GRASSROOTS ACTION and Bylaws (Again) ARE POWERFUL!

Posted by Laura Hagen, HWFC Member-Owner

Here are this weekend’s Grassroots-Grows-Capacity Action Steps:

1. Read Another Bylaws Broadside!;
2. Read some or all of the articles, cited below, from the citations’ page of a document called the HWFC Bylaws Task Force FAQ;
3. Extra Credit: Read the entire HWFC Bylaws Task Force FAQ;
4. Please comment, below. Observations, thoughts, reactions.

~ANOTHER BYLAWS BROADSIDE!~
with its VERY OWN LIST OF CITATIONS

Please go read Bylaws Part I, first, GRASSROOTS ACTION and current bylaws ARE POWERFUL!

You can stay inside this weekend, grab a cup of something warm & toasty, push the cat or dog off your lap (or not), plunk your laptop down on your lap … and read away. Permission granted to stay warm indoors with eggnog, glögg, mead, hot chocolate, hot, spiced cider, warmed kumbucha or, my favorite, a pot of Jade Oolong tea. Oh, and how could I forgot a cup of Joe!

There is a lot of talk going around our co-op about bylaws. That’s because the (former) board had been planning on asking member-owners to both vote on bylaws’ changes (which would dis-empower member-owner power & control) and also add 12,000 new shareholders to the co-operative corporation (see why this is also a move to dis-empower member-owner power & control, here) at the January 24, 2016 membership meeting, 37 days away.

It is now up in the air as to whether these votes will actually take place, given that we have a newly-configured board and brand new leadership on our executive committee, committed to maintaining & strengthening our member-owner labor program (MLP) and committed to transparency here at HWFC.

In addition, the newly-configured board made a decision at its Tuesday, December 15, 2015 meeting to suspend the work of the Bylaws Task Force and Strategic Planning Committees for an indefinite period of time.

Finally, the board also voted to place a 60-day moratorium on the use of any consultants contracting with HWFC (save for attorneys and physical plant contracts.) So, any bylaws’ work that CDS Consulting Co-op (see below) was in the middle of brokering here at HWFC, or any Strategic Planning meetings & work planned with Shem Cohen of Change Events, Inc. have been suspended. Any Strategic & Crisis Communications and lobbying activities contracted with Corning Place Communications have also been halted.

It wouldn’t hurt to write the board and tell them you don’t want a bylaws’ (or 12,000 new shares’) vote in January …given that nobody except the 27 members of the Bylaws Task Force (BTF) has ever even seen these draft bylaws.

BYLAWS: LOTS OF READING AND THINKING TO DO

If you fell behind on your bylaws’ classwork, this post, GRASSROOTS ACTION and Current Bylaws ARE POWERFUL, goes into the bylaws’ issue in some detail.

However, despite all the recent brakes being applied to an out-of-control bylaws’ train here at HWFC – forewarned is forearmed. Hence the assignment to read & study. There are several important facts to understand – call this your Study Guide – before you dig in and start reading the new material:

• HWFC’s bylaws were fine to begin with, they did not need a complete overhaul, perhaps some tweaking may have been in order.

• The bylaws’ revision process here at HWFC – started in April, 2015 – was conducted in complete secrecy.

To this date, no one save 27 members of the HWFC Bylaws Task Force (BTF), has even seen the draft bylaws document(s), and this is not for lack of trying. Only six (6) members of the BTF are unaffiliated member-owners. The remaining members are:

9 HWFC board members
3 HWFC Leadership Team members (management)
4 HWFC Governance Review Council (GRC) members
3 attorneys, representing two law firms hired by the (former) board
2 nationally-known consultants from CDS Consulting Co-op: one an attorney and one the Team Leader of their CBLD program (see below) as “Subject Matter Experts”

• The national corporation pushing bylaws’ changes on us – CDS Consulting Co-op (CDSCC) – appears to do this to many US co-operatives with whom it works.

• The CDS Consulting Co-op firm promotes its in-house CDSCC CBLD ‘Fresh Start’ Bylaws Template as a part of a package it sells to US co-operatives. The program is called Co-operative Board Leadership Development (CBLD). The HWFC board contracted for the program & its ‘Fresh Start’ Bylaws Template in December, 2014.

• The CDSCC ‘Fresh Start Bylaws Template’ strips food co-op owners of their power & control and, instead, consolidates it between management & board.

• Where are employee member-owners in this picture? Once food co-op member-owners are stripped of their legal powers, via bylaws’ changes, they can offer no protection, safeguards, oversight, or watchdogging on behalf of employees, who are at now at the mercy of a newly-empowered management-board axis.

