Socialism: pay capital accounts on a fixed schedule so they stay clear of pension law

Co-Authored-By: Claude Opus 5.5 <[email protected]> Claude-Session: https://claude.ai/code/session_01QWPs69B8nQZjtPEUXMKzZx
2026-09-25 07:42:01 -06:00
parent 7baa6e9810
commit 2c269d075d
9 changed files with 42 additions and 19 deletions
@@ -34,9 +34,10 @@ That makes the stake a bit harder to earn in work, since hours after the co-op f

 Overtime is paid at one and a half times a worker's "regular rate," and a bonus that workers are promised in advance usually has to be added into that rate ([29 CFR 778.211](https://www.law.cornell.edu/cfr/text/29/778.211)). Both the profit share and the [team bonuses](free-riding.md#team-bonuses-the-members-design) are promised in advance.

-There's a way out for the profit share. A written profit-sharing plan that pays out of the whole business's profits, by a set formula such as hours worked, isn't added into the regular rate. But the plan has to be open at least to every worker covered by the wage law, not just members, though it can require a minimum length of service ([29 CFR 549.1](https://www.law.cornell.edu/cfr/text/29/549.1)). So:
+There's a way out for the profit share. A written profit-sharing plan that pays out of the whole business's profits, by a set formula such as hours worked, isn't added into the regular rate. But the plan has to be open at least to every worker covered by the wage law, not just members, though it can require a minimum length of service ([29 CFR 549.1](https://www.law.cornell.edu/cfr/text/29/549.1)). It has other conditions too:

- **The standard profit share is written to meet that rule**, or the co-op recalculates each worker's overtime at the end of the year.
+- **The model's profit share probably doesn't meet it.** The part credited to members' accounts isn't paid "within a reasonable period" or put in a trust, as the rule requires. And a share "may not be diminished because of any other remuneration," but the model's pay rule takes part of above-market pay out of the profit share ([Investing for the Long Run](the-long-run.md#the-rules)).
+- **So the whole profit share is added into the overtime rate.** Every year, once the profit share is set, the standard payroll service recalculates overtime for every worker who had any and pays the difference. Overtime is a small share of hours in most co-ops, so the cost is small.
 - **Team bonuses are always added into the overtime rate.** The standard payroll service does the math.

 ### Meetings are work
@@ -111,6 +112,6 @@ The board has gone the other way when *everyone* who works there is an owner and
 - **The charter is weaker than law.** A member fired for organizing gets an outside arbitrator, not the labor board. Until the NLRA is changed, that's the protection.
 - **The NLRA change is new federal law,** and it may never pass. Opponents will say it's odd for owners to organize against themselves. The answer is that a member has one vote among many, and the managers they elect can still treat them badly.
 - **State unemployment law changes slowly.** Until states adopt the model law, members in some states have no unemployment cover unless their co-ops set up their own. Making that cover required would raise costs only for co-ops in those states. The pilot leaves it optional and counts who went without.
- **The founding setup hasn't been tested.** Whether unpaid work before the co-op is formed is really outside wage law, and whether the profit share meets the overtime rule, are questions for the Labor Department's opinion letter. Until it answers, the bank's lawyers decide, and they could be wrong.
+- **The founding setup hasn't been tested.** Whether unpaid work before the co-op is formed is really outside wage law is a question for the Labor Department's opinion letter, and whether members' accounts stay outside pension law is another ([Member Capital Accounts](capital-accounts.md#why-not-pay-it-out-when-you-leave)). Until it answers, the bank's lawyers decide, and they could be wrong.
 - **Workers without papers are still left out** of membership, and so out of the profit share.
 - **This is a map, not legal advice.** State rules differ and change, and the Department of Labor's table is from 2021. Instead of every co-op paying a lawyer, the bank keeps a checked set of rules for each state and runs a shared payroll service that handles minimum wage, overtime and insurance.