WORKER OWNERS AND EMPLOYMENT LAW (UPDATED MAY 2020)

The prevailing wisdom is that for worker cooperatives owned by people who do not have employment authorization in the United States, their co-op should be organized as a limited liability company (LLC), with every member playing a meaningful role in management, and no probationary work time when they are not a member. (See this operating agreement--with cartoons!--re how this is put into practice, and check out this legal guide for a discussion.)

It is legal for any resident of any country to own a business in the US, and a business owner can work for their own business. It is not legal for a US company to hire as an employee someone without work authorization. This is why co-ops with undocumented worker-owners need to do what they can to make sure the law will see them as owners, not employees.

I used to hear this view stated repeatedly without citation to specific authority. So in 2020, when I was advising a co-op that expected that it might someday have undocumented worker-owners, I did a deep dive into the case law around when business-owners are considered owners, and when they considered employees.

Read my employment law research here