FIGHT TO MAINTAIN MEMBER-OWNER LABOR PROGRAM ASSUMES IMPORTANCE
MEMBER-WORKERS = MEMBER-VOTERS

Finally, and the crux of the matter here at HWFC – since the (former) board tried to (functionally) end our MLP with two ratified motions at the October 20, 2015 board meeting – is the battle to maintain our member-owner labor program.

Part and parcel with revising bylaws, CDSCC seems to advise boards’ of US food co-ops to weaken and/or end their member-owner labor programs (MLP). It’s a hard sell and fear, by our (former) board, has been wielded as the weapon of choice to coerce member-owners into believing it is in their best interest to end the member-owner labor program, preferably as quickly as possible (no later than by January 1, 2016).

Here at HWFC our MLP not only provides working member-owners with a discount on purchases, community and “food fellowship,” it, keeps us involved and “on the floor” running the business, and, most importantly, maintains an owner’s right within the co-operative corporation to make business decisions and vote.  Any move to substantively change (or end) our MLP should also be viewed as a concurrent move to legally disenfranchise us.

The (former) board did its best to end our MLP. We fought back and won; a November 30, 2015 emergency Special Membership Meeting with 700+ people attending saw to that.

Is the fight over?

No.

SECRECY

Not two days later, on December 2, 2015, the (former) board’s executive committee authorized a secret meeting to take place between the co-chair of the Governance Review Counsel (GRC), the board’s two legal teams, and the NYS Department of Labor (DOL). Topic? Front & center: discussion of our member-labor program and labor law issues.

A secret meeting with a NYS regulatory agency, attended by 7 individuals, was planned for before and took place after 700+ members of HWFC attended a historic emergency Special Membership Meeting of our co-operative: the largest meeting in our 39 year history! [1]

The GRC’s co-chair, Ursula Abrams, was asked by the then acting-President Deb Dennis [2] (and the executive committee? …which, after the election at our emergency Special Membership Meeting, would have consisted of only two people) to keep this meeting a secret from member-owners (!), including the three new board members who had just been elected two days’ previously! There is some question as to whether all the incumbent board members knew about this secret meeting.

It was confirmed, by me, at the December 10, 2015 meeting of the GRC, that it was a unanimous decision of the GRC to agree to this request to keep the meeting secret. The entire GRC also agreed to allow the GRC co-chair to issue her written interpretation of the meeting to Membership.

UPDATE, February, 2016: It has been subsequently uncovered, through a review of billing invoices, and announced by the brand new HWFC Board of Directors, that this “Memorandum” was actually written by the Strategic PR firm, Corning Place Communications, hired as consultants by acting-President Deb Dennis’s board in April 2015; it was, however, presented by the Board as a communication from the GRC’s (former) co-chair.

This is absolutely and without question an astroturf (fake grassroots attacks real grassroots) action; a “skunkworks” type of operation …taking place right under our noses in the middle of governance operations in our co-operative!

US nonprofits have been under this kind of attack for decades; makes sense that US food co-ops would start experiencing the same type of “fake grassroots” operations.

Please see the definitions of “astroturf,” “co-opted,” “skunkworks” and “stinktank” at this very reputable national grassroots advocacy group called TeleTruth. Do a search on “astroturf” or “front group” at SourceWatch, http://www.sourcewatch.org; U.S. Right to Know, http://www.USRTK.org; and the Cornucopia Institute, http://www.cornucopia.org . See the Food & Water Watch article, Are Your Tax Dollars Bankrolling an Industry Front Group?, this SourceWatch article on a PR firm which specializes in creating agricultural “front groups” and this 2012 Organic Consumers Association article, Meet the Corporate Front Groups Fighting to Make Sure You Can’t Know What’s in Your Food.

I will refrain from detailed expression of my outrage  – I am simply stunned – allowing the reader to ruminate and fume, save with this reminder; this secret meeting with the NYS DOL and this subsequent “Memorandum” were deceptions willfully & intentionally initiated and foisted upon Membership by the (former) acting-President (and the executive committee? and other (former) board members?) with the help of a highly paid PR & Lobbying firm AND two law firms (and other consultants of that HWFC board? [which included, at the time, the nationally-based CDS Consulting Co-op and Change Events]) …after our historic emergency Special Membership Meeting, attended by 700+ people, had taken place on November 30, 2015, at which we elected three new board members and sent a clear message to that board to stop attacking both our member-labor program and member-owner power and control of our co-operative.

Our emergency Special Membership Meeting, held on November 30th, was a mere blip on the radar screen to those who participated in this “co-opted”or “skunkworks” operation two days later, on December 2nd – a blip on their radar screen – and who agreed to (deceptively) publish the subsequent PR manipulation of that meeting to the entire HWFC membership.

