An Interveiw with Attorney Neil Helfman
Jazz aficionado, cooperative law attorney, former Teamster, union member and construction worker, Neil Helfman, discusses his chapter in the Sustainable Economies Law Center's 2021 Legal Guide to Worker Cooperatives, as well as his thoughts on worker cooperatives in construction and climate-wise, green building, and the need for professionals to step up in the co-op movement. Neil also addresses ideas to create more of a presence and in culture and entertainment representation.
Neil Helfman: My name is Neil Helfman. I have been practicing law for over 30 years, and much of that time I've been involved in in advocating, forming, advising worker cooperatives. And I recently wrote a section for the SELC's Worker Cooperative Legal Guide on labor law, which was very insightful, and I think that's the reason we're having this conversation; the 2021 California Worker Cooperative Law Practice Guide. And I wrote the section dealing with labor law. It took me about a month and a half to do so. And in many ways, it was very revealing, and it also confirmed a few things that I knew.
What it showed me, among other things, is that labor law in many ways is the dividing law -- or it can be -- the dividing line between those cooperatives that are really operating as businesses and those that just call themselves cooperatives and don't. Because what I realize is that the labor law that exists is totally out of whack when it comes to a cooperative. And the legal precedent upon which the courts have used, in a sense, is almost fraudulent because they have relied upon a case that arose before Subchapter T, which gave strong definition to workers cooperatives, before the Puget Sound case, which again distinguished workers cooperatives from other forms of businesses.
And this was a 1961 case called the Goldberg Case, which primarily saw cooperatives as a attempt to evade labor laws, so it was not an honest attempt to analyze what cooperatives are. They used as an example, an entity which had nothing to do with cooperatives, was basically two or three people running two hundred home workers and calling themselves cooperatives. And on the basis of this fact pattern, on the basis of this law, the legal system has created a precedent in the way it looks at worker cooperatives that, again, is devoid of any analysis of the way cooperatives operate, in the same way that the Tax Court did when it looked at cooperatives in Puget Sound. And we are presently living in that legacy because what courts do, and they will often do -- lazy courts do -- instead of analyzing the situation, they will simply rely upon existing precedent, especially when it comes out of a Supreme Court and say 'that's it' without any further thought.
So on one hand, I notice that the existing law which is determining at this point the employment status of worker cooperatives members is basically a fraud. And even given this situation -- even given the incongruity of labor law with the formation and the operation of worker cooperatives -- the other thing I notice was a total absence of any legal activity. You would think that given this incongruity, there would be more activity going on, challenges into existing labor laws. And I'll go into particulars later on. There isn't any. And to me, that's kind of indication of what's happening with the cooperative movement as a whole. Because if a big sore thumb like this can't catch our attention and we're not doing anything, then it's pretty much indicator that all we're doing is talking and not doing. And I think that's where we have to turn things around.
JJ Noire: So, the worker cooperative law practice guide for young lawyers and for existing lawyers, is this a fairly comprehensive introduction to what needs to be done or how to handle cooperative cases?
Neil Helfman: It's a practice guide. It gives a lot of practitioners advice on issues of taxes. We give a lot of practitioners advice in terms of what they need to do to comply with labor law. And more than that -- and this is the other part, this is the third part which really gets to me -- is that these laws provide opportunities that we're not using. And again, that's another indication that we're just not on top of things.
As an example, under an existing unemployment insurance law, if you're an employee, both the employer and the employee have to pay a tax, and that tax supposedly is supposed to go to the benefit of employees where they're unemployed. However, given the structure of worker cooperatives, workers will never be able to collect that money because they're not just mere employees, they're also members of cooperatives. And if you're going to be expelled from a co-operative, it's usually for cause. And if you're expelled for cause, you cannot be rewarded with unemployment insurance. They give a criteria of of those type of reasons in which you -- let me go back. What they do is they set a standard in terms of what conduct is acceptable, which will allow you to get the unemployment insurance. And then that will list a bunch of acts which will say if you are terminated for any of these things, you will not be available. And they all relate to cause; you did something wrong. And in any well-organized cooperative, they're not just going to fire someone, you're going to have a procedure, you're going to have a hearing, you're going to find out what the person did wrong, and then you're going to have a vote by the membership.
