A Labor Law Prof Talks Union Co-ops

Editor’s Note: This interview with UofL law professor and labor expert Ariana Levinson originally appeared on the Kentucky State AFL-CIO website. Parts of the answers are drawn from the articles, “Union Co-ops and the Revival of Labor Law,” from Volume 19.3 of The Cardozo Journal of Conflict Resolution (2018)  and “Founding Worker Cooperatives: Social Movement Theory and the Law,” from Volume 14.2 of the Nevada Law Journal (2014). 

How can a union co-op benefit union workers?

Worker co-ops increase job security, longevity of employment, and job satisfaction and provide an opportunity to accumulate wealth, in addition to income. Unionized owners will benefit in all these ways.

A union worker co-op can be a way to save a company that is closing because owners are retiring or to avoid a buy-out by an out-of-town private equity fund. Small businesses are a key sector providing jobs in local communities, and, even without the impact of Covid-19, the Silver Tsunami, in which many older business owners retire without a buyer for their business, is upon us. In these instances, the co-op is a means to save well-paying union jobs and keep income and wealth in the local community.

A union worker co-op can also be a way to create new companies and organize workers in a new way that doesn’t require an expensive protracted union campaign. Does your union have a contract with a company to water plants or keep up the grounds? Why not provide unionized workers who own their own business a preference for these jobs? Are there local workers who see a need and want to start a business? Why not use union expertise to help them so they will see the value of a union and unionize themselves? In these instances, the co-op is a way to add new members using less resources and save more resources for the long-protracted campaigns at larger employers.

Union worker co-ops can help ensure the success of a particular business and save or create well-paying jobs. They can also do more by potentially contributing to increased unionization rates and a resurgence of unions in their traditional role as a representative of working people.

How does a union co-op work?

A worker-owned co-op is a business that is owned and managed by its workers. In a true worker co-op, each worker has one share of ownership and one vote, creating property ownership and formal decision-making power for all. Profits are distributed on a patronage basis, meaning they are based on how much an owner works and not on how many shares an owner holds. In larger co-ops, the worker owners elect a board who hires management to run the business. In a smaller co-op, the worker owners themselves may make many decisions as a collective. The most basic definition of a union co-op is a worker co-op where at least some of the employees are represented by a union.

Particularly in large worker-owned co-ops, a union can ensure that democratic decision-making on matters of interest to workers, such as job security or discrimination, extends beyond election of directors and officers to the “shop floor” level. Even in a smaller co-op, a union ensures the protection of minority voices and interests. A union provides an avenue for individual workers to file grievances and resolve them, rather than have those workers who are unhappy or outvoted left without a stable process for dispute resolution.

A union also ensures that terms of employment are transparent and fairly applied. A collective bargaining agreement (“CBA”) governs terms and conditions of work. Union representation in such matters ensures that the worker owners’ interest as workers, and not only as owners, will be considered with respect to terms of employment. It provides a method to resolve disputes between management owners and non-management owners or between two non-management owners. As with many organizations, elites may emerge in worker-owned firms, and collective bargaining is a method of reducing the power of that elite. Separation of powers between the co-op and the union, even when ultimately the same worker-owners control both organizations, serves as an independent check on each.

Relations between labor and management are by nature adversarial. How would that work in a co-op?

Relations between labor and management in the U.S. are often extremely adversarial, but the adversity results largely from our history of anti-unionism and our legal framework. Our legal framework provides ultimate decision-making about major business decisions, such as whether to remain open or shut down or who to hire to manage the company, to the employer. These decisions are actually often as crucial to the workers and community as they are to the owners or managers of the business. A union co-op provides means for workers to have say on these larger issues and not only on wages and other terms and conditions of work. If you speak to union representatives who have been involved with negotiations at a union co-op, they agree that, while negotiations are still arms-length, the union has more power to craft initial provisions and is able to work more cooperatively with the co-op than with most traditional employers. The union has bargaining authority and is a separate entity from the employer, not a company union.

