Socialism: sort out what a worker is owed in notice pay and severance when a co-op closes, have the insurance pool pay notice pay after unpaid wages with limits against padding, and reprice wage cover to match

Co-Authored-By: Claude Opus 5.5 <[email protected]> Claude-Session: https://claude.ai/code/session_01QWPs69B8nQZjtPEUXMKzZx
2026-09-27 09:56:08 -06:00
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5 changed files with 28 additions and 12 deletions
@@ -91,7 +91,7 @@ A locked co-op isn't a charity. It's a business that makes and shares profits. T
  - **Workers can hand over the rest:** wages beyond what the pool paid that the protected part doesn't cover, benefit contributions and severance, within the cap above.
  - **Handed-over claims buy savings, not votes.** In the new co-op, they become credits in each worker's [capital account](capital-accounts.md). Votes stay one per member, so a manager with a larger claim doesn't get more say than an aide whose wages were paid by the pool.
 - **The insurance pool's claims count too.** Normally, whoever pays a wage claim loses its priority ([§ 507(d)](https://www.law.cornell.edu/uscode/text/11/507)). Without a fix, most low-paid workers' claims would be paid by the pool and couldn't be used to bid. So the pool keeps the priority, and when a qualified workers' co-op bids, it hands the claims it paid to that co-op for its bid. The new co-op repays the pool over time. Each worker's own claims use the $17,150 priority first, and the pool's claim for that worker only ranks after them.
- **No last-minute claims.** In the 180 days before filing, pay deferred by a vote, pay left unpaid for more than one normal pay period while others were being paid, and any increase in severance terms rank as ordinary claims, not priority ones, and can't be used to bid.
+- **No last-minute claims.** In the 180 days before filing, pay deferred by a vote, pay left unpaid for more than one normal pay period while others were being paid, and any increase in notice or severance terms rank as ordinary claims, not priority ones, and can't be used to bid.
 **8. If no qualified co-op buys it, the pieces go to anyone, but not the whole.** No buyer, together with anyone financially tied to it, may end up with substantially all of the business. The brand, the core technology or the main customer contracts count as substantially all, whatever their size, as the lock already says. A buyer of the pieces who hires more than a third of the members within two years owes the difference between what it paid and what the running business was worth, as set by the court's appraiser. The sale order says so up front. That money goes to the co-op's creditors, not the federation fund.
@@ -59,7 +59,7 @@ Every co-op's bylaws must include a written layoff order before it has anyone to
 - **Agency and contract work ends first.** Where agency workers or contractors do the same work as people on the payroll, those contracts end before anyone on the payroll is laid off. Their hours already count in [the lock's](the-lock.md) test of who does the work, and a co-op can't use them to dodge it.
 - **The dismissal protections apply.** A layoff that doesn't follow the order can go to the same hearing and outside arbitrator as a dismissal ([Does Sharing the Profit Mean Less Effort?](free-riding.md#when-a-member-wont-do-the-work)). The rules on retaliation, disability and leave apply too. If someone laid off had organized, filed a complaint or led opposition in a vote within the last 12 months, the co-op has to show it followed the order.
 - **Notice.** At least 30 days' notice, or pay instead, or 14 days in a co-op of fewer than 15 workers. The law often requires more. Under federal law, employers with 100 or more full-time workers give 60 days' notice of large layoffs and closings, and cutting someone's hours by more than half for six months counts as a layoff ([29 U.S.C. § 2101](https://www.law.cornell.edu/uscode/text/29/2101), [§ 2102](https://www.law.cornell.edu/uscode/text/29/2102)). A long, deep work-sharing cut can trigger it. Some states require 90 days, including New York for employers with 50 or more full-time workers there ([Cooley, 2023](https://www.cooley.com/news/insight/2023/2023-08-03-new-york-state-amends-its-warn-act-regulations)) and New Jersey, which also requires severance ([Jones Day, 2023](https://www.jonesday.com/en/insights/2023/04/new-jersey-warn-act-amendments)).
- **Severance** follows the bylaws, and never less than state law requires. The standard bylaws pay one week per year worked, the same as New Jersey requires of larger employers in mass layoffs and closings. More than two weeks per year, or more than 26 weeks in all, counts as pay under [the pay rules](the-long-run.md#the-rules).
+- **Severance** follows the bylaws, and never less than state law requires. When a co-op closes, notice pay and severance from different laws don't add up; the worker gets the largest of each ([Protecting Members' Savings](savings-guarantee.md#notice-pay-and-severance)). The standard bylaws pay one week per year worked, the same as New Jersey requires of larger employers in mass layoffs and closings. More than two weeks per year, or more than 26 weeks in all, counts as pay under [the pay rules](the-long-run.md#the-rules).