So, what it means as a practical situation: worker cooperatives are paying money into the unemployment insurance fund and have no possibility of ever collecting. So what do we do? Well, maybe what we could do is something like they do in Italy. If we can't benefit directly, maybe we can benefit indirectly by using that to further the cooperative movement. So what are they doing in Italy in some of the small cooperatives there? They're taking the unemployment insurance premiums, maybe from cooperatives and other entities, and using it as a fund to start new businesses. So what many of the problems which labor laws present are opportunities to further business. And again, this is -- I can't do it alone. We need other people to do it. We need a collective effort in order to both promote the ideas of law and also do the work. So go ahead, ask the next question.
JJ Noire: Let's talk about how the situation right now. We've got a massive climate change. We're here talking in California, which is facing water shortages and possible restrictions on delivery of water to certain areas. How can this be flipped into an opportunity for cooperatives, and why is it cooperatives who can best address this situation?
Neil Helfman: Well, I don't know if cooperatives can best address it now. Inherently they could, because I think the cooperative structure provides a means of efficiency to compete in the open market. So I'm a big believer that cooperatives can wage class warfare in the open market, because they can become more competitive. But the problem is we don't have people with the proper skill sets. So we may have all the ideas, we may have this and that, but we don't have the superstructure and the people to execute it. And that's where I think we need to go. And that's one of the lessons of Mondragon. They didn't just teach the 11 founding members cooperative principles. They were also trained engineers at the same time.
JJ Noire: So, we really need to maybe do outreach to skilled workers. And maybe talk a little bit about -- you were mentioning the Bauhaus movement before. Talk about that and how you'd like to see that applied to cooperative businesses, particularly businesses in the trades, and why.
Neil Helfman: OK. First, let's start with skilled workers because I think we have a resource, an untapped resource, and that resource is geezers. I'm a geezer. I'm 75 years old, OK? And I have experience. I've been a member of several labor unions. I have experience in carpentry, in furniture making, in design and so forth. We have a lot of geezers who have skills as electricians, as plumbers. I think they'd like to transfer their skills to people. I think many of them would like to be involved in dynamic units. And I think on the other hand, we need young people who need to have skills. So what that means is that we have geezers who can teach young people.
Well, what happened in Bauhaus, what did they have? They had the experts. What they would do, is they would have half the day in which they would have experts in various fields of applied arts and practical arts, who would teach students various subjects, hands-on, and then the other half of the day, they would go into limited production. They would make products. They would sell it and use it to sustain themselves economically. Indeed.
So, it's what I'm saying -- I'm a lawyer, I get it. I'm a lawyer and I understand the whole legal angle, and the need to provide a law that not only conforms to the existing cooperative structure, but allows it to grow. But I think we need to do something more than that. We actually need to start forming the cooperatives, bringing the skill sets. So it's not just a matter of creating the right law and institutions, I think we now start to have to start training the people to provide the type of work and skills that are needed. So the cooperatives can fulfill whatever economic situation that allows them to to jump into, and I think there are several. I think one of them again is construction. I worked in commercial construction for two and a half years. I don't see any reason why any of the sub-trades -- such as plumbers, electricians, roofers, cement, masons, carpenters -- why any of those can't be cooperatives. I think they could function. There's no reason that you need to have a hierarchy in those organizations. They all involve skilled people.
And I think one of the things that that a cooperative is, which makes it more in tune to the present environment, I think the type of work that we're going to have is going to demand more skills and more decision making. So I think it's incongruous to ask people, on one hand, in your workplace environment we want you to be creative and to think for yourself, but when it comes to your business, we'll let someone else handle it. So I think again, that foretells of where cooperatives can grow, not just in the simple industries, not just in the industries that we may call working class industries -- but more importantly, into the industries where people need to make decisions, where people need to think on their own. And you would think that you would extend that beyond the work environment to the operation of their own business.