Give some examples of successful worker co-ops in the U.S.

Equal Exchange may be the best-known worker co-op in the U.S. The over 130 workers elect a board of directors from among themselves to make high level business decisions. Equal Exchange is a fair-trade coffee and chocolate business that had revenue of $74.4 million in 2018. They have operated as a worker co-op for 30 years. Equal Exchange is not unionized, but other prominent worker co-ops are.

The longest running and largest union co-op in the United States is the Cooperative Home Care Associates. They employ over 4,000 people, many of whom are minority women. The company, located in the Bronx in New York City, provides home-care assistance to the elderly, ill, and disabled. The company started out as a worker co-op in 1985, and the employees unionized in 2003. They are represented by Service Employees International Union (“SEIU”) Local 1199. The union helped the cooperative to secure government contracts contributing to both the cooperative and the union’s ability to grow.

Another example of a union co-op is New Era Windows in Chicago. When Republic Windows and Doors shut down in 2012, the union employees occupied the plant and reclaimed the business as an effort to avoid job loss. Through the support of the union representing them, the United Electrical workers, local politicians, and other community members, the employees were able to reopen the company as a union co-op.

Closer to home, The Cincinnati Union Co-op Initiative, now Co-op Cincy, was started by four amazing activists in 2009 during the Great Recession and incorporated as a nonprofit in 2011. The first co-op that they helped incubate was Our Harvest. Our Harvest was incorporated in April 2012. It is an urban farm and food hub intended to eventually be fully employee owned. It currently has three worker-owners and 14 workers. A UFCW [United Food and Commercial Workers International Union] organizer reached out to the employees in 2014, and the employees voted to have union representation. The initial contract negotiations were cooperative, efficient, and successful, resulting in a collective bargaining agreement between Our Harvest and UFCW Local 75.

What is the history of the union co-op movement?

Historically, many successfully operated worker cooperatives have survived economically and provided workers control over the business. The first movement toward worker cooperatives started in 1790 because of changes in work process. The Knights of Labor, a union with hundreds of thousands of members in the 1880s, made starting cooperative businesses a primary focus of the union movement in the 1870s and 1880s. Then, in the early 1900s, another wave of cooperatives formed in response to the massive unemployment of the Depression. Between 1790 and 1959, there were more than 700 documented cases of worker co-ops in industries ranging from shoe manufacturing to sheet metal work to coal mining. Then, during the 1960s and 1970s, which is known to have been a time of social unrest, another group of worker co-ops was founded.

An example of a union co-op formed during this time is Denver Yellow Cab. Before it was established as a co-op in 1979, Denver Yellow Cab was a privately held company. In 1978, the holding company for Denver Cab bought out the other investors and was looking for a buyer. The union leaders set to work thinking about how members could buy the company and run it as a co-op. They had a strike fund of over $100,000 and quickly formulated plans. Union members voted to buy the company, and the attorneys worked out an agreement whereby workers would take over the company.

The new bylaws were the result of meetings and discussion and were approved by a large majority of employees. All drivers had to belong to the co-op, and four of the six unions covering other employees also required co-op membership. Membership lasted as long as a person was employed with the co-op, and each member had one vote in decision-making. The members elected a board of directors from members who were not union officers or department heads. The board appointed the officers and management team. The day-to-day routine of employees and drivers was not changed by the co-op structure. In 1984, the co-op had 400 cabs and more than 900 drivers. The co-op appears to have declared Chapter 11 bankruptcy in 1993 and to have subsequently been bought out by new owners.

Since the Great Recession, a new social movement has resulted in a significant number of unions supporting the establishment of union co-ops. These co-ops are union, not only in the sense that the employees are likely to select union representation once the business is up and running, but also because unions are supporting their establishment by, for instance, providing governance models and expertise, meeting space for union-related co-op conferences and a source for hiring skilled employees. The movement began in approximately 2009, when Mondragon and the [United]Steelworkers entered into a historic agreement to foster union co-ops in the United States. •