The lengths to which the former acting-President (and her executive committee? …and other board members?) went, to carry off this NYS DOL meeting, underscores its importance to them. Despite an emergency Special Membership Meeting – and massive coverage by the Times Union – they intended to pull this meeting off!

We suspect they were hoping for a written ruling from the NYS DOL against co-op Member Labor Programs (MLPs), which could then have been utilized to end MLPs in ALL NYS food co-ops. This written ruling did not happen; NYS DOL does not issue written rulings in this manner.

The only written thing we got out of this meeting was a cleverly-worded & manipulated document, professionally spun by a PR & Lobbying firm …which was paid very nicely to do so …by the (former) HWFC board of directors.

What’s the final message (spin) of that document?

Get thee back to changing your bylaws!

Which entity was helping the (former) board, at that time, with bylaws’ changes as members of our Bylaws Task Force?

Two (nicely paid) consultants – “Subject Matter Experts” – from CDS Consulting Co-op: Mark Goehring and Thane Joyal. (Remember those CBLD ‘Fresh Start‘ Bylaws?)

But, ask yourself: why would one food co-op board in one state capital wish to end MLPs in ALL the food co-ops in that state? Was this truly their agenda …or the agenda of some entity with wider, state and national interests?

END update.

At the  December 10, 2015 GRC meeting, MS. Abrams provided the names of the people present at the HWFC Board – NYS DOL December 2, 2015 meeting:

James Rogers, NYS DOL Deputy Commissioner for Business and Labor Affairs
Maura McCann, NYS DOL Acting Director of Labor Standards
Michael Pagliolonga, NYS DOL General Counsel
1 woman (name not known) from NYS DOL [3]
Joanmarie Dowling, Dowling Law, PLLC, representing HWFC board
John Vero, Couch White, LLP, representing HWFC board
Ursula Abrams, representing HWFC GRC

This list of attendees and Ms. Abrams written interpretation of the meeting, sent out in the board’s December 3, 2015 Inside Scoop as a Memorandum, are all we member-owners know about this meeting. [4] See the full text of this Memorandum, below.

One of the GRC’s original, prime mandates, as an elected body, was to report directly to membership, in addition to the board – especially when confronted with an out-of-control board. Given the fact of the 700+ person Special Membership Meeting and given that the main purpose of the meeting itself was to absolutely rein in an out-of-control board, the decision of the full GRC to agree to proceed with and participate in this secret meeting – while not informing membership and their three newly-elected board members – verges on, at best, a lack of common sense and/or denial of GRC duties to membership as per the bylaws, or, at worst, total agreement with the machinations of an out-of-control executive committee and, therefore, a total failure of the GRC in its mandated duties to member-owners: that is, the GRC, as a check & balance, failed.

The NYS DOL did not call this meeting. We were not under review or investigation by the NYS DOL. Far from it. Neither did the NYS DOL issue an opinion to HWFC as a result of this meeting: they don’t do that.

The GRC co-chair issued the written opinion.  IMHO, and I am not an attorney, this interpretation of the meeting – and that is all it is, one person’s interpretation – serves to dish out more fear directly to us member-owners about our MLP and, secondly, could serve to place our co-operative directly in the limelight with the NYS Department of Labor (DOL) and any new NYS initiatives involving NYS DOL.

Given the text of the first secret letter, authorized by the board and hand-couried to the NYS DOL on October 26, 2015 – which ignored the existence of member-owners and made clear management & board intent to (secretly) work together to end member-labor at HWFC – it came as an utter shock to learn at the Board meeting on December 15, 2015, that a second secret letter had been sent to the NYS DOL, instructing them to disallow any other parties – save the board’s two legal teams and invited guest – wishing to participate in any meetings between HWFC and the NYS DOL! (Copies of this secret letter are not available. We may need to FOIL NYS DOL yet again.)

Given the fact of this second secret letter to the NYS DOL and the meeting it protected, how have these two secret letters and one secret meeting (it is unknown if there have been others) harmed member-owners’ ability to advocate on our own behalf should an issue ever arise with the NYSDOL? Isn’t it incumbent upon us, as member-owners, to inform the NYS DOL and set the record straight immediately: we were purposefully kept out of the conversation with the NYS DOL, and we member-owners are an interested, legally-invested party to this conversation?

Furthermore, the October 20, 2015 board motion (made at another secret meeting) which authorized this entire operation, had in its text the following unusual terms, “interface” and “entities:”

The Board authorizes the Co-op’s attorneys (Couch White and Dowling Law, PLLC), in consultation with the Leadership Team and the Executive Committee, to interface with the New York State Department of Labor and entities in connection with ending member labor on the floor and administration by January 1, 2016. [4]

This motion, the 2nd of two passed at the October 20th meeting, was never rescinded by the board: it was and is still in play.

