S 2318Labor Relations

Corporations, Associations, and Partnerships - Workers' Cooperatives

This bill allows workers' cooperatives to furnish independent contract labor to other entities without triggering certain employee regulations.

Introduced32 Yea4 Nay2 Not voting

Population
Affected

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Introduced Jan 23, 2026Committee Senate Labor & Gaming

Plain-English Summary

This legislation amends the state laws governing workers' cooperatives. It allows a corporation to organize as a workers' cooperative specifically for the purpose of providing contract labor to other businesses. The bill stipulates that individuals performing this labor must have an independent contractor relationship with the hiring entity. Additionally, it clarifies that if a worker uses the cooperative to find work but is not a member or working directly for the cooperative's internal operations, certain existing statutory provisions regarding cooperative employees do not apply to them.

For younger readers

Imagine a group of people who work for themselves, like painters or computer fixers. Usually, they find jobs on their own. This new rule allows them to join a club called a "cooperative." This club helps them find work with other companies. The rule says that when they do these jobs, they are still working for themselves, not as employees of the company they are helping or the club. It gives these independent workers a new way to organize and find jobs together while keeping their own business freedom.

Who & Where It Applies

Impacted groups

Independent contractorsWorkers' CooperativesStaffing agenciesBusiness ownersSkilled laborers

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Encourages the formation of workers' cooperatives, which democratize wealth and decision-making power among workers rather than concentrating it in the hands of corporate owners.
Provides a mechanism for independent contractors and gig workers to organize collectively, potentially giving them more leverage and support than they would have acting alone.
Offers an alternative to traditional corporate staffing agencies, allowing workers to retain more of the value they generate through their labor.
Codifies the classification of workers as independent contractors, potentially undermining efforts to secure full employee benefits, healthcare, and protections for gig workers.
Creates a loophole where workers using the cooperative to find work are excluded from certain cooperative protections if they are not full members, potentially creating a two-tier labor system.
Could lead to the proliferation of "sham" cooperatives set up primarily to shield client companies from liability and employment taxes rather than genuinely empowering workers.

For Conservatives

Solidifies the legal status of independent contractors, protecting businesses from burdensome employee classification regulations and associated taxes.
Promotes free-market flexibility by allowing skilled laborers to contract freely without government-mandated employee benefit structures.
Encourages entrepreneurship and self-reliance by enabling individuals to operate as business owners within a cooperative framework rather than seeking state-dependent employment.
Promotes the growth of cooperative business structures, which function similarly to unions and may foster anti-corporate sentiment in the marketplace.
Could create confusion in liability law regarding who is ultimately responsible—the cooperative or the client—if the independent contractor status is challenged in court.
May encourage the collectivization of the labor force, potentially strengthening political voting blocs that typically oppose conservative fiscal policies.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 9 additions

SECTION 1. Chapter 7-6.2 of the General Laws entitled "Workers' Cooperatives" is hereby amended by adding thereto the following section: 7-6.2-3.1. Corporations organized for the purpose of furnishing skilled labor. A corporation electing to be governed as a workers' cooperative, may in its articles of incorporation or bylaws, indicate its intent to be so governed for the purpose of furnishing contract labor for other entities; provided that, any individual performing said labor does so under circumstances that demonstrate that the individual's relationship to the contracting entity is one of an independent contractor furnishing skilled labor through the workers' cooperative corporation. For the purpose of § 7-6.2-4(f), if an individual makes use of such a worker's cooperative to secure work with another entity, but is not a member of the cooperative or is not furnishing services directly to the cooperative, the terms of that subsection shall not apply to that individual.

SECTION 2. This act shall take effect upon passage.