For immigrants, especially people without work authorization, one of the greatest hurdles to self-sufficiency is finding work that is safe and satisfying, and getting compensated fairly for that work. Worker cooperatives can help unite workers and create a protective network while also providing safe work conditions and fair wages. The LLC Cooperative model allows for people without work authorization to be legal owners and avoid filling out I9s.
Immigration law requires work authorization for employees, but not for business owners
One advantage of a cooperative for people who do not have work authorization in the U.S, is the ability to establish and run a Limited Liability Company (LLC) in a way that distinguishes worker-owners from employees.
Immigration law requires work authorization for someone who is an employee. Whether or not someone is an employee depends on a number of factors, most important of which is whether someone else has the right to control, or actually controls, the person’s work. If the cooperative operates so that each member is given the power to vote on at least the major decisions of the cooperative, then the cooperative can claim that its members are owners and not employees, that they control the work together. Other factors demonstrating control should also be in place, such a:
- ensuring all members vote on adding and removing members,
- conducting evaluations through peers or by all of the members,
- and not having practices like mandatory training and supervision as part of the job.
While work authorization is required for employees, it is NOT required to become a business owner. Ensuring that cooperative members who don’t have work authorization have authority over their workplace is not only essential for their well-being and safety, but also serves as a crucial factor in avoiding their classification as employees. This legal approach allows individuals without work authorization to secure safe and well-paid job opportunities.
Starting a cooperative for individuals without work authorization requires careful consideration and several essential steps to be followed.
- It is first important to understand immigration in the U.S. and what the current immigration laws and requirements are.
- Understanding the impact of your entity choice on your cooperative is crucial, and it is equally important to comprehend why an LLC is the most advantageous business entity for immigrants.
- Aspiring co-op members must obtain an ITIN and a EIN in order to start and run an LLC Cooperative.
- It is also very important to understand how to effectively manage and govern your immigrant cooperative to prevent the classification of worker-owners as employees.
LLC Coop entity choice provides protections and options regardless of immigration status
The LLC Cooperative model allows for people without work authorization to be legal owners and earn benefits like health benefits. In California, there is a presumption that workers in a corporation are employees. Therefore, LLC’s are often the preferred entity choice for immigrant worker cooperatives. Using an LLC as your legal entity makes it possible for the worker-owners to not be considered employees and therefore avoid work authorization.
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