At its November 3, 2015 meeting, the board rescinded its 1st October 20th motion, replacing it with:

John moved to rescind the Board’s decision of October 20 “to end member labor on the floor and administration by January 1, 2106.” The Board will enact another resolution that will take into account input from the GRC and members. [5]

The GRC has now entered the picture. [6] [7]

Given two secret letters and one secret meeting with NYS DOL which have been uncovered after the fact (and, to clarify, kept secret from member-owners as a class), isn’t it just possible that other “entities,” in addition to NYS DOL, have been contacted by the former board and its lawyers, consultants & lobbyists “in connection with ending member labor?” Did the “interfac[ing]” stop with one NYS DOL meeting? I now find the terms “interface” and “entities” to be deliberately ambiguous in the context of all this secrecy.

Three times, now – that we know of – the (former) board, or, more likely, its executive committee, has appeared to, in secret, utilize an outside regulatory agency – the NYS DOL – as a sneak thief would use a crowbar: attempting to strategically leverage and pry rightful ownership of this food co-operative corporation from member-owners’ hands.

If this one meeting, and the two letters, were intended to act to protect the co-op from harm, due to its MLP, why the need for secrecy? Why go to such great lengths to insure that member-owners were kept in the dark and denied participation?

AN END TO THE SECRECY: LET’S EMPOWER OURSELVES

Let’s get back to the GRC co-chair’s interpretation of the secret NYS DOL meeting, since it’s all we have to work with, for the moment.

Ms. Abram’s written interpretation ends with this statement:

I think our best next steps are to return to the Bylaws Task Force Initiative to absorb and process the clear messages received by the membership advisory referenda voted on at the 11/30 Special Membership Meeting, as well as, the clarifications gained from this meeting with the DOL.

So, given that her final “take away” from this secret NYS DOL meeting is to return to the Bylaws Task Force Initiative and to factor in the advisory votes taken at the November 30, 2015 emergency Special Membership Meeting, we are going to do that, to the best of our ability.

I pass, at this time, on also considering “the clarifications gained from [the] meeting with the DOL.” I leave that, for the moment, to our member-owner attorneys.

Since our board has voted to suspend activities of the Bylaws Task Force, we member-owners can all become the public, transparent, democratic arm of the secret HWFC Bylaws Task Force. We are all owners of this food co-operative; ownership involves some reading & studying and we will start by studying the materials handed out by CDS Consulting Co-op to the secret HWFC Bylaws Task Force.

We have a lot of catching up to do.

So, first, “to absorb and process the clear messages … voted on at the 11/30 Special Membership Meeting,” here is the text of the most pertinent of the three November 30, 2015 emergency Special Membership Meeting advisory ballots, with its election results:

Member review and approval or disapproval of the board’s decision, made at the October 20, 2015, Board meeting and made public on October 23, 2015. “Consistent with the Bylaws Task Force recommendation, the board will end member labor on the floor and administration by January 1, 2106. The board will make a good faith effort to engage the membership in the process.”

Review: The right to reverse Board decisions is based on our Bylaws [330.1;430], the full text of this and all following citations are provided at the end of this document. There will be presentations and discussion prior to the straw poll. Concerns raised include Bylaws [330.5], which grants the Membership the final approval of Member work requirements.

330.1 Membership Rights The Membership has ultimate authority and responsibility regarding the operation of HWFC. The Membership may delegate authority to the Board and Management. Such delegation shall be specific and all residual authority shall remain with the Membership.

430 Review of Board Actions by Membership Any action taken by the Board may be referred to the Membership for approval or disapproval on request by petition for a Referendum or a Special Membership Meeting pursuant to Section 341 or 343.

“DISAPPROVE Board Decision” would disapprove the original board decision to end member labor on the floor and administration.”

504 voters or 85.7% Disapprove the Board’s Decision.

Please also consider the four additional ballots which were voted upon at the emergency Special Membership Meeting and those election results.

Second: scan the list of articles in the list of citations. Pick & chose among all these articles – or methodically read ’em all  – provided to our HWFC Bylaws Task Force by two of the top national consultants working for CDS Consulting Co-op, Mark Goehring, CDSCC CBLD Team Leader and, Thane Joyal, esq.

ALICE IN WONDERLAND DOWN THE RABBIT HOLE
Is this a Bylaws Task Force or a
Better End Member-Labor Task Force?

Hold your horses! Did you just scan the list of citations?

