In some urban communities, people are coming together to fight
food insecurity by opening cooperatively owned groceries in
neighborhoods where traditional grocery stores have closed.
Historically, some cooperatives require owners to work without pay
for a few hours a week, a month, or a year as a way to foster solidarity
and keep down labor costs. These owner-work programs raise legal
issues, however, because generally the Fair Labor Standards Act
(FLSA) requires for-profit cooperatives to pay their workers. Of
course, every requirement has exceptions, and one potential exception
that would allow cooperative owners to work at their grocery is
classification as an owner rather than an employee covered by the
FLSA. But the issue of whether a worker is an owner is much less often
addressed than the issue of whether a worker is an independent
contractor. The Department of Labor (DOL) and courts have not yet
formulated a consistent test to govern the determination. This Article
proposes a test drawing upon those traditional factors used to
determine the economic reality of a worker’s situation in the
independent contractor setting and on other factors proposed by the
DOL and courts. Each cooperative will be different, and the multifactored
test provides room to structure a cooperative in a manner
that enables owners to work without pay. Generally, the thousands of
consumer owners of a large cooperative grocery with a board of
directors and professional management will be employees who must
be paid. On the other hand, a small cooperative grocery run directly
by the owners, who make financial and operations decisions, and work
relatively independently of each other could decide not to pay any
wages. Ultimately after considering all the factors, to work without
pay the cooperative owners must be in business for themselves and
choose to pay themselves nothing, like a sole proprietor, majority
stakeholder in a closely held corporation, or true partner could