 - **Lopsided layoffs get checked.** Federal agencies treat a selection rate for any race, sex or ethnic group below four-fifths of the rate for the group doing best as a sign of possible discrimination ([29 C.F.R. § 1607.4(D)](https://www.law.cornell.edu/cfr/text/29/1607.4)). The model uses the same line for layoffs, and adds age. If the share of any gender, race or age group keeping their jobs falls below it, the co-op publishes a written explanation before the layoffs take effect, and anyone laid off can take it to the outside arbitrator.
 ## Coming back
@@ -70,13 +70,14 @@ Some states make a company's owners or officers personally pay wages the company
 - **Federal law reaches people in charge, in every state.** The Fair Labor Standards Act counts as an employer "any person acting directly or indirectly in the interest of an employer" ([29 U.S.C. § 203(d)](https://www.law.cornell.edu/uscode/text/29/203)). Courts have read that to reach officers and managers who control the business's operations, and an unpaid minimum wage or overtime is owed again as damages, so twice over ([§ 216(b)](https://www.law.cornell.edu/uscode/text/29/216)). It covers only the minimum wage and overtime, not the rest of a worker's pay. No state law can take this away.
 - **New York appears to reach every member.** For an ordinary private corporation or LLC, only the ten largest owners are personally liable for unpaid wages ([Business Corporation Law § 630](https://newyork.public.law/laws/n.y._business_corporation_law_section_630); [LLC Law § 609(c)](https://newyork.public.law/laws/n.y._limited_liability_company_law_section_609)). For a co-op it's broader: every member and every director of a cooperative corporation is personally liable, each for the whole amount, for wages owed to its employees ([Cooperative Corporations Law § 47](https://newyork.public.law/laws/n.y._cooperative_corporations_law_section_47)), and the co-op can't opt out of that in its charter. The state's worker co-op article applies the co-op chapter except for listed sections, and § 47 isn't listed ([§ 85](https://newyork.public.law/laws/n.y._cooperative_corporations_law_section_85)). The same article says a worker co-op is governed by the corporation law ([§ 84](https://newyork.public.law/laws/n.y._cooperative_corporations_law_section_84)), so a court could read it the other way, but the ten-largest rule isn't among the corporation-law sections it brings back. I haven't found a court case either way. "Wages" includes severance, vacation pay, and benefit and pension contributions. A worker has to give written notice within 180 days after the work ends, and can sue a member only after a judgment against the co-op goes unpaid. A member who pays more than their share can recover the excess from the other members. Choosing another form doesn't escape it: in a co-op of ten or fewer equal members, the ten-largest rule reaches everyone anyway, and both rules apply to companies formed in other states when the work is done in New York.
 - **Massachusetts reaches officers and managers.** The president, treasurer and any officers or agents managing a corporation count as the employer under the state's wage law ([ch. 149, § 148](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter149/Section148)), and unpaid wages are owed three times over, plus legal costs ([§ 150](https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter149/Section150)). Workers can't waive this. In a co-op, those officers are members the others elected, and they may be paid no more than anyone else.
 - **New Jersey's closing law may reach owners and managers.** Its severance duty, a week per year worked in large closings and layoffs, falls on the "employer," which it defines to include anyone acting in the employer's interest, anyone who owns and operates it, and whoever makes the decision behind the layoffs ([P.L. 2019, c. 423](https://pub.njleg.state.nj.us/Bills/2018/PL19/423_.HTM); [Protecting Members' Savings](savings-guarantee.md#notice-pay-and-severance)). In a co-op, the members own and operate it.
 - **California reaches owners and managers who cause it.** An owner, director, officer or managing agent who violates certain wage rules, "or causes" them to be violated, can be held liable as the employer ([Labor Code § 558.1](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=558.1)). That includes the penalty for final pay not paid on time, which keeps running as a day's wages per day for up to 30 days ([§ 203](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=203)). "Causes" probably means some personal part in the decision, so officers who decided to keep people working are at risk, and a member who only voted probably isn't.
 So the model does four things:
 - **No working on credit.** A payroll counts as missed when wages are still unpaid five business days after the day state law says they're due. The board declares it and tells the pool the same day, and the pool can declare it if the board doesn't. From then on, the co-op can't schedule more ordinary work until everyone is paid up, unless it files for bankruptcy protection or the federation's fund lends it the payroll. The fund decides on a loan within two business days, and its loan is repaid after workers' wage claims, not before. Work to keep people safe, care for people or animals, save perishable goods and wind down in order goes on, and the pool pays for it first. This keeps a failing co-op from running up unpaid wages its own members might have to cover ([When Work Runs Short](downturns.md#when-cutting-isnt-enough)).
 - **Stopping and federal notice rules.** A sudden stop at a co-op with 100 or more workers can count as a plant closing that needed 60 days' notice ([29 U.S.C. § 2102](https://www.law.cornell.edu/uscode/text/29/2102)). The law shortens that when the business was seeking money that notice would have scared off, or when the cause wasn't foreseeable, but the employer must still give as much notice as it can. So a co-op whose quarterly accounts show the pool's warning signs ([Keeping Workers' Savings Safe](savings-guarantee.md#who-runs-it-and-how-claims-are-paid)) gives conditional notice early rather than waiting for the missed payroll.
