All Roll Calls
Yes: 195 • No: 35
MarylandSB 01442025 Regular SessionSenateWALLET
Corporations and Associations - Limited Worker Cooperative Associations - Authorization (Maryland Limited Worker Cooperative Association Act)
Sponsored By: Mary Washington (Democratic)
Signed by Governor
Corporations and AssociationsAppeals -see also- Judicial ReviewChartersCommerce and Business -see also- ElectrComm; ForeignTr; etc.Cooperative AssociationsCorporations -see also- Municipal Corps; Public Corps & InstFees -see also- Attys' Fees; Devt Fees & TaxesGratuitiesHearingsIncome TaxInsurance AdministrationInsurance -see also- Health Ins; MAIF; Motor Vehicle InsLiabilityLimited Liability CompaniesMeetings -see also- Hearings; Open GovernmentMergers and AcquisitionsNamesNoticesOvertimePersonal RepresentativesRecords -see also- Land Records; Vital RecordsSalaries and Compensation -see also- Overtime; Reimb. RatesVoting -see also- Absentee and Mail-In VotingWorkers' CompensationWork, Labor, and Employment -see also- JobTrn; Leave; etc.
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Bill Overview
Analyzed Economic Effects
10 provisions identified: 3 benefits, 2 costs, 5 mixed.
Cooperative tax debts can reach managers
Beginning October 1, 2026, cooperative tax duties can create personal liability for managers, members, or responsible agents. People directly controlling finances can owe the cooperative’s admissions and amusement tax or motor fuel tax, plus interest and penalties. If a cooperative negligently fails to withhold or pay income tax, direct fiscal managers and agents required to handle withholding can be personally liable. For sales and use tax owed by a cooperative buyer or vendor, all members are personally liable without an operating agreement. With an operating agreement, people managing its business and affairs are liable; sales-tax liability includes interest and penalties. These rules cover both limited worker cooperative associations and collective worker cooperatives.
Worker cooperatives pay filing fees
Beginning October 1, 2026, worker cooperatives enter Maryland’s filing and annual-report fee system. Listed fees include $25 to reserve a name, $100 for articles of organization, and $300 for an annual report. Other listed charges include $100 for foreign-name registration or yearly renewal, $100 for covered foreign-business qualifications or registrations, and $6 for nonrecorded documents. A $100 nonrefundable processing fee applies per covered recorded or filed document, including cooperative articles and amendments. Specified certificates cost $20; expedited charges include $425 or $50 for covered documents and $20 for specified status certificates or certified lists.
Debt protections for cooperative members
Beginning October 1, 2026, a cooperative’s debts generally belong to the association, not its members. This default protection applies unless the articles of organization say otherwise. Serving as an assembly voting member or representative alone does not make someone an association agent or personally responsible for its debts. These role-based protections do not remove liability based on other grounds.
Cooperatives gain securities registration exemptions
Beginning October 1, 2026, specified cooperative financial instruments are exempt from registration under Maryland securities law. These include membership interests, patronage refunds, per-unit retain certificates, equity instruments, and evidence of membership interests. The association, its members, representatives, and salaried employees can offer and sell them without registering as brokers or dealers under that law.
Cooperative members get earnings and buyout rules
Beginning October 1, 2026, cooperatives divide profits and losses under their governing documents. Declared patronage profits paid or credited to patron members must reflect each member’s work, use, or other patronage that period. Net earnings can be paid in cash, credits, or written allocation notices. Internal capital accounts can track book value and set buyout prices; governing documents must provide for buying back interests when membership ends and can allow periodic redemptions. Retained earnings and losses can enter a shared reserve, controlled by collective cooperative members or, for other associations, the board.
Cooperative worker status and insurance rules
Beginning October 1, 2026, forming a cooperative does not automatically make worker members employees. Partnership tax treatment also does not require employee status under Maryland law; individual workers’ status remains separately determined. Insurers must base workers’ compensation premiums for covered employees on actual payroll, enforced by the Maryland Insurance Commissioner. Actual payroll includes money paid after taxes and deductions, including base pay, bonuses, overtime, leave benefits, commissions, and tips. The law does not prohibit appropriate alternative insurance arrangements.