You will note that the majority of the citations provided to the HWFC Bylaws Task Force by Ms. Joyal and Mr. Goehring have virtually nothing to do with bylaws.

One, and only one article relates specifically to bylaws: the boilerplate ‘Fresh Start’ bylaws produced by CDSCC.

Seriously?

A list of sources that has virtually nothing to do with the topic at hand: my university music history professor would simply fail me.

They have everything to do with member labor at US food co-operatives (and what a risky & dangerous business that is) and those pesky member-owner “patronage dividends” that so get in the way of, well, out-and-out profit.

The first citation refers to a document written by Goehring and Joyal, Member labor programs at comparable co-ops and related resources.  Since we must have paid for this research paper, how do we get a copy of it?

Nine of the thirteen citations relate directly to member-labor; fully sixteen (16!) articles out of a total of 19 discuss member-labor and the risks and/or those pesky “patronage dividends.”

My favorite title of all is, Why some Co-ops are killing off their member labor programs. Need I say more?

The only unambiguous bylaws’ citations provided to the HWFC Bylaws Task Force (#12) is a reference to the CDS Consulting Co-op’s CBLD ‘Fresh Start’ Bylaws Template. Please go read these boilerplate bylaws. Compare them to our own, here.

We have recent confirmation, BTW, that these boilerplate ‘Fresh Start’ bylaws were handed out, utilized and promoted during HWFC Bylaws Task Force meetings. These are the bylaws which strip food co-op owners of their power & control and, instead, consolidate it between management & board.

Pay special attention to #4 and #9: the only two local citations from Albany, NY. Why these two sources, one mentioning Governor Cuomo and a new NYS Task Force?

And #10? I am, again, left speechless (as I was after first reading the board’s first 10/26/15 secret letter to the NYS DOL). Although, remember, the HWFC Bylaws Task Force includes all three (3) members of the Leadership Team (management), who clearly wielded significant influence. (“One shareholder, one vote” is code for dis-empower member-owner power & control. See this document, from the top of the page, yet again.)

In the triple interests of academic freedom, need-to-know by every single working, voting, member-owner of the Honest Weight Food Co-operative, and we-collectively-paid-for-’em-so-their-our-property, I am ignoring the gag order on the bottom of the FAQ.

Yes, that’s right. Printed on the bottom of every single page of this FAQ is the following statement:

Revised: November 9, 2015. This document is confidential and provided for the sole purpose of internal Co-op discussions. This document may not be disclosed in any manner (including photos) to any third party or used for any other purpose without the express, prior written permission of the HWFC’s Board of Directors.

A gag order   …on each footer   …of a FAQ   …of a co-op doc.

Did you ever?

I guess one is not supposed to, well, frequently ask questions.

POOR CDS CONSULTING CO-OP RESEARCH HABITS?

Since the three citations from Laddie Lushin (an attorney, nationally-famous and esteemed for his legal views supportive of co-operatives and, as well, member-labor programs, who limits his work to co-operatives and nonprofits) are missing their URLS – conveniently provided for all the other articles in the CDSCC list, below – I have dug up what I could quickly find on the internet, and am also contacting Mr. Lushin to ask for him for URLs, email copies, or hard copies of all his published articles:

6.     Co-op member labor programs under the Fair Labor Standards Act: A matter of economic reality, by Laddie Lushin, published by Laddie Lushin, 2009.

Click to access Laddie-Lushin-article.pdf

7.     Summary of patronage dividend requirements for consumer co-ops, by Laddie Lushin, published by Laddie Lushin, 2011.

Click to access PATRONAGE%20DIVIDEND.pdf

8.     Member labor and federal employment taxes, by Laddie Lushin, published by Laddie Lushin, 1994.
(Could not locate URL. HWFC new BTF members, help!)

Why weren’t articles like these included in this list of sources? For example: you must read this Nov-Dec 2010 article by Laddie Lushin, published in the Cooperative Grocer (a publication of the Cooperative Grocers Network), A Trojan Horse in Our Midst Ten Faults of the Uniform Limited Cooperative Association Act, (wherein he comments on an article of Thane Joyal’s) and his follow-up letter to the editor in Jan-Feb 2011’s Cooperative Grocer, A quagmire of vacuous happy-talk, which is responded to by the editor, Dave Gutnecht, Do we have your attention?: this repartee occurring in an article entitled, “Flexible or Flawed” Co-op Laws. Finally, here are all of the articles referenced in Laddie Lushin’s Jan-Feb Letter to the Editor, from the Nov-Dec 2010 issue of Co-operative Grocer.