- **The insurance pool pays first.** The [pool](savings-guarantee.md#the-insurance-pool) covers up to eight weeks of each worker's unpaid wages. If the rule above is kept, that covers most of what's owed, but final pay, vacation and benefit contributions can go past it. The pool doesn't pursue ordinary members for what it pays, and the co-op's bylaws and officers' insurance cover elected officers who kept the rule and didn't hide losses. Federal and Massachusetts liability can't be waived, but it can be insured.
+- **The insurance pool pays first.** The [pool](savings-guarantee.md#the-insurance-pool) covers up to eight weeks of each worker's unpaid wages, then notice pay ([Notice pay and severance](savings-guarantee.md#notice-pay-and-severance)). If the rule above is kept, that covers most unpaid wages, but notice pay, vacation, severance and benefit contributions can go past it. The pool doesn't pursue ordinary members for what it pays, and the co-op's bylaws and officers' insurance cover elected officers who kept the rule and didn't hide losses. Federal and Massachusetts liability can't be waived, but it can be insured.
 - **The model state law narrows it.** In states that adopt it, a member of a locked co-op covered by the pool isn't personally liable just for being a member, for claims by other members or for anything the pool paid. Workers who aren't members keep their full claims for anything the pool didn't pay, since they had no vote. There's no shield for wages earned after a payroll was missed and the rule wasn't kept, or for anyone who ran payroll or kept people working ([The Lock in State Law](lock-state-law.md#what-the-model-law-does), point 10). It doesn't touch federal law.
 Until a state adopts that, members in states like New York take on a real personal risk. The risk follows where the work is done, not where the co-op was formed, and the bank's checked entry for each state says what it is. Every member is told in writing when they join, with the rules of the state where they work.
@@ -13,7 +13,7 @@ An honest list of what the model hasn't solved yet, most dangerous first.
 2. **The horizon problem.** *(Mostly answered.)* Members near retirement have little reason to vote for investments whose payoff arrives after they leave. The evidence from France and Italy finds no underinvestment where co-ops must keep a reserve, and [Investing for the Long Run](the-long-run.md) closes the main routes around this model's reserve: pay above the going rate, sales of assets, development spending, high pay that turns into losses, and worn-out equipment still in use. A warning light shows when a co-op stops replacing its equipment, and big bets get an independent opinion before members vote. Still open: nothing forces a co-op to maintain what it has, a bad bet that fails after its backers leave falls on the people who came after, and it's unsettled whether 30% is enough and whether the account rate is right. Members' accounts now pay back within three to seven years ([Member Capital Accounts](capital-accounts.md#why-not-pay-it-out-when-you-leave)), so they help less with long-lived investments than accounts held until members leave. Letting members sell their places to incoming workers was rejected, because that is how the plywood co-ops ended up sold.
-3. **Members' savings sit inside their employer.** *(Partly answered.)* [Member capital accounts](capital-accounts.md) are capped at a year's pay, protected by a solvency test, and now insured by a pool the co-ops pay for ([Protecting Members' Savings](savings-guarantee.md)). It covers final wages, former members' payouts and a protected slice of current accounts. Premiums are now estimated from Europe's wage guarantee funds and Census closure rates for small firms like co-ops: at least 0.25% of payroll for final wages, and 3% to 6.5% a year of covered savings depending on the co-op's age, which takes most or all of the interest on a protected slice. The wage rate assumes a failed co-op owes about two of the eight weeks, which nobody has measured. The reserve target is six extra years' worth of claims while the pool is young, and limits for new additions fall when the reserve falls behind its planned path. If a recession hit in the pilot's fifth year, the pool would pay roughly 45 to 60 cents on the dollar of savings claims, so in its early years it's a partial promise, and cover for current members' savings waits until the pool has its own track record. Still open: the pool has no government backing, so a worse recession could outrun it; the estimates rest on rough data, not co-ops; the reserve takes about fifteen years to build; and it needs a federal charter to avoid fifty states' insurance laws. Also open: an account paid out when a member leaves would probably be a pension plan under federal law, which would forbid the co-op from using the money. So accounts now pay each year's credit back on a fixed schedule of three to seven years, whether or not the member has left. That's designed to stay outside pension law, but it isn't settled until the Labor Department answers, and federal appeals courts weigh programs like it differently. Because nobody loses their account for leaving, much of what's paid goes to people who've left, which weakens the case. So co-ops where more than a third of payouts go to people no longer working there shorten the wait, then stop making new credits, and credits taxed only when paid wait for the Department ([Member Capital Accounts](capital-accounts.md#why-not-pay-it-out-when-you-leave)). In high-turnover work, that almost always means no accounts, so the lowest-paid members lose the savings the model promises them. An ordinary retirement plan outside the business, with the co-op adding 3% of wages for everyone and, from 2027, a federal match for low earners, makes up part of that ([Member Capital Accounts](capital-accounts.md#saving-for-retirement)). It gives up the trust, disclosure and fiduciary rules that pension law would bring, which the model only partly replaces, and it leaves the co-op less of its members' money to invest for the long run. State wage laws are a second risk: in some states, California likely among them, a credit in a member's account could count as wages, which can't be held back, charged with losses or paused. Co-ops in those states don't use accounts until the state changes its law ([Owners Are Still Workers](labor-law.md#is-the-profit-share-pay)), so members there build no savings in the co-op. A third: account credits look like the notes the Supreme Court has held to be securities, so the model keeps members from putting money in and asks the SEC for an answer ([Member Capital Accounts](capital-accounts.md#are-accounts-securities)). If the answer is no, the nearest exemption means calling credits pay, which works against the model's positions on tax, pension and wage law.