Cooperative closure and estate rights clarified
Beginning October 1, 2026, cooperatives dissolve after governing-document triggers, judicial dissolution, or qualifying member votes. A dissolution vote needs two-thirds of worker members and two-thirds of all assembly voting power, unless the agreement requires more. Having no members for 90 consecutive days also triggers dissolution, subject to agreement terms and statutory continuation rights. A qualifying successor, assignee, or new member can continue the business within 90 days or the agreement’s deadline. When the last membership ends under the specified statutory provision and no replacement joins, the personal representative or guardian is automatically admitted unless they decline or name another member within 90 days after learning of the event. A deceased member’s estate representative can exercise the member’s specified statutory rights to settle the estate; membership ending alone generally does not dissolve the business unless the agreement says so.
Cooperative members gain meeting rights
Beginning October 1, 2026, associations must hold annual member meetings, with notice 10 to 60 days ahead. They must report their business and financial condition at the end of the latest fiscal year. Members holding at least 20% of voting power on an issue can demand a special meeting. A board majority or the cooperative agreement can also authorize one; only business listed in the notice can be conducted. Members can participate remotely if they can communicate with one another, unless the agreement says otherwise. Missing an annual meeting does not invalidate association actions.
New legal option for worker cooperatives
Beginning October 1, 2026, Maryland LLCs can choose limited worker cooperative status in their articles of organization. They generally need three worker members to start business, unless their sole member is another limited worker cooperative association. Worker members must be people who contribute labor. A required cooperative agreement sets capital, membership rights, contributions, admission rules, profit-sharing, voting, representative selection, and tax-status choices. Associations can choose collective worker cooperative status; cooperatives formed elsewhere can register under Maryland’s foreign LLC rules. Names must include “LIMITED WORKER COOPERATIVE ASSOCIATION,” “LWCA,” or “L.W.C.A.”; prohibited misnaming carries a penalty up to $500.
Worker cooperatives get board and voting rules
Beginning October 1, 2026, associations need boards of at least three people, except collective worker cooperatives. Boards or their delegates manage the business, and the cooperative agreement sets representatives’ terms. Voting power can reflect members, cooperative membership counts, use, patronage, or membership class; investors vote only when governing documents allow it. With use- or patronage-based voting, workers otherwise left without votes must receive at least the minimum voting power given participating worker members. Unless a higher threshold applies, elections and assembly decisions need both a majority of worker members and a majority of eligible voting power.
Sponsors & Cosponsors
Sponsor
Mary Washington
Democratic • Senate
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
House vote • 4/7/2025
Third Reading Passed
Yes: 104 • No: 35
Senate vote • 4/7/2025
Third Reading Passed
Yes: 46 • No: 0 • Other: 1
Senate vote • 2/13/2025
Third Reading Passed
Yes: 45 • No: 0 • Other: 1
Actions Timeline
Approved by the Governor - Chapter 199
4/22/2025Passed Enrolled
4/7/2025SenateThird Reading Passed (46-0)
4/7/2025SenateSenate Concurs House Amendments
4/7/2025SenateThird Reading Passed (104-35)
4/7/2025HouseSecond Reading Passed with Amendments
4/4/2025HouseFavorable with Amendments {163623/1 Adopted
4/4/2025HouseFavorable with Amendments Report by Economic Matters
4/4/2025HouseReferred Economic Matters
2/14/2025HouseThird Reading Passed (45-0)
2/13/2025SenateSecond Reading Passed with Amendments
2/11/2025SenateFavorable with Amendments {733224/1 Adopted
2/11/2025SenateFavorable with Amendments Report by Judicial Proceedings
2/10/2025SenateFirst Reading Judicial Proceedings
1/8/2025SenateHearing 1/09 at 2:00 p.m.
1/2/2025SenatePre-filed
10/16/2024Senate
Bill Text
Enacted
4/22/2025
Enrolled
4/7/2025
Third Reading
2/11/2025
First Reading
1/2/2025
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