In addition to its members, who are the owners of the business, Burley also employs a small number of non-members. While non-members are paid only an hourly wage, members of the cooperative receive both an hourly wage and patronage dividends. Patronage dividends are calculated yearly, based on the number of hours a member works and the portion of the profits that is attributable to the efforts of Burley's members. The remainder is put into a capital account in the member's name, where it remains for two years as equity. After the two years, the money becomes a loan to the cooperative upon which the cooperative pays interest to the member.
Members are immediately liable for income taxes on the entire amount of the dividend.
Employer sought review, and the Board affirmed. ORS 656.210 governs the calculation of temporary total disability benefits. The determination of whether claimant's patronage dividends were part of her wages depends on an understanding of the nature of a cooperative. The means of production and distribution are thus owned in common and the earnings revert to the members, not on the basis of their investment in the enterprise but in proportion to their patronage or personal participation in it. The policy behind the tax exemption is not to benefit the cooperative as a business organization but to benefit its member-producers.