So again, I see these many emerging opportunities. And the two industries in particular -- one I just mentioned was the building trades, and the building trades not only in terms of construction, but just in terms of building. For instance, let me show you a prop. This is a product I've put together. And you can try it for yourself: if you took a normal board like this, you could break it easy. You could never break this. And the reason I'm using this prop is because cooperatives cannot only, again, learn the existing building methods, they can also start innovating new ones. And we have certain conditions we have to relate to. There are climactic conditions, one is fire, so we need to have buildings with less wood and the type of things that are less flammable. You have situations in the East Coast where you have hurricanes. So again, you need the type of durability that can stand that and products like this may be able to provide the answers. I have used them, by the way, in my shelvings. And they are -- I'm using, for instance, I had the shelving unit. The whole unit weighs about 15 pounds. It has supported about 600 pounds of dead weight for six or seven years without any stress. So I think again, the opportunity is not just entering into the building trades, but to construct new methods given the changing environment that we have, because we just can't build like we did before. So that's another opportunity. We need the skill set. Let's bring in the geezers. Let's bring in the creative people. And this is where a Bauhaus could be helpful, because we could have a form where we can do the work. We can experiment, make the products, and go through the dialectic of both, you know, action and deed.
JJ Noire: One of the difficulties for a lot of co-ops is not having a building that they own, which is harder and harder to accomplish given the real estate monopolies, where corporations are buying up all the real estate and out-bidding everybody. In what ways can cooperatives be more flexible and try to found a business while somehow circumventing those problems?
Neil Helfman: Well, I think you point to a very important issue of holding a building, because that foretells, number one, of a co-op's stability. You cannot be a stable business if you're going from place to place. Number two, it helps you become rooted in the community, and I think that's important as well. So I think there's two ways in which they can go about securing property. One is to use the tax provisions of Subchapter T, which allows you to defer income, which you do not pay tax at the present time. And I know from at least one experience, where a business -- a cooperative -- did that, saved enough money for a down payment, and used it to purchase their property. Another way which I've been advocating is to use limited partnerships in which the cooperative will be the general partner. And it will probably be -- it'll have to be incorporated as an LLC because obviously you don't want a general partner to have liability exposure. And, as a general partner in a limited partnership, you do not have to have a stake. So the way it's divided is you have the general partner who basically runs the show -- who is the decision maker in regards to the business -- and then you have the limited partners who are the investors. And by the way, any cooperative member, or the cooperative itself could also be limited investors.
And what this allows you to do, is allows you to secure a piece of property with not paying a lot of money. You know, it doesn't require a huge financial obligation. And it also can create a very attractive investment environment, because people will invest for reasons that make sense -- not for reasons of social justice, but for economic reasons. And the reasons are, as limited partners they will get appreciation of the property like any other property, and they will get income from the people who live there in the form of rent. So everyone gets what they want. The limited partners get whatever type of economic advantage they have, and the cooperative has a location which is secure. So there are two ways of doing it, and I think it's important. I think it's crucial that cooperatives start thinking of ways in which they can secure the location, either through a purchase, or through a limited partnership.
JJ Noire: Excellent. If anybody wants to contact you regarding setting up this Bauhaus idea with the trades and stuff, how would you prefer that they get ahold of you?
Neil Helfman: Email: neilhelfman at gmail.com. It's my name, lowercase at gmail.com. And basically, if we get enough critical mass, maybe we'll brainstorm, start to figure out what skill sets we have, what resources we have. I think we probably want to walk before we run. Start with a few limited products and then expand from there. But I think we got to do more than talk about cooperatives, and theorize about cooperatives, I think we now have to start creating them.
I put out a website, it's on Shareable -- I think it's accessible -- in which I list six operational advantages of worker cooperatives. And I think people have to think in terms of worker cooperatives, in terms of business, because we're not going to put this thing together unless we do. And the thing about worker cooperatives: while it may provide social justice, it really does provide a dynamic way to compete in the marketplace, if we have the proper organization and skill sets. And we haven't done it yet, all we've done is talk. So I'd like to do.
And by the way, talking about the Bauhaus, I think we could expand and do other things. One things I like to do right now, you see my record collection? I got all kinds of -- we have something we can start right now. Why don't we have a radio station or a podcast in which we can play great music like Tom Donohue did on KSAN, Lights Out, and then in between the music we could use as a bulletin board for cooperatives, for people who maybe want to form cooperatives, or someone says, "Hey, you know, I'm an engineer looking for two others. If you're interested, contact me" or announcements in terms of cooperatives. So I think there's a lot more we can be doing, in both creating cooperatives, getting the word out, creating a dialog that leads to action, creating entertainment. And I'm ready right now, but I'd like some people to join me.