+3. **Members' savings sit inside their employer.** *(Partly answered.)* [Member capital accounts](capital-accounts.md) are capped at a year's pay, protected by a solvency test, and now insured by a pool the co-ops pay for ([Protecting Members' Savings](savings-guarantee.md)). It covers final wages, former members' payouts and a protected slice of current accounts. Premiums are now estimated from Europe's wage guarantee funds and Census closure rates for small firms like co-ops: about 0.55% of payroll for final wages and notice pay, and 3% to 6.5% a year of covered savings depending on the co-op's age, which takes most or all of the interest on a protected slice. The wage rate assumes a failed co-op owes about five of the eight weeks, counting pay in place of notice, which nobody has measured. Notice pay and severance from overlapping federal, state and bylaw rules don't add up; a worker gets the largest of each, but the pool doesn't cover severance, and a long-serving worker's severance is mostly lost in a failure. The reserve target is six extra years' worth of claims while the pool is young, and limits for new additions fall when the reserve falls behind its planned path. If a recession hit in the pilot's fifth year, the pool would pay roughly 45 to 60 cents on the dollar of savings claims, so in its early years it's a partial promise, and cover for current members' savings waits until the pool has its own track record. Still open: the pool has no government backing, so a worse recession could outrun it; the estimates rest on rough data, not co-ops; the reserve takes about fifteen years to build; and it needs a federal charter to avoid fifty states' insurance laws. Also open: an account paid out when a member leaves would probably be a pension plan under federal law, which would forbid the co-op from using the money. So accounts now pay each year's credit back on a fixed schedule of three to seven years, whether or not the member has left. That's designed to stay outside pension law, but it isn't settled until the Labor Department answers, and federal appeals courts weigh programs like it differently. Because nobody loses their account for leaving, much of what's paid goes to people who've left, which weakens the case. So co-ops where more than a third of payouts go to people no longer working there shorten the wait, then stop making new credits, and credits taxed only when paid wait for the Department ([Member Capital Accounts](capital-accounts.md#why-not-pay-it-out-when-you-leave)). In high-turnover work, that almost always means no accounts, so the lowest-paid members lose the savings the model promises them. An ordinary retirement plan outside the business, with the co-op adding 3% of wages for everyone and, from 2027, a federal match for low earners, makes up part of that ([Member Capital Accounts](capital-accounts.md#saving-for-retirement)). It gives up the trust, disclosure and fiduciary rules that pension law would bring, which the model only partly replaces, and it leaves the co-op less of its members' money to invest for the long run. State wage laws are a second risk: in some states, California likely among them, a credit in a member's account could count as wages, which can't be held back, charged with losses or paused. Co-ops in those states don't use accounts until the state changes its law ([Owners Are Still Workers](labor-law.md#is-the-profit-share-pay)), so members there build no savings in the co-op. A third: account credits look like the notes the Supreme Court has held to be securities, so the model keeps members from putting money in and asks the SEC for an answer ([Member Capital Accounts](capital-accounts.md#are-accounts-securities)). If the answer is no, the nearest exemption means calling credits pay, which works against the model's positions on tax, pension and wage law.
