Organize a worker cooperative under chapter 308B

Who this is for#

A group of workers who want to own and control the business where they work, and the people helping them draft the documents.

The short answer#

Chapter 308B does not define a "worker cooperative." You form an ordinary 308B cooperative and make it a worker cooperative by who your patron members are and how your bylaws define patronage. The statute defines patronage as "business, transactions, or services done for or with the cooperative as defined by the cooperative" and a patron member as a member holding a patron membership interest, one that requires the holder to conduct patronage business with the cooperative ^{P1, § 308B.005, subds. 21-23}.

[INFERENCE] The definition of patronage as services done for or with the cooperative permits a worker-centered drafting approach, but does not itself decide federal tax treatment or employment classification § 308B.005, subdivision 21. The chapter expressly contemplates employment of members as a possible member-control-agreement subject § 308B.627, subdivision 2; that is not a complete worker-employment code ^P1.

What the statute gives you#

• Purpose. A cooperative may be formed "for any lawful purpose," including providing products, supplies and services to its members ^{P1, § 308B.201}.
• Patron-member control. A patron member is entitled to one vote on matters put to patron members, unless the articles or bylaws give additional votes based on patronage criteria; patron members vote collectively, and the bylaws cannot reduce their collective vote below 15 percent of the total vote on matters of the cooperative ^{P1, § 308B.545, subd. 1}. See Member voting rules in Chapter 308B.
• Economic floor for patrons. Patron interests collectively hold at least 60 percent of financial rights to profit allocations and distributions, or at least 15 percent if authorized as the statute requires ^{P1, § 308B.601, subd. 3}. Section 308B.721 separately governs annual profit allocations and distributions: the default patron floors are 50 percent, with distinct conditions for reductions to no less than 15 percent. These measure different rights and flows, not an established statutory conflict. See Raise member equity and capital ^P1.
• Bylaws content. The bylaws, or the articles, must include the purpose, capital structure, classes, voting and governance rights and the patronage allocation rules ^{P1, § 308B.241, subd. 2}. See Write the bylaws.

What your bylaws must decide#

1. What counts as patronage. Hours worked? Wages earned? Something else? The statute leaves the definition to you ^{P1, § 308B.005, subd. 21}.
2. Who may be a patron member, any probationary period, and what ends membership. See Define members and membership classes.
3. How patronage is allocated and paid. See Allocate patronage and make distributions.
4. Whether any outside investors are allowed, in what class, and under what voting limits. See Raise member equity and capital.

Formation#

The SOS articles form has no cooperative-type box; the five articles are name, purpose, duration, registered office and organizers, so the worker character comes from your bylaws and membership terms, not the filing ^G1. For the steps, see Form a Minnesota cooperative under Chapter 308B.

Common mistakes#

1. Copying bylaws from a consumer or farm cooperative without redefining patronage.
2. Leaving patronage undefined and discovering at year-end that members disagree about how to share surplus.
3. Treating the buy-in as simply a fee without checking the securities and contribution rules.