Honest Weight Food Coop: a very interesting email from Ken Von Geldern

State and federal law are clear that the rules governing member-worker cooperatives are different than those that govern most businesses.

(This will be of limited interest to you folks outside of the Albany area, I’m afraid.)
To all Honest Weight Food Co-op members,

I’m sending this email to inform you and every member of the co-op, especially all working members, about what’s going on at the co-op, and what will be coming up in the near future. I encourage you to read this and forward it to all your friends and acquaintances who work at the co-op. The reason for this is that we (a group of working members) are not able to get a list of working members, so we haven’t been able to send out this information directly to members. We are having to rely on personal word-of-mouth, flyering at the co-op, and a website, to disseminate this information.

Here is an update about what’s been happening in the recent period:

–At the membership meeting on June 29, the co-op’s voting (working) members were presented with a proposal by the Board of Directors to reduce the discounts received by working members. After some discussion about the co-op’s financial situation, and many suggestions from members on how to improve it, the members rejected the proposal by a vote of about 3 to 1. We also voted down the proposed yearly budget. There was some discussion at this meeting about the suggestion to grant voting rights to non-working members (people who have bought a share, but do not work, and get a 2% discount). (FYI: There are about 1200 working members at the co-op, and about 10,000 non-working share-holders.)

–At the Board of Directors meeting of July 7, the Board “resolved that its fiduciary responsibilities to the
Co-op would require modification, in consultation with the membership, of the current member labor program.” After that meeting, discussions spread around the co-op that our working-member program might not be in compliance with federal or state labor law, that is, the discounts working members receive might not grant us a value equivalent to minimum wage for our work.

–A proposal to grant voting rights to all shareholders was scheduled by the board to be voted on at a membership meeting that was planned for Oct. 25. This vote was postponed due to several logistical questions about how meetings and voting would take place in such a system.

–On Oct. 16, Board of Directors President Bill Frye was quoted in the Times-Union saying that “We would like to get the member workers off the floor of the store. It’s very expensive. They are really not as effective and efficient. They almost have to be retrained every time they come into the store. They also like to chat.” The Board then removed Frye as board president. In a follow-up Times Union article on Oct. 25, Frye was quoted as saying, “I got vilified and humiliated and embarrassed and asked to resign my presidency, and I did. Sometimes it doesn’t pay to tell the truth because the truth hurts and they don’t want to hear it.” After that statement, the Board members asked Frye to resign from the Board, but he declined. The Board does not have the authority to remove a board member. That authority lies with the working members.

–On Oct. 23, the Board posted a notice on the co-op bulletin board that they had decided to severely curtail the working-member program by discontinuing members working on the floor of the store, on January 1, 2016. This was never proposed to, nor voted on, by the members.

–On Oct. 24, working members presented a petition to the acting board president, calling for an emergency Special Membership meeting. The petition had over 70 signatures, which is more than the 4% of working members required to call for a special meeting, and the 5% required to recall board members. That meeting has not yet been scheduled.

–On Oct. 26 the co-op’s Governance Review Council voted unanimously that the Board of Directors had overstepped its authority when they made the decision to significantly alter member-owner rights, stating that that authority rests with the member-owners.

–On Oct. 26, the HWFC executive committee hand-couriered a letter to the NYS Department of Labor, although DOL has never cited our member-worker program as being a problem in any way. Member owners have been denied a copy of this letter.

–On Nov. 1, working members held an emergency informational meeting to inform members of these events, and to explain and answer the legal questions that have been raised about our member-worker program. Several working members (those who had petitioned to set up the special membership meeting) led this meeting, with a major presentation by labor attorney Kate Doyle, and a supporting statement from John Sweeney, former Commissioner of the NYS Dept. of Labor.