 4. **Is the lock too rigid?** A co-op that should be sold (a better operator exists, the members want out) can only go to another co-op. If the co-op sector is small, that buyer pool is tiny, and viable firms may be liquidated instead of rescued. The federation as buyer of last resort is a partial answer. Critics on the right add a sharper version: a lock that outlasts a repaid loan by generations is a permanent restriction on selling property, bought with one loan, and it binds members who never agreed to it. The lock is now built to hold in layers, including an independent lock share and rules against selling the business piece by piece ([The Lock](the-lock.md#how-the-lock-is-made-to-hold)). Its biggest legal gap is bankruptcy: federal bankruptcy law generally overrides limits on selling a bankrupt company's property, so the lock only holds in bankruptcy if Congress amends that law. [When a Locked Co-op Goes Bankrupt](bankruptcy.md) drafts that amendment. It's modeled on how bankruptcy law already treats charities. Only co-ops can buy a failed co-op whole, its workers can keep it running and bid with the wages they're owed, and creditors who never chose to lend are paid the lock's cost from the federation fund, which the co-op that buys the business repays. Whoever carries on the business, including members who keep it through a reorganization, takes on injuries from the old co-op's products, its warranties and household customers' deposits. When members keep a co-op over creditors' objections, the value faces a market test, though a weak one, since a conventional offeror can never win. That cost is usually nothing but can be large, and nobody has measured how often. The bank lends toward a workers' bid only up to what the assets would bring sold off piece by piece, so the rest has to come from the workers' claims, the insurance pool or patient money from the federation, and a failed firm often won't find it. It still needs Congress, a later Congress can repeal it, and while the co-op sector is small, some viable businesses will be broken up for lack of a co-op buyer. Italy offers a softer model: a co-op there can convert into an ordinary company, but its accumulated reserves go to the co-op development fund, not to the members ([Has This Been Tried?](precedents.md#italys-co-op-funds-coopfond-and-the-marcora-law)). That would keep the part of the lock that stops members cashing out what earlier generations built, and drop the part that stops a firm from ever changing hands.
@@ -30,7 +30,7 @@ Three lessons come out of these. When members sense trouble, they rush to get th
 Every locked co-op belongs to a **members' savings insurance pool**. It protects three things, in this order.
-**1. Final wages.** If a co-op fails owing its workers pay, the pool pays up to eight weeks of each worker's unpaid wages and earned time off. For a low-paid worker, this is usually the biggest loss, and US bankruptcy law only partly protects it: unpaid wages get priority, but only up to $17,150 per worker, and only after secured lenders are paid ([11 U.S.C. § 507(a)(4)](https://www.law.cornell.edu/uscode/text/11/507)).
+**1. Final wages.** If a co-op fails owing its workers pay, the pool pays up to eight weeks of each worker's unpaid wages and earned time off, and then notice pay the co-op owes ([below](#notice-pay-and-severance)). For a low-paid worker, this is usually the biggest loss, and US bankruptcy law only partly protects it: unpaid wages get priority, but only up to $17,150 per worker, and only after secured lenders are paid ([11 U.S.C. § 507(a)(4)](https://www.law.cornell.edu/uscode/text/11/507)).
 **2. Former members' payouts.** When someone leaves, their account becomes a fixed amount the co-op owes them, paid on the account's normal schedule, three to seven years after each credit was made (see [Member Capital Accounts](capital-accounts.md#how-its-paid-out)). They no longer work there and have no say in how it's run, so this is the clearest case for protection. The pool covers these unpaid payouts up to $50,000 per person.
@@ -38,6 +38,21 @@ Every locked co-op belongs to a **members' savings insurance pool**. It protects
 **The limits are per person**, across every co-op they've ever belonged to. An account split in a divorce or passed to an estate shares the original person's limit.
 ## Notice pay and severance
 A worker whose co-op closes can be owed three kinds of money: pay for work already done, pay in place of the notice they should have had, and severance. The laws that require the last two overlap, so a worker could look owed the same weeks two or three times over. The model sorts it out this way.
 - **What the laws require.** The co-op's bylaws require 30 days' notice or pay instead, with no exceptions ([When Work Runs Short](downturns.md#the-layoff-order)). Federal law requires 60 days' notice of a closing from employers with 100 or more full-time workers, or 100 or more workers putting in 4,000 hours a week between them ([20 C.F.R. § 639.3(a)](https://www.ecfr.gov/current/title-20/part-639/section-639.3)). One that closes without it owes back pay and benefits for each day short, up to 60 days, but never for more than half the days the worker was employed ([29 U.S.C. § 2104](https://www.law.cornell.edu/uscode/text/29/2104)). Courts disagree on whether that means calendar days or working days. Federal law excuses short notice when the business was seeking money that notice would have scared off, or when the cause wasn't foreseeable ([§ 2102(b)](https://www.law.cornell.edu/uscode/text/29/2102)). California requires 60 days at sites with 75 or more workers, part-time ones included, with back pay on the same terms ([Labor Code §§ 1400.5](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=1400.5), [1401](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=1401), [1402](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB&sectionNum=1402)). New York requires 90 days' notice from employers with 50 or more full-time workers there, but, like federal law, limits back pay to 60 days ([Labor Law § 860-g](https://newyork.public.law/laws/n.y._labor_law_section_860-g)). New Jersey requires 90 days from employers with 100 or more, and its penalty for short notice is four more weeks of severance rather than back pay. Other states have their own versions, and the bank's checked entry for each state lists them.
