Members at the Old Louisville Coffee Co-op announced last week they intend to enter a legal battle with the state over being required to provide workers’ compensation.
They claim Kentucky fined them $4,000 for not providing the insurance, and that when a lawyer for the company pushed back, the state offered to cut the fee in half if the group accepted paying it rather than pursuing legal action. But the workers don’t intend to take that deal.
The members also started a GoFundMe campaign they say will cover legal fees, which had nearly reached its $5,000 goal by Monday afternoon.
“Since the idea for creating a worker co-op formed, we have spent hundreds of hours researching state and federal laws, talking to government officials, and jumping through hoops, only to end up back at the drawing board,” the group wrote on the fundraiser’s page.
A worker at the Old Louisville Coffee Co-op said Thursday the group was not yet ready to comment further. It is unclear how many workers agree with the decision to not offer workers’ compensation, how that decision was made and what recourse workers have in the case of on-the-job injury or illness.
The coffee shop opened last summer and operates as a limited cooperative association. State legislation recognized LCAs in 2012 and outlined they can provide shared ownership to members, which can include powers such as voting rights and the ability to share in profits and losses.
In their fundraiser statement, co-op members argued that they are both workers and owners, and that the business therefore shouldn’t be required to provide the insurance. They added they believe it's the state’s first worker-owned food or beverage establishment.
“In deciding to fight these charges, we are establishing a new legal precedent (a case that the state courts have never heard before), the outcome of which will set the rules for every worker co-op to come in Kentucky,” the group wrote.
State law requires businesses with employees to offer workers’ compensation insurance, which addresses on-the-job injury and illness costs. It also exempts certain employees, including agricultural workers and those who voluntarily decline coverage, and allows owners to opt in to receive coverage.
Kentucky law does not explicitly mention limited cooperative associations when discussing workers’ compensation.
Kim Brannock, a representative for the state’s Education and Labor Cabinet, said in an email the agency “does not comment on cases in ongoing litigation.”
The cabinet includes the Department of Workers' Claims, which oversees business compliance with workers’ compensation.
Ariana Levinson, a University of Louisville professor who studies labor and employment law, including worker-owned cooperatives, said the workers’ compensation law favors the co-op members’ challenge to the state.
“With the way that I understand they operate, they have a very strong argument that they are owners and not employees, and so they can elect either to be covered by workers' compensation or not to be covered,” said Levinson, who added in an email that she connected the co-op’s attorney to other lawyers.
A worker can sue a company without workers’ compensation if they’re injured on the job. Levinson said a business may choose to risk that and forgo the insurance if it costs too much.
“They might not be making any profit at the beginning. And because they're not making any profit, they don't have the money to pay for the workers' compensation coverage,” she said.
In their fundraiser statement, the members said “our income hinges on our ability to turn a profit.”
Levinson, who made a public donation to the group’s GoFundMe, added that the collaborative nature of a co-op could encourage a member to resolve an injury without suing.
