HB 1635
In CommitteeHouse
Consumer cooperative boards
Concerning the composition of the boards of directors of consumer cooperatives and cooperative associations.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill updates rules for how consumer cooperatives and cooperative associations structure their boards of directors. It adds requirements for large cooperatives (those with 2,500 or more employees worldwide) to include two board seats for nonsupervisory or nonmanagerial employees, elected by their peers, with limited voting rights on employment-related matters.
- Requires that cooperative boards have at least three directors, who are elected by members and serve terms set in the organization’s bylaws or articles.
- Allows boards to fill vacancies or expanded seats by appointment (unless the bylaws or articles say otherwise), and appointees serve the remainder of the predecessor’s term.
- For cooperatives with 2,500 or more employees worldwide, mandates two board seats reserved for nonsupervisory or nonmanagerial employees, selected by majority vote of such employees.
- Prohibits employee directors from voting on decisions about wages, benefits, or terms of employment for nonsupervisory or nonmanagerial employees.
- Clarifies rules for director terms, class structures, removal procedures, and how board size can be changed (via bylaws or articles).
Who is affected
- Consumer cooperatives and cooperative associations with 2,500+ employees worldwide — Consumer cooperatives and cooperative associations with 2,500 or more employees worldwide must reserve two board seats for nonsupervisory or nonmanagerial employees, who are selected by their peers and have limited voting rights on employment-related matters.
- Nonsupervisory and nonmanagerial employees of large cooperatives — Nonsupervisory or nonmanagerial employees of large cooperatives gain a formal voice on the board through elected representation, though they cannot vote on wage, benefit, or employment condition decisions affecting their peers.
- Cooperative associations and consumer cooperatives generally — All cooperative associations and consumer cooperatives must follow updated rules about board composition, vacancies, and director terms, especially if they have 2,500 or more employees.
Pro/Con Analysis
Potential Benefits (2)
Mandates two elected, nonsupervisory employee board seats for large cooperatives, giving rank-and-file workers formal, peer-selected representation on governance—this enhances internal accountability and may improve alignment between management decisions and worker interests, especially in areas outside wage-setting (e.g., strategic direction, member services, ethics).
Business & EmploymentPeopleRef: Sec. 1(3) and Sec. 2(4)Clarifies and standardizes board composition, vacancy-filling, and director terms for cooperatives, reducing ambiguity in governance and potentially lowering legal disputes or administrative friction—this supports smoother operations for cooperatives, many of which serve low- and middle-income members.
Local GovernmentPeopleRef: Sec. 1(1)–(2) and Sec. 2(1)–(4)
Potential Concerns (3)
The bill imposes new governance requirements on cooperatives with 2,500+ employees worldwide, potentially increasing administrative and compliance burdens for cooperative associations—especially those operating near the threshold—though it does not create new state oversight or funding requirements, so the fiscal impact on local governments is likely minimal.
Local GovernmentRef: Sec. 1(3) and Sec. 2(4)The ban on employee directors voting on wages, benefits, and employment terms for their peers significantly limits the practical influence of worker representatives, reducing the bill’s effectiveness in advancing worker voice—this constraint may frustrate expectations of meaningful participation and could weaken the cooperative model’s democratic ethos.
Business & EmploymentPeopleRef: Sec. 1(3) and Sec. 2(4)While the bill expands board representation, it does not grant full voting rights to worker directors on core employment matters, creating a tiered governance structure where employee directors are present but constrained—this may reinforce symbolic inclusion without substantive power, potentially undermining the democratic promise of cooperatives.
Rights & LibertiesLean peopleRef: Sec. 1(3) and Sec. 2(4)
Who Is Most Affected
Large consumer cooperatives (e.g., REI, PCC Community Markets, if they crossed 2,500 employees) will need to restructure boards and implement election processes for worker directors—this may increase governance complexity but also strengthen democratic legitimacy and employee morale.
Nonsupervisory, nonmanagerial employees gain formal board access and peer-elected voice, though their voting restrictions on core employment issues limit their influence—this may improve workplace communication and reduce alienation, but could also lead to frustration if expectations outpace actual power.
Small cooperatives (under 2,500 employees) face no new board composition requirements, but may adopt similar practices for best-practice alignment or member expectations—overall impact is neutral to slightly positive due to reduced regulatory confusion in the sector.
Cooperative legal counsel and compliance officers will need to update bylaws and election protocols, but the changes are largely procedural and avoid new licensing or reporting tiers—modest administrative cost with high clarity benefit.
Members (owners) of cooperatives may benefit from improved board accountability and transparency, especially if worker directors help surface operational concerns earlier—this aligns with cooperative principles but depends on how boards use the new input.