 - **Notice pay, once.** A worker gets back pay for the longest period any one law pays, not all of them added up. That's at most 60 days under the federal, California and New York laws. New Jersey's extra four weeks are severance, not notice pay. The laws figure back pay at the higher of the worker's final rate and their three-year average. The pool pays at its own covered rate ([Closing the loopholes](#closing-the-loopholes)), and any difference stays the worker's claim against the co-op.
 - **Severance: the larger of the bylaws and state law.** The standard bylaws pay a week per year worked. New Jersey's 2019 law requires the same of employers with 100 or more workers when a closing or mass layoff ends 50 or more jobs at a site, and counts federal back pay toward it ([P.L. 2019, c. 423](https://pub.njleg.state.nj.us/Bills/2018/PL19/423_.HTM)). New Jersey has amended it since, reportedly to count more workers and sites, and the bank's entry has to be checked against the current text. The bylaws never add on top of the law; they only fill in where the law pays less.
 - **What the pool pays, in order.** Out of each worker's eight weeks, first pay for work already done and earned time off, then notice pay, including the co-op's usual health contribution for those weeks. Pay from other work in the same weeks is taken off the notice pay, so nobody is paid twice for the same weeks. The pool covers notice only up to the standard bylaws' 30 days or the period the law actually requires, whichever is longer. A co-op can promise more, but the pool won't pay for it, and a longer notice period or bigger severance adopted in the two years before a failure gets neither cover nor priority. Severance isn't covered. France's fund covers it, but this pool is smaller and has nothing behind it.
 - **The pool takes over the claim it paid.** Federal law subtracts wages the employer paid for the notice days, but the pool isn't the employer, and no court has said whether its payments count. So the pool pays as an advance on the co-op's behalf, and each worker assigns to it, in writing, their notice-pay claims up to what it paid.
 - **Unemployment benefits.** In some states, pay in place of notice delays unemployment benefits for the weeks it covers. There, part of what the pool pays saves the state's fund money rather than adding to the worker's income. The pool pays notice pay in whatever way costs workers the least benefit in each state, and the bank's checked entry says what that is.
 - **Skipping notice isn't following the rules.** Directors who closed without the notice the bylaws or the law required, when no legal exception applied, are among the people the pool pursues ([Owners Are Still Workers](labor-law.md#when-wages-go-unpaid-members-can-owe-them)).
 - **Much of the severance is at risk in a failure.** Bankruptcy puts wages, severance and notice pay earned in the 180 days before filing ahead of other unsecured debts, up to $17,150 per worker ([11 U.S.C. § 507(a)(4)](https://www.law.cornell.edu/uscode/text/11/507)). Courts often treat only the part of length-of-service severance earned in those 180 days as having that priority, so a long-serving worker's week-per-year is mostly an ordinary claim that may pay little. Back pay a court awards for notice-law violations covering days after the filing can be paid ahead of that, as a cost of the case, if the court finds it won't cost other jobs ([§ 503(b)(1)(A)(ii)](https://www.law.cornell.edu/uscode/text/11/503)). A trustee that only liquidates the business may owe no federal notice at all. The pool's claim for what it paid ranks behind the worker's own unpaid claims ([When a Locked Co-op Goes Bankrupt](bankruptcy.md), point 7).
 - **A co-op buyer that keeps the workers owes no notice pay for them.** When a business is sold, its workers count as the buyer's employees from the day of the sale, so those who keep their jobs haven't lost them under federal notice law ([29 U.S.C. § 2101(b)(1)](https://www.law.cornell.edu/uscode/text/29/2101)). The failed co-op still owes notice pay to those the buyer doesn't take on, and the buyer owes notice for any later closing.
 - **Splitting doesn't avoid it.** Federal rules can treat related companies as one employer, looking at common ownership, common directors, actual control, shared personnel policies and dependence on each other ([20 C.F.R. § 639.3(a)(2)](https://www.ecfr.gov/current/title-20/part-639/section-639.3)). Co-ops in a federation share standard bylaws, a lender and a pool, so a court might count them together. That's unsettled. So the bylaws don't rely on the answer: a co-op whose group reaches 100 workers, counting companies it controls and co-ops split from it in the last three years, gives 60 days' notice as if federal law applied, and layoffs within any 90 days are added together. Neither the bank nor the pool may direct a co-op's layoffs, which would make the case for counting co-ops together stronger.
 ## How it's paid for
 **By the co-ops, not taxpayers.** The pool has **no government backing**, for the same reason [the bank's](pilot-spec.md#the-decision-rule) debts don't. A public guarantee would be a hidden subsidy, and markets would come to assume it. That's a real difference from credit unions and banks, and it's why the pool has to be run more cautiously than they are. The charter also bars the bank from lending to the pool, buying its assets or paying its claims, so the bank can't become a backstop by the back door. No law can stop a future Congress from bailing the pool out. The best this model can do is keep the promises small enough, and the cut in a bad year plain enough, that a bailout isn't needed.