Why wasn’t this bylaws’ article by Laddie Lushin, Assessing the Adequacy of Your Co-op Bylaws; or another article by Lushin, Securities Laws And Co-op Member Loan Programs included?

Both Joyal (and Gutnecht, above, then editor of the Cooperative Grocer)  are given ample advertising in the list of citations, provided, below, by CDS Consulting Co-op.

Of interest, CDS Consulting Co-op is one of the sponsors of the Cooperative Grocers Network, as is National Coop Grocers and National Cooperative Bank. HWFC is a member of the Cooperative Grocers Network and also National Coop Grocers (NCG).

Google Laddie Lushin and: co-op; co-op bylaws;  co-op member labor and see what you find. Seems a pretty  significant US co-operative source to me, especially about co-op governance and bylaws.

NB to any interested HWFC new BTF Research Assistants: Get to work! Laddie Lushin. Post what you find out, below.

 THE LIST OF CITATIONS. FINALLY! Jeez Louise already!

Without further ado, we member-owners paid for ’em and we’re on a need to know basis, so here are the citations and all those “bylaws” articles, ready for your reading pleasure as a new member of the public, transparent, democratic arm of the (secret) HWFC Bylaws Task Force…

…yes, sorry to say, I am one of those professors (and I am full of hot air given that I teach a historical woodwind instrument called the recorder, so there is a lot of hot air to go around!) who always has just one more book to toss a student’s way.

So, for extra credit you may as well start with the actual HWFC Bylaws Task Force FAQ which precedes its list of citations, here.

~~~

HWFC Bylaws Task Force FAQ Citations, copied verbatim:

1.     Member labor programs at comparable co-ops and related resources, by Mark Goehring and Thane Joyal. Prepared for HWFC Bylaws Research Team, May 15, 2015. This paper contains the full text of the following articles:

a.     Member labor, member loans threatened, by Dave Gutnecht and Robin Seydel, Cooperative Grocer #032, January – February 1991
http://www.cooperativegrocer.coop/articles/2010-01-26/member-labor-member-loans-threatened .
b.     Who benefits from Co-op member labor? by Dave Gutnecht, Cooperative Grocer #034, May-June 1991
http://www.cooperativegrocer.coop/articles/2004-01-09/who-benefits-co-op-member-labor .
c.     A “non-working, non-worrying” member by Paul Cultrera, Cooperative Grocer #036, September-October 1991
http://www.cooperativegrocer.coop/articles/2004-01-09/non-working-non-worrying-member .
d.     Exemption Sought for Co-op Member Labor Programs, Jul/Aug 1991 by Staff Cooperative Grocer #035
http://www.cooperativegrocer.coop/articles/2004-01-09/exemption-sought-co-op-member-labor-programs .
e.     Who’s Watching Member Labor in Retail Food Cooperatives, by Thane Joyal Jan/Feb 2012
http://www.cooperativegrocer.coop/articles/2012-01-18/who’s-watching-member-labor-retail-food-cooperatives .
f.     Member Labor Issues for Retail Food Co-ops, by Nancy Moore Sept/Oct 1992
http://www.cooperativegrocer.coop/articles/2004-01-09/member-labor-issues-retail-food-co-ops .

2.     Who’s watching member labor in retail food cooperatives?
By Thane Joyal. Cooperative Grocer, January/February 2012

3.     Why some Co-ops are killing off their member labor programs by Alicia Freese,
http://www.sevendaysvt.com/vermont/why-some-co-ops-are-killing-off-their-member-labor-programs/Content?oid=2425859

4.     Who checks minimum wage cheats? By David B. Caruso, Associated Press. Published 10:54 pm, Sunday, August 9, 2015 –Times Union,
http://www.timesunion.com/news/article/Who-checks-minimum-wage-cheats-6434549.php

5.     Waking the sleeping giant: Recognize patronage dividends for what they are —co-op capital, by Marilyn Scholl, with Joel Dahlgren and Bruce Mayer,
http://www.cooperativegrocer.coop/articles/2010-06-04/waking-sleeping-giant.

6.     Co-op member labor programs under the Fair Labor Standards Act: A matter of economic reality, by Laddie Lushin, published by Laddie Lushin, 2009.

7.     Summary of patronage dividend requirements for consumer co-ops, by Laddie Lushin, published by Laddie Lushin, 2011.

8.     Member labor and federal employment taxes, by Laddie Lushin, published by Laddie Lushin, 1994.

9.     Governor Cuomo announces statewide task force to combat worker exploitation and abuse throughout New York State, Press release dated July 16, 2015.
https://www.governor.ny.gov/news/governor-cuomo-announces-statewide-task-force-combat-worker-exploitation-and-abuse-throughout .

10.     Letter to the HWFC Board of Directors, received July 9, 2015 from HWFC Department Managers in support of “one shareholder, one vote.”

11.     Patronage Primer,

Click to access Patronage-Dividend-Primer.pdf

12.     Fresh state bylaws template guide, published by CDS Consulting Co-op, 2012,
http://library.cdsconsulting.coop/doc/fresh-start-bylaws-template/ .

13.     CBLD policy template, published by CDS Consulting Co-op.
http://library.cdsconsulting.coop/doc/cbld-policy-template/ .

END Bylaws Task Force FAQ Citations

