Clarifies the role of a corporation electing to be governed as a workers' cooperative to allow it to operate as a hiring hall under certain circumstances.
Summary
This bill amends Rhode Island’s workers’ cooperative law to clarify that a corporation choosing to be governed as a workers’ cooperative may, in its governing documents, state that it is organized to furnish contract labor for other entities. The bill is aimed at allowing certain workers’ cooperatives to function as hiring halls or labor-furnishing entities, so long as the worker’s relationship to the contracting entity is that of an independent contractor providing skilled labor through the cooperative.
The bill also specifies that, for purposes of the workers’ cooperative statute, an individual who uses a workers’ cooperative to obtain work with another entity, but is not a member of the cooperative or directly furnishing services to the cooperative, is not subject to a particular subsection governing member-employees. In practical terms, the measure distinguishes between cooperative members who are employees and workers supplied through the cooperative as independent contractors.
Impact
The bill would modify Chapter 7-6.2 of the Rhode Island General Laws by adding a new section that expands and clarifies how workers’ cooperatives may operate. It would affect the legal classification of certain workers supplied through a cooperative, treating them as independent contractors rather than employees for the purposes described in the bill. As a result, cooperatives using this model would be exempt, with respect to those workers, from employee-related requirements under Title 28, including payroll taxes, temporary disability insurance, unemployment insurance, and workers’ compensation obligations that apply when cooperative stakeholders are treated as employees.
Sentiment
The bill appears to have received generally favorable treatment in the legislature, as reflected by its passage in the Senate by a wide margin of 31 yeas to 4 nays on June 4, 2025. The available materials do not include committee testimony or detailed floor debate, but the vote suggests broad support for clarifying the legal status of workers’ cooperatives and enabling them to operate more flexibly in the labor market.
Contention
The main point of contention is the bill’s reclassification of workers furnished through a cooperative as independent contractors, which can reduce or eliminate employer-side obligations such as unemployment insurance, workers’ compensation, and payroll-related taxes. Supporters likely view the measure as a way to modernize cooperative labor arrangements and provide flexibility for skilled workers and businesses, while opponents may be concerned that it could weaken worker protections or blur the line between employees and contractors. The split vote indicates some legislative concern about those labor-classification implications.