@@ -55,12 +70,12 @@ Every locked co-op belongs to a **members' savings insurance pool**. It protects
 Nobody has priced insurance quite like this, but the pieces can be estimated from what's known.
-**Final wages: at least 0.25% of payroll.** Europe's wage guarantee funds are the closest match. Both are paid for by employers as a share of payroll:
+**Final wages and notice pay: about 0.55% of payroll.** Europe's wage guarantee funds are the closest match. Both are paid for by employers as a share of payroll:
 - **Germany** pays up to three months of unpaid wages when an employer goes insolvent. Employers paid 0.06% of payroll in 2023 and 2024, and pay 0.15% in 2025 and 2026. After the financial crisis the rate jumped to 0.41% in 2010 ([lohn-info.de](https://www.lohn-info.de/insolvenzgeldumlage.html); [Haufe](https://www.haufe.de/id/beitrag/insolvenzgeldumlage-fuer-2026-HI17106952.html)).
 - **France** covers wages and other amounts owed to workers, including severance, up to a ceiling. Employers pay 0.25% of each worker's pay, up to about €16,000 a month, in 2026 ([Service Public](https://entreprendre.service-public.gouv.fr/actualites/A17906)). In 2009 the rate rose from 0.10% to 0.20%, 0.30% and then 0.40% within a single year ([Eurojuris](https://www.eurojuris.fr/articles/augmentation-du-taux-de-cotisation-ags-au-1er-octobre-2009-10360.htm)).
-Both are run or required by the state and spread across every employer in the country, so their rates are a floor, not a benchmark. This pool covers less, eight weeks of wages, but it covers young, small firms in a few industries, with nothing behind it. So it starts at 0.25% of payroll, plus a charge to build its reserve, and the actuary adjusts from there. That rate quietly assumes that a co-op that fails owes its workers, on average, about two of the eight weeks, since most businesses keep paying wages until they close. Nobody has measured that for small US firms. If a failed co-op owed all eight weeks, the premium would need to be about 0.9% of payroll. The pool records it for every failure.
+Both are run or required by the state and spread across every employer in the country, so their rates are a floor, not a benchmark. This pool covers less, eight weeks of wages and notice pay, but it covers young, small firms in a few industries, with nothing behind it. At 0.25% of payroll, the rate would quietly assume that a co-op that fails owes its workers, on average, about two of the eight weeks, since most businesses keep paying wages until they close. Notice pay changes that: a co-op that closes without notice owes about four weeks of it under its own bylaws, on top of the last unpaid pay period, and failing businesses rarely give notice in time. Pay from other work cuts it somewhat. So the pool starts by assuming about five of the eight weeks, at about 0.11% of payroll per week owed, which comes to 0.55% of payroll, plus a charge to build its reserve, and the actuary adjusts from there. The rate is the same for every co-op, as with wage cover in Europe, so older co-ops, which fail less often, help pay for younger ones. That's a choice, made so the newest co-ops aren't charged most for cover their workers need most. Nobody has measured any of this for small US firms. If a failed co-op owed all eight weeks, the premium would need to be about 0.9% of payroll. The pool records what it paid, and for what, in every failure.
 **Members' savings: about 3% to 6.5% of covered amounts a year, depending on the co-op's age.** When a co-op fails, members' accounts and unpaid payouts rank behind its lenders, so the pool should expect to pay almost the whole covered amount. What matters is how often covered co-ops fail owing more than they have. Three rough numbers bracket it:
@@ -111,18 +126,18 @@ A pilot's co-ops are all young and concentrated in a few industries and regions,
 - **Limits come back slowly:** by at most a tenth a year, and only after two years on the path.
 - **No switching back and forth.** A co-op that moves its former members' cover to escrow or a surety bond can't return to the pool for five years, and the pool prices it when it does.
-**A bad fifth year.** Suppose a recession starts in the pilot's fifth year. The covered co-ops are three to five years old, priced at about 5.7% a year on average. The reserve is small, about 3% of covered amounts, because most co-ops joined recently. Five bad years at that rate, plus four extra years' worth, come to about 51% of covered amounts. Premiums bring in about 27%, counting a fifth of the paying co-ops lost along the way. With the reserve, that pays about 58 cents on every dollar claimed. With six extra years' worth, or if every closure turns out to be a claim, it's closer to 45 to 50 cents. The industry with the most co-ops is also stressed on its own, at twice its normal rate. For final wages, if a failed co-op owes two weeks on average, the pool pays about three-quarters. If it owes all eight, it pays about a fifth. So in its first years the pool is a partial promise. Each member's yearly statement shows what the pool would pay per dollar in this stress case, as it stands that year.