Some of the main points made at this meeting were:
-State and federal law are clear that the rules governing member-worker cooperatives are different than those that govern most businesses. The determining factor is, do those members who provide the work have the authority to effectively control the business? In the case of HWFC, it is clear that they do. It is also clear that, if the working members have the authority to control the business, they have the right to offer voluntary labor to the business, and this labor is not regulated by the Fair Labor Standards Act (minimum wage law).
-John Sweeney personally confirmed with both the current Labor Department Commissioner and counsel that HWFC is, in fact, in compliance with all state labor laws and is not the focus of any investigation, nor has there been any reason or cause for concern.
-Concerns about the legality of member-worker programs are a common issue that come up periodically in co-ops that have working members. Many co-ops have had their working-member programs eliminated as a result, and have become typical corporate grocery stores. These concerns have been called “rumors” and “urban myths” by leaders of co-ops that have withstood these challenges. (See the second attachment for comments by some leaders of such co-ops.)
-There are other reasons why many Boards of Directors try to get rid of working-member programs. Some of these are: the democratic process involved in member-worker businesses can be cumbersome, and doesn’t allow the professional leaders of the business to do whatever they want; there is a belief that member-worker programs are more expensive than paid-worker programs; there is a belief that a co-op can grow larger with all paid workers; many people, including directors, store managers and shoppers, prefer the efficiency and slick style of a corporate grocery store to the more laid-back, personal style of a community-based store. Concerns of the legality of working-member programs often come up after disputes over these other issues have been going on for some time, and those people who insist that member labor programs are not legal often can have some other agenda.
-The proposal to expand voting rights to all members who have bought a share would undermine the working-member program, by eliminating the working members’ authority to control the co-op. As stated above, HWFC’s working-member program is legal because our structure gives working members the authority to control the business. This authority comes from our right to elect the members of the board of directors, to vote on our budget, and to vote on any major changes to the policies or operation of the co-op. Expanding voting rights to share-holders who do not work would remove this authority from working members, and grant it to share-holders.
-There is a strong concern that the current temporary hiring for the holiday season could actually be an attempt to hire more permanent workers in the store. This would be a back-door way to decrease or eliminate the working-member program. The reason for this is that it is not legal for a co-operative business to replace paid work positions with “voluntary” working members. HWFC’s bylaws state that it is the Board’s responsibility to maximize working-member labor. However, if the working members don’t hold the Board accountable, we can’t be sure that they’re upholding that responsibility.

–On Nov. 3, the Board voted to rescind the decision to end the member labor program. They also stated that they had sent a letter to the NYS Dept. of Labor, with questions about our legal status with regard to our program. They have not yet heard back from the DOL.

–Also at this meeting on 11/3, the Board announced that they would allow members to talk with and hand out flyers to other members about the upcoming special membership meeting. The statement says the board will make every reasonable accommodation “to provide a room or location in the store or outside” for this activity. The Board has not yet scheduled the special membership meeting.

Stay tuned for notice of when the special membership meeting will occur. It will be coming up soon.

For a website where you can find information and post comments, go to https://hwfcinfohub.wordpress.com/2015/11/01/member-petition-info-leaflet/.

Also– PLEASE FORWARD THIS to all your friends and acquaintances who work at Honest Weight. This type of person-to-person communication is the only way we can all be informed about what’s going on at our co-op!

Respectfully Submitted
–Ken von Geldern


Author: Roger

I'm a librarian. i hear music, even when it's not being played. I used to work at a comic book store, and it still informs my life. I won once on JEOPARDY! - ditto.

One thought on “Honest Weight Food Coop: a very interesting email from Ken Von Geldern”

  1. Actually, this story could be of wider interest. I’ve been told that Whole Foods and Trader Joe’s started out as little local co-ops fighting The Food Revolution just like Honest Weight did. But both made the leap into national corporatism while still retaining that wholesome hippie vibe. The managers of Honest Weight have made no secret of wanting to follow the path laid out by these two big corporations. But it looks like HW’s managers have been playing their cards too soon, or not with enough finesse.

    This current controversy, for those whose eyes glazed over trying to read Mr. Von Geldern’s letter without context, is that the managers of Honest Weight tried to eliminate volunteer employees who put in work hours in exchange for shopping discounts. The managers cited an entirely bogus reason, that the State of NY considered such practices illegal, but as the letter above makes clear this is total baloney.

    The real reason the managers want to eliminate volunteers is because they are under the illusion that the store is losing money with volunteers paid in discounts. I can tell you that’s nonsense, I’ve seen volunteers work there who I thought were paid employees because they worked so hard, while I could point out a few full time workers that have worked there for years who are pretty much useless.

    It looks to me that all the Honest Weight managers have done with this ham-handed fiasco is to squander that wholesome hippie vibe that’s been bringing in and keeping the loyal customers. Time will tell how much this will translate into lost revenue. But I can see that loyal customer base, which has been eroding ever since they built the new store, has taken a major hit from which the store may not be able to recover.

    Meanwhile, the remains of that loyal base of customers is still fighting to bring Honest Weight back to the forefront of The Food Revolution. It looks like they won this battle, which is outlined in the letter above. But clearly that war has been lost for some time.

    And yeah, I still shop there and get to watch this stuff, but because of their ever increasing ridiculously high prices I now buy from Honest Weight maybe a third of what I used to. I’m sure there are plenty of others like me.

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