Why Some Co-ops Are Killing Off Their Member-Labor Programs 

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• Matthew Thorsen
• City Market

After wrapping up harvest work at the Intervale Community Farm last fall, an eager crew of laborers said good-bye to the farmers they'd been helping out.

"Their last words were, 'See you next spring!'" recalled ICF executive director Andy Jones.

But Jones didn't invite the group back into the fields this year. The co-operative farm had been giving these member-workers a discount on their consumer-supported agriculture share in exchange for their efforts. And in the interim, Jones had determined that the arrangement was likely illegal under federal labor law.

Since the Great Recession, the ubiquity of the "unpaid internship" has brought attention to the question of who qualifies as an employee — and who is therefore entitled to a minimum wage. Some interns have successfully sued their employers for back pay.

The same law — the Fair Labor Standards Act — that protects the rights of "interns" of all stripes has caused some co-ops to question the legality of their own labor practices, and a few are terminating the member work programs that have been central to their identities. There hasn't been a spate of lawsuits or a national outcry, and experts provide different interpretations of the law, but the days of watching your boss bag your groceries at City Market are numbered.

Burlington's thriving co-op is preemptively phasing out a program that allows members to work at the store in exchange for a break on their grocery bill. Customers get a 7 percent discount for working at least two hours a month, and a 12 percent discount if they put in four or more hours. (At ICF, members could work four hours a week for 10 weeks, and in return they got half off a small CSA share.)

But a few years ago, the City Market leadership team, like Jones, began to worry that this system might run afoul of U.S. Department of Labor regulations.

In 2010, the DOL published a six-factor test to help determine whether a so-called intern qualifies as an employee. Among those factors: The intern can't do work that would displace an employee, and the work he or she does has to be for his or her own benefit. The same standards apply to co-op member-workers, according to DOL spokesman Andre Bowser.

Co-ops across the country are dismantling their programs, confirmed a spokeswoman for the National Cooperative Grocers Association. "The enforcement costs of something like that would be tremendous," Jones said, explaining that ICF would have to pay back wages, payroll taxes, workers' compensation and other costs accumulated over its member-worker program's lifespan.

Laddie Lushin — an expert in cooperative law — doesn't see it that way: "Literally hundreds of co-ops are making decisions on this issue based on nothing more than the general opinion of people who don't know what the law is," he said.

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• Matthew Thorsen
• The Intervale Community Farm

The Braintree-based lawyer suspects he's the only attorney in the country who's actually read the relevant court decisions. In 2009, Lushin wrote a 19-page manuscript based on his analysis of three U.S. Court of Appeals cases. There's nothing inherently illegal about a member-worker program, he claims. As long as workers aren't "economically dependent" on the discount, they don't count as employees. And, except for "a few atypical situations of extreme poverty of member-workers," that's unlikely to be the case, he said.

"I am not very impressed with the DOL privately saying that standards that apply to one particular set of circumstances apply to a completely different set of circumstances," he said. "Would I change my manuscript on the basis of this? Perhaps only for the purpose of addressing it and debunking it."

A co-op devotee, Lushin has a particular fondness for member-worker programs — though he said he'd never push them on a business. "Personally, I think it's a marvelous mechanism to draw people into the cooperative and its operations, to be contributing to it in a substantive way ... It encourages a connection, a sense of belonging. It's a really useful arrangement, and that's why it started in the first place."

Not everyone is abandoning the old business model. For example, the Middlebury Natural Foods Co-op still has its member-worker program. "I don't see us getting rid of it anytime soon," said assistant marketing director Emily Millard, who also noted the Co-op doesn't think it's illegal.

When Montpelier's Hunger Mountain Co-op first started, members were required to work there. Today, roughly 25 members still work at the store, but they're treated as seasonal employees, according to general manager Kari Bradley. "The challenge is finding other ways ... for members to stay connected," Bradley said. "It is unfortunate in some ways, but it's also part of the evolution of co-ops."

Kelly McElheny is one of the organizers behind the Southshire Community Market, a co-op trying to attract enough members to get off the ground in Bennington. They're still figuring out what to do about their member-worker program.

"It gets so — pardon my French — fucking complicated that it makes you crazy," McElheny said. Legally, "you have to be really careful about it," she explained. But Southshire's members want it. "We've had a number of people say, 'We're not joining if we can't work to get a discount.'"

The Intervale Community Farm's program was also popular among members, including Abigail McGowan, a history professor at the University of Vermont. When Tropical Storm Irene hit Vermont in 2011, ICF issued a plea for help harvesting crops before the rising Winooski River consumed them. McGowan showed up and, moved by the experience, she signed up to be a member-worker for the next two years.

"It was just sort of magical," McGowan said, explaining that it gave her "a sense of the complexity of the farm, the planning, the thoughtfulness with which crops get rotated." Gardening in her six-tomato-plant plot, McGowan added, just doesn't have the same effect.

Does the government really care that McGowan was getting discounted veggies in return for harvesting help?

Jones said he didn't know whether the U.S. DOL had singled out co-ops, but "my understanding is there is just a more aggressive enforcement approach in the DOL on a number of different levels." The department has gone after several Vermont farms and food producers for violating different labor regulations, according to Jones.

The DOL did crack down on a New Mexico co-op's member-worker program — but that was more than two decades ago. According to Bowser, it hasn't investigated any Vermont food co-ops, but if someone filed a complaint, it would.

Does the local authority — the Vermont Department of Labor — have anything to say about this? Dirk Anderson, the department's lawyer, said he wasn't aware that local co-ops were preemptively doing away with their member-worker programs. Federal and state jurisdictions overlap in this area of law, he explained, but the U.S. DOL's regulations are more "fleshed out," so Vermont might refer an especially thorny case to that agency.

"There's always raised eyebrows when people are performing services for an employer and not being paid," Anderson said, noting exceptions are made for nonprofit organizations, which City Market and ICF are not. "It's an interesting question," he said — but "it's not an issue that's really come to my attention."

City Market plans to take 11 months to eliminate its in-store work program, but the co-op is still committed to giving members a chance to chip in, according to Allison Weinhagen, who oversees membership services for the store. The downtown grocery already partners with 15 nonprofits at which members can volunteer in exchange for a discount, and City Market plans to expand that program.

As long as people are working at nonprofits outside the store, it's legal, according to Weinhagen.

Once the final harvest is in, Jones said, ICF will turn its attention to figuring out how to keep its members engaged on the farm, even if they have to stay out of the fields. Getting the crops in hasn't been the problem, according to Jones — they hired a few part-time employees to pick up the slack. For him, the "tragedy" is that members might lose their connection to the farm.

McGowan is committed to staying involved — she sits on ICF's board now. Still, she said, it's not the same. "The larger sense of community in a co-op is based on shared labor ... I think you lose that when I can't be out there weeding, or harvesting eggplants."