are, reviews the Illinois Co-operative Act 805 ILCS 310/1, and makes recommendations for amending the Co-operative Act. Since this report focuses on worker cooperatives, it will not address the Agricultural Co-operative Act (805 ILCS 315/1) which organizes agricultural consumer cooperatives.

The Co-operative Act was amended in 2016 which modified the statute’s language to allow all types of businesses to be organized as worker cooperatives in Illinois. This was a milestone in allowing worker cooperatives to grow, especially within the service sector. Regardless, two elements from many other statutes organizing worker cooperatives are missing from the Illinois Co-operative Act.

  • Inclusion of language that describes the distribution of earnings to cooperative members through patronage dividends or labor patronage
  • Inclusion of more worker cooperative values in the statute language, specifically the voting system of one-member, one-vote.

Alex Linares, author of the report, will present his research at the Chicago Cooperative Alliance’s Chicago’s 1st Cooperative Economy Summit being held tomorrow, August 25, from 10:00 a.m. – 5:00 p.m. at 237 S. Desplaines St.  At the same gathering, folks connected to the Illinois Worker Cooperative Alliance and the John Marshall Law School-Chicago Business Enterprise Law Clinic will also present their recent report, Cooperation Chicago: Building Chicago’s Worker Cooperative Ecosystem. Groups affiliated with the Alliance include:  Chicago Community and Worker’s Rights (CCWR), Centro de Trabajadores Unidso:  United Workers’Center (CTU), The Domestic Worker and Day Laborer Center of Chicago (DWDL), The Co-op Ed Center (CEC), and New Hope Rising.

Interest in the worker cooperative model is growing and we are pleased that, through this report, we can contribute to the many efforts that exist towards promoting worker cooperatives. We hope this report sheds light on the recent amendments (2016) that made the statute more supportive of service based cooperatives, while also recommending amendments in the statute to better integrate more social values into the statute.

On September 14-16, the Worker Cooperative National Conference will be held in Los Angeles, California.