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LANTERN COOPERATIVE – EMPLOYEE RIGHTS CHARTER ​

Effective Date: 2026-01-09
Status: Constitutional Document (requires 75% employee vote to amend)

Purpose ​

This charter establishes the foundational rights of all employee-owners. These are RIGHTS, not benefits — they cannot be revoked without democratic amendment.

Philosophical Foundation: All rights in this charter reflect Lantern's commitment to the Four Pillars of human dignity: safe housing, healthcare, education, and food. See Foundational Philosophy.

⭐ IMPORTANT: Some rights in this charter are IMMUTABLE (cannot be removed or weakened, even with 100% vote). These are marked with 🔒. See Immutable Rights Framework for full details.

⚠️ PRE-REVENUE NOTICE: Lantern is currently in Phase 0 (Pre-Revenue). The rights described in this charter represent our binding commitments and the company we are building toward. However, no cash salaries, stipends, paid benefits, or monetary compensation of any kind will be paid until the company generates revenue. During Phase 0, all team members contribute on a voluntary/equity-only basis. When early revenue arrives (Phase 0.5), equal profit distributions begin — but formal salaries, benefits, and stipends require Phase 1 thresholds (MRR $10,000+ or equivalent seed funding). Each Article below notes which implementation phase activates it. See the Implementation Framework immediately below for full details.

Implementation Framework: Phased Approach Based on Cashflow ​

Reality Check: While these rights represent our commitment and ultimate goals, practical implementation must align with the company's financial capacity. We have excellent employee rights and growth opportunities, but we must implement them responsibly over time.

Guiding Principles for Phased Implementation ​

  1. Cashflow First: Benefits are implemented as the company generates sustainable revenue
  2. Immutable Rights Protected: Rights marked with 🔒 (especially living wage, equal ownership, democratic governance) cannot be deferred
  3. Transparency: Employees always know which benefits are active, which are pending, and the timeline for activation
  4. Employee Vote: Activation timeline and phases require employee approval

Implementation Phases ​

Phase 0: Pre-Revenue (Founding Team) — CURRENT PHASE ​

Plain language: During Phase 0, nobody gets paid cash. There are no salaries, no stipends, no paid benefits, and no reimbursements. All work is voluntary and compensated through equity ownership only. This remains true until Lantern reaches Phase 1 revenue thresholds.

Active rights (no cash cost — effective immediately):

  • Equal ownership and voting rights 🔒 (Day 1, immutable)
  • Democratic decision-making 🔒 (Day 1, immutable)
  • Financial transparency 🔒 (Day 1, immutable)
  • Equity-based compensation only (all cash salary is deferred until Phase 1)

NOT active — deferred until Phase 1 revenue milestones are met:

  • ❌ Cash salaries — no one receives cash pay of any kind
  • ❌ Health insurance, stipends, or any employer-paid benefits
  • ❌ Paid time off, parental leave, sabbaticals (no salary to pay against)
  • ❌ Equipment stipends or reimbursements
  • See Team Structure for founder compensation framework

Founder work compensation:

  • Founders contribute part-time or whenever available (very bootstrapped and grassroots)
  • Founder contributions during Phase 0 documented for later compensation
  • During first year of cash flow (Phase 0.5 or Phase 1), CEO may voluntarily defer 50%+ of profit share to compensate Phase 0 founder work (see Section 1.2.1)

Phase 0.5: Early Revenue (Any recurring revenue, pre-MRR $10,000) ​

Plain language: Money is coming in, but not enough to pay full salaries. Instead of salaries, a percentage of net profit is distributed equally among all employee-owners. No formal salaries, benefits, or stipends are paid yet — those require Phase 1. Think of this as "the lights are on, but we're not there yet."

Trigger: Any month the company has positive net revenue (after operating costs), even $1 of distributable profit.

