Governor Signs Bonta’s Innovative Bill to Ease Pathway for Workers to Own their Own Businesses

Wednesday, August 12, 2015

For the first time in California history, small businesses may incorporate as worker-owned businesses

(SACRAMENTO, CA) – Assemblymember Rob Bonta (D-Oakland) was proud to announce today that Governor Brown signed legislation that will allow small businesses to form as worker cooperatives – businesses that are democratically owned and managed by their workers. The bill, AB 816, is first-of-its-kind legislation to facilitate the creation of worker-owned businesses in California.

“Worker-owned businesses are central to addressing income inequality, empowering workers, and building the middle class,” explained Bonta. “As low-income communities struggle with high rates of unemployment and low wages, worker-owned small businesses are an effective way of providing a living wage and bringing workers into the middle class.”

Worker cooperatives’ profit goes to the workers who earned it rather than corporate headquarters, keeping the wealth generated in the local community.  Worker cooperatives are democratically owned and managed, allowing workers to determine their business strategy and working conditions.  According to the United States Federation of Worker Cooperatives, the 350 worker cooperatives currently in the United States employ over 5,000 people and account for $500 million in annual revenue.

DIG Cooperative, Inc., an Oakland contractor that focuses on water conservation systems, was incorporated in 2006 under the existing consumer cooperative structure. Anya Kamenskaya, a member of the DIG Cooperative, explained how the new law will provide clarity and guidance for businesses wishing to operate as worker cooperatives. “The new law will enable our business to more easily raise capital for operation and expansion than the cumbersome requirements in current law. This will increase our capacity to employ Oakland residents at a workplace that puts the well-being of workers first.”

AB 816 provides a model and guidelines for small businesses that wish to form as worker cooperatives.    The bill mandates that worker cooperatives be democratically owned and managed by their workers.  AB 816 also allows worker cooperatives to raise capital from their members and the community. Bonta explained that this new structure will provide a way to build long-term wealth and assets for individuals who have been traditionally denied those opportunities.

Bonta concluded, “I thank  Governor Brown for recognizing the important economic recovery tool provided by AB 816.  AB 816 will facilitate the creation of worked-owned businesses that will bring thousands of Californians into the middle class.”

See AB 816 for the full text of the bill.