~~~

[1] The facts about this secret meeting were confirmed at a public meeting of the GRC, held on December 10, 2015 at HWFC.

[2] Acting-President Deb Dennis verbally confirmed during the December 15, 2015 board meeting – to a packed room at the Unitarian Church – that she had, in fact, been the one to speak to Ms. Abrams and request that she keep the NYS DOL meeting secret.

[3] The unknown NYS DOL employee present at the 12/02/15 HWFC-NYS DOL meeting is still unknown. Neither John Vero, Joanmarie Dowling nor Ursula Abrams could remember her name when asked at the 12/15/15 board meeting, but assured member-owners they would find out. The information was never forthcoming.

[4] Here is the complete text of the Memorandum, sent to the entire HWFC Membership and community, via the board’s publication, the “Inside Scoop:”

INSIDE SCOOP

December 3, 2015
News and Views from the Honest Weight Board of Directors

HWFC MEETING WITH THE NEW YORK STATE DEPARTMENT OF LABOR MEMORANDUM

TO: HWFC Board of Directors and Membership
FROM: Ursula Abrams, Governance Review Council
DATE: December 3, 2015

As your elected Governance Review Council (GRC) member, and at the request of the Board of Directors, it was my honor to represent the HWFC Membership at an informational meeting with the NYS Department of Labor (DOL) on Wednesday, December 2, 2015. I am submitting this report in two sections: 1) a kind of verbatim recounting of what was asked and what was answered; and 2) some highlights of my own “take aways.”

I am not spending time on perfecting this report because I want to get it to you as expeditiously as possible. I am sending this directly to the Board Administrator to be sent out to the Board and the Membership at the same time. Although I am not including it here, I have some new ideas about how a re-formed Member Labor Program could be structured so as to minimize our legal risks and yet retain our community. I hope to be able to share those ideas in future meetings together.

1. WHAT WAS ASKED AND ANSWERED

Attendees

The meeting, which lasted about an hour, took place at the DOL offices on the State Campus. In addition to me, the Co-op’s two attorneys, Joanmarie Dowling and John Vero, were in attendance. From the DOL were representatives from Labor Standards, Worker Protection and the General Counsel’s Office.

We made brief introductions and were then asked to make a presentation. Joanmarie provided an overview of HWFC, describing it as being a for-profit corporation that has been in existence since 1978. She said we have approximately 12,000 shareholders, of whom approximately 1,100 are also member-owners. There were a few questions from DOL such as “how does a person become a shareholder?” and whether all member-owners were also shareholders.

When we described the monthly and weekly work requirements needed to become a voting member-owner, they posed a question about the ratios between member-owners and paid employees — which we could not answer.

We described four (4) general categories of work assignments: governance and committees, community outreach, education and store activities.

DOL’S QUESTION: OWNERS OR UNPAID WORKERS?

DOL then introduced the question of whether member-owner workers were subject to minimum wage requirements, saying this was their primary question in situations where work is being performed without compensation. They seemed to have very little interest in how the governance policies are structured and the fact that all committees are run by  member-owners. All of their questions were directed to how the store operates and the relationship between the paid and unpaid workers.

In the midst of this discussion, General Counsel produced a letter from January 25, 1990, written by a DOL attorney to the Chair of the HWFC Personnel Committee (Richard Celani). The letter, referred to as a Legal Opinion, was in response to an apparent HWFC inquiry about the applicability of minimum wage requirements to member-owner labor at Honest Weight. They said the 25-year old letter was the only opinion they had found in preparation for our meeting, other than a Federal Labor Standards Act 1997 opinion letter.

DOL explained that the threshold question they would need to determine – if they were ever to instigate an investigation -was whether, in the eyes of the Department, member-owners were truly “owners” or actually “employees.” They said the only way they could come to a definitive answer, would be to conduct a “full investigation” – which they recommended we not request.

We told them that HWFC was considering different options for a governance re-structuring including updating the bylaws and that we welcomed any guidance they could offer.

