Submitted by Kate Doyle, Owner-Worker and attorney & Concerned Owner-Workers
A Letter to Shareholders from Concerned Owner-Members
The Owner-Members working in this grassroots effort to save member labor and the Co-op – as it is – have been concerned about how to address all Shareholders of The Honest Weight Food Co-op (HWFC) with openness, respect and understanding.
We have heard the arguments asserting that “One Share – One Vote” is only fair, and considered them carefully, especially within the context of concern for the future of the Co-op. At this time, we have found the Board recommendation to be against the interests of the Membership and of HWFC as a whole. If shareholders are given the right to vote, then member labor – as it is – would end. The Owner-Workers would not control the business, and they would be considered employees according to Fleming V. Palmer 123 F. 2d 749. As is clear from the legal analysis below, the current member labor at HWFC is legal.
Please read the explanation below for a more thorough understanding of why retaining our traditional voting rights is in the best interests of the future of HWFC as a whole. We hope Shareholders will recognize the severe effects “One Share – One Vote” could have on HWFC.
Why Only Worker Members at HWFC have the Right to Vote:
by Owner-Member and attorney, Kate Doyle
Under the HWFC Bylaws, only worker members have a right to vote. The right to vote is not based upon purchasing a share in the corporation (shareholder), but upon being a shareholder who works in/for the store. This definition of “voting member” is critical.
One of the seminal cases we rely on is Fleming V. Palmer 123 F. 2d 749, wherein the Federal Court of Appeals found that members ofthat particular co-op were subject to the FLSA (Fair Labor Standards Act; minimum wage) requirements because they were really just employees. Those workers were deemed employees because they did not control the business. Thus, if the workers do control the business they are not employees, but rather they are owners who control the business.
HWFC currently has approximately 1235 working member-owners. These owner-workers collectively control how the business is run by holding the only voting rights granted under the Bylaws. Whatever these owner-workers vote for, or against, controls the company. Under the current voting powers, the owner-worker collective controls the business and therefore they are not employees.
However, we have over 12,000 shareholders. If the Bylaws were changed to make all those who simply purchase a share a voting member, then the owner-workers would no longer control the company (1,235/12,000 is only about one tenth of the voting power, and by definition the owner-workers could never, collectively control the business).
Anyone who wants a right to vote must and should work, and join the collective of owner-workers. Three hours a month are all that is needed, and the co-op can and should provide the necessary opportunity to those who wish to become owner-workers and obtain voting rights. This is not a matter of exclusivity; it is a matter of joining the collective to preserve control by the owner-members, and thus preserve the cooperative nature of our business. So long as the owner-workers control, no matter how many there are, they are not employees, and there is no conflict with the FLSA.