+**A bad fifth year.** Suppose a recession starts in the pilot's fifth year. The covered co-ops are three to five years old, priced at about 5.7% a year on average. The reserve is small, about 3% of covered amounts, because most co-ops joined recently. Five bad years at that rate, plus four extra years' worth, come to about 51% of covered amounts. Premiums bring in about 27%, counting a fifth of the paying co-ops lost along the way. With the reserve, that pays about 58 cents on every dollar claimed. With six extra years' worth, or if every closure turns out to be a claim, it's closer to 45 to 50 cents. The industry with the most co-ops is also stressed on its own, at twice its normal rate. For final wages and notice pay, if a failed co-op owes the five weeks the rate assumes, the pool pays about three-quarters. If it owes all eight, it pays a bit under half. So in its first years the pool is a partial promise. Each member's yearly statement shows what the pool would pay per dollar in this stress case, as it stands that year.
 **What it costs, in the standard example.** A mature 40-person co-op might have $300,000 of protected account slices (at most $8,000 a member, and less for members who take their share in cash), $200,000 of former members' payouts outstanding, and about $2 million a year of payroll, with eight weeks of it, about $300,000, covered by final-wage cover.
 | Cover | Premium | A year |
 | --- | --- | --- |
-| Final wages | 0.25% of payroll, plus 0.1% to build the reserve | about $7,000 |
+| Final wages and notice pay | 0.55% of payroll, plus 0.1% to build the reserve | about $13,000 |
 | Former members' payouts | 3%–4% for a co-op past its tenth year, plus 1 point to build the reserve | $8,000–$10,000 |
 | Current members' slices, once offered (after the reserve target is reached), if the co-op chooses | 3%–4% | $9,000–$12,000 |
-| **All three** | | **$24,000–$29,000** |
+| **All three** | | **$30,000–$35,000** |
-That's about 4% to 5% of the $600,000 annual profit in the [capital accounts example](capital-accounts.md#where-each-years-profit-goes), or about 2.5% without cover for current members. A strong co-op would pay less, a weak one more. Once the reserve reaches its target, the extra charges stop. The real rates will come from the pool's actuary and its own experience.
+That's about 5% to 6% of the $600,000 annual profit in the [capital accounts example](capital-accounts.md#where-each-years-profit-goes), or about 3.5% to 4% without cover for current members. A strong co-op would pay less, a weak one more. Once the reserve reaches its target, the extra charges stop. The real rates will come from the pool's actuary and its own experience.
 ## Who runs it, and how claims are paid
@@ -131,7 +146,7 @@ That's about 4% to 5% of the $600,000 annual profit in the [capital accounts exa
 - **Checked every year.** An outside actuary publishes an opinion on the pool's reserves, and federal auditors audit it. The pool and the bank are stress-tested together, since the same recession would hit the bank's loans and the pool's claims at once. If the reserve falls below its target, the board publishes a plan to restore it within 90 days, and limits stop rising until it does.
 - **One pool, one register.** Federations can run their own pools only once each meets the national pool's reserve ratio on its own, since pools of co-ops all lose in the same recession. There's one national register of everyone covered, so the per-person limits hold across pools.
 - **Automatic payment.** When a covered co-op fails, the pool pays from the co-op's own member register and payroll records. Nobody has to know to file a claim. Fagor's former workers lost their case partly because they filed too late. Disputes go to an independent adjudicator. Final-wage payments are wages, so the pool or the liquidator pays them through payroll, with the usual withholding.
- **The pool steps into the workers' shoes.** Once it pays wages, it takes over the workers' priority claims in bankruptcy ([When a Locked Co-op Goes Bankrupt](bankruptcy.md)) and under federal and state notice and wage laws, so it recovers what it can. Workers are never paid twice for the same weeks. Federal law and some states can make a company's officers or owners personally liable for unpaid wages, and New York appears to make every co-op member liable ([Owners Are Still Workers](labor-law.md#when-wages-go-unpaid-members-can-owe-them)). In a co-op, those are workers, so the pool doesn't pursue ordinary members or officers who followed the rules, only people who hid losses or kept others working after a missed payroll.
+- **The pool steps into the workers' shoes.** Once it pays wages, it takes over the workers' priority claims in bankruptcy ([When a Locked Co-op Goes Bankrupt](bankruptcy.md)) and under federal and state notice and wage laws, so it recovers what it can. Workers are never paid twice for the same weeks ([Notice pay and severance](#notice-pay-and-severance)). Federal law and some states can make a company's officers or owners personally liable for unpaid wages, and New York appears to make every co-op member liable ([Owners Are Still Workers](labor-law.md#when-wages-go-unpaid-members-can-owe-them)). In a co-op, those are workers, so the pool doesn't pursue ordinary members or officers who followed the rules, only people who hid losses or kept others working after a missed payroll.
 - **Stepping in early.** Every covered co-op sends the pool quarterly accounts. If warning signs appear, the pool can stop covering *new* additions to accounts until the co-op recovers, which stops members from piling up covered savings in a sinking firm. That freeze also applies to anyone who leaves after it starts, so members can't escape it by quitting.
 ## Closing the loopholes