RISKS AND ANALYSIS

DOL warned of potential risks from class action law suits, member – labor loss – of – wages complaints, and investigations by other agencies, including the U.S. DOL. They emphasized seven (7) times (by one of our counts) that the potential risks of being found out of legal compliance were high. At the same time, they said they were not currently investigating us and – while a complaint could be filed any time-barring such an occurrence, we were not on their shortlist of companies to review.

In discussing what kinds of facts and activities they look at when making the determination as to whether workers are legal “employees” (and therefore protected by minimum wage) they listed the following “tests”:

• Is the non-paid worker “displacing” a paid worker?
• Is the “owner” controlling and managing the work they are doing?
• Does the “owner” share in the company’s profits? (and, is there a fair distribution?)
• The “Economic Realities” test.

They mentioned problems that they look for such as including a determination as to whether workers were – in reality – “employees for a non – cash wage.”

DOL Labor Standards’ investigations focus on what is actually happening in the store on a daily basis rather than what our various governance documents might say. If they were to investigate and observe workers laboring under the control, direction, schedule, and management of someone else, then their inclination would be to see the potential for abuse and exploitation of workers. They offered an example of a theoretical construction company which offers 1% of its stock to “shareholders” who are then “owners” and therefore do not fall under the protections of minimum wage requirements.

There was some discussion about the problems of having paid and unpaid workers performing the same tasks side-by-side. They mentioned having read in the newspaper that HWFC was considering removing member-owner labor from the “floor” of the store. We responded that the scenario was one of many possibilities but that it was not a preferred path. We told them clearly that there was a strong desire to retain the Member Labor Program. We talked about the culture of the store and the critical impact member-owner labor played in the Co-op’s community. We asked if the Owner versus Employee analysis becomes easier if the employee-labor were smaller and more contained. They responded that such a scenario NOW would raise the issue of “displacing workers” to a high level.

2. MY TAKE AWAY

• With regard to the different opinions about the liability risks currently facing HWFC that have been voiced over the last 6 months: everybody’s right. The risks are real; they are significant; they could shut us down. ALSO: they are not imminent…UNLESS somebody files a complaint tomorrow. “DOL is a complaint – driven agency.”

• Our attorneys are great. They have knowledge and creativity and will work to fully address the question(s) that are posed to them. Having worked with them before, during, and after this meeting, I came to better appreciate their predicament in trying to represent a co-op which is, itself, divided. I had no sense that either Joanmarie or John had any “agenda” of their own.

• In addition, it has become increasingly apparent, that we have many judges and attorneys in our membership. I think we should have a Legal Committee to help put together legal issues and/or legal perspectives on issues facing the Co-op.

• The issues around confidentiality and building a business in a competitive society are simply incompatible with co-op principles. We cannot have both Transparency AND Confidentiality. Because the Co-op exists in a society which follows an adversarial legal system, the open sharing of all information among all Co-op members increases our risk of litigation. For example, if we, the Membership, decide to take our chances and continue the status quo, how should we communicate that? It is not the DOL who is going to care; but it could be Trader Joe’s or Whole Foods. Once the DOL (State or Federal) receives a complaint, they are OBLIGATED to investigate. Everything that has been discussed in the news, and now between the Co-op and the DOL, provides evidence that we, as an organization, have fore-knowledge of these potential risks in our labor practices.

• I think our best next steps are to return to the Bylaws Task Force Initiative to absorb and process the clear messages received by the membership advisory referenda voted on at the 11/30 Special Membership Meeting, as well as, the clarifications gained from this meeting with the DOL.Onward!
  Ursula

[5] HWFC member-owners, please go to the HWFC website and read the board minutes for the October 20, 2015 meeting, section 4 [2 hour 40 min. executive session, followed by two public votes].

[6] Member-owners may read the minutes of the November 3, 2015 board meeting here.

[7] The November 17, 2015 board minutes are missing from the HWFC board’s webpage and ratified motions from that meeting, therefore, are also unavailable. There was a secret executive session meeting, prior to the meeting being opened to member-owners, lasting 80 minutes; we know that at least one GRC member attended. This was the only Board meeting at which the GRC could have been formally asked by the board to participate in any communications with the NYS DOL.

GRC minutes from this time period are also not available.

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Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.
Margaret Mead

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Grassroots Action: One HWFC member-owner individual, family, and employee at a time …we can reach every HWFC member-owner if we ALL work it.
Build Capacity: If everybody does their little bit (or a bigger bit if they can),
we build our capacity day-by-day.  Read like the dickens, get up to speed!
Have faith: It simply works!
You are the PR: Be factual, be calm, don’t attack anyone personally, and please do be impassioned about saving our member-owned, locally-owned & controlled co-operative!

This is co-operative, in action!
Laura