This bill amends existing Washington law (RCW 23.86.080 and RCW 24.06.130) to change corporate governance rules for certain cooperative associations and corporations. It keeps a minimum board size of three directors (directors may be called “trustees” for associations), requires the articles or bylaws to fix the number of directors and the first board, allows directors to be divided into classes, and provides that if no term is specified a director’s term defaults to one year. It also confirms that a decrease in the number of directors does not shorten an incumbent’s term and that directors hold office until a successor is qualified; removal of directors is governed by any procedure in the articles of incorporation. The bill adds a procedural requirement for large cooperative associations: any cooperative with 2,500 or more employees worldwide must have its articles or bylaws reserve two board positions for nonsupervisory or nonmanagerial employees. Those two employee-directors must be chosen by a majority vote of the corporation’s nonsupervisory and nonmanagerial employees acting as a body. Employee-directors who are nonsupervisory or nonmanagerial employees are prohibited from voting on resolutions that set wages, employee benefits, or other terms or conditions of employment related to nonsupervisory or nonmanagerial employees. The bill also specifies vacancy and appointment rules: vacancies and newly created directorships from an increase in the number of directors may be filled by the board unless the articles or bylaws provide otherwise, and a director appointed to fill a vacancy serves the unexpired term. The extracted text does not include statutory definitions for terms used (for example, “consumer cooperative,” “cooperative association,” “corporation,” or “nonsupervisory or nonmanagerial employees”), does not provide the text of the cited exception at RCW 23.86.087, and does not state an effective date or details on how the employee majority vote must be conducted.

If enacted, cooperatives and corporations covered by these statutes that employ 2,500 or more people worldwide would need to reserve two board seats specifically for nonsupervisory/nonmanagerial employees who are chosen by a majority vote of that employee group; those employee-board members would be barred from voting on wages, benefits, or other employment terms affecting that employee class. Boards generally must have at least three directors, set director numbers in bylaws (with the first board named in the articles), allow boards to fill vacancies unless the governing documents say otherwise, and follow existing rules for terms, removal, and classified boards; directors who fill vacancies serve only the unexpired term. The groups most affected are large cooperative associations, consumer cooperatives and corporations subject to chapter 24.06, their current boards, and their nonsupervisory employees. Practically, these entities will likely incur administrative and legal costs to amend articles or bylaws, create and run employee selection elections, add and onboard new directors, and adjust governance procedures; frontline employees gain formal board representation but with limited voting power on compensation issues. The extracted text leaves key implementation details unclear, including definitions of covered employee categories, the election mechanics, any exceptions in RCW 23.86.087, and the timeline or effective date for these requirements.