Active rights:

  • Everything from Phase 0 (ownership, governance, transparency) 🔒
  • Equal profit distribution 🔒 — a percentage of net profit (after taxes, operating costs, and a minimum reserve) is distributed equally among all employee-owners
    • Distribution frequency: monthly or quarterly, decided by employee vote
    • Minimum reserve: At least 30% of net profit retained for operating runway (adjustable by employee vote, but never below 20%)
    • Formula: (Net profit − taxes − reserve) ÷ number of employee-owners = per-person distribution
    • These are profit distributions, not salaries — no minimum dollar amount guaranteed
  • Founder Work Compensation provision may activate during this phase (see Section 1.2.1)

Still NOT active — deferred until Phase 1:

  • ❌ Formal salaries (the $75k/year living wage minimum requires Phase 1 MRR thresholds)
  • ❌ Health insurance, stipends, or employer-paid benefits
  • ❌ Paid time off or leave policies (no salary base to pay against)
  • ❌ Equipment stipends

Why this matters:

  • Ensures early revenue is shared fairly and immediately, not hoarded
  • Provides real income to team members as soon as the company can afford it
  • Maintains the immutable equal-distribution principle from day one of revenue
  • Creates a natural, transparent bridge to Phase 1 without forcing the company to commit to $75k salaries before it's sustainable

Phase 0.5 → Phase 1 transition:

  • When MRR reaches $10,000+ (or equivalent seed funding is secured), the company transitions to Phase 1
  • Profit distributions convert to formal salaries at the $75k/year minimum
  • Employee vote confirms readiness and transition timing

Phase 1: Initial Revenue (MRR $10,000+ or Seed Funding) ​

Activated rights:

  • Living wage minimum salary 🔒 (75,000/year minimum, immutable)
  • Salary cap (3× rule) 🔒 (immutable)
  • Profit sharing 🔒 (immutable, begins with first distributable profit)
    • Note: Founder Work Compensation provision allows voluntary CEO profit deferral (50%+) for first 12 months to compensate Phase 0 founders (see Section 1.2.1)
  • Basic health insurance (employee coverage, 100% paid)
  • Unlimited PTO (minimum 4 weeks encouraged)
  • Remote-first work
  • Basic equipment stipend (1,000 initial)

Deferred to Phase 2:

  • Family health coverage (PPO option)
  • Professional development stipends
  • Wellness benefits
  • Sabbatical program
  • 4-day work week (starts as optional)

Phase 2: Sustainable Revenue (MRR 50,000+ or Series A) ​

Activated rights:

  • Health insurance for employee + family (100% premiums)
  • Professional development budget (2,500/year initially, scaling to 5,000/year)
  • Mental health stipend (1,000/year initially, scaling to 2,000/year)
  • Fitness stipend (500/year initially, scaling to 1,000/year)
  • Equipment stipend increase (3,000 every 3 years)
  • 4-day work week (32 hours standard for all)
  • Parental leave (12 weeks initially, scaling to 26 weeks for primary)

Phase 3: Growth & Scale (Profitable with 12+ months runway) ​

Activated rights:

  • Full parental leave (26 weeks primary, 12 weeks secondary)
  • Sabbatical program (12 weeks after 5 years + 5,000 bonus)
  • Full wellness benefits (2,000 mental health, 1,000 fitness)
  • Full professional development (5,000/year)
  • Conference attendance (one per year fully paid)
  • Enhanced severance guarantees
  • Company retreats (two per year)

Phase Activation Process ​

  1. Financial Review: CFO reports to employees when cashflow supports next phase activation
  2. Employee Vote: Majority vote required to confirm phase activation and specific benefit priorities
  3. Timeline: 30-day notice before benefits activate
  4. Retroactive Application: Where feasible, newly activated benefits apply retroactively for current employees

What Cannot Be Deferred (Immutable Rights) ​

Even in pre-revenue or crisis periods, these CANNOT be deferred:

  • Equal ownership and one-person-one-vote 🔒
  • Living wage minimum salary 🔒 (once cashflow permits ANY salaries)
  • 3× salary cap 🔒 (applies whenever salaries are paid)
  • Equal profit sharing 🔒 (applies to all distributable profits, including Phase 0.5 distributions)
  • Financial transparency 🔒
  • No layoffs without shared sacrifice 🔒
  • Privacy & no user data sales 🔒
  • Right to vote on major decisions 🔒

Critical Note: If the company cannot afford living wage minimums, it must either:

  • Continue operating on equity-only (no cash salaries paid to anyone)
  • Distribute profits equally under Phase 0.5 until salary thresholds are sustainable
  • OR reduce all salaries proportionally while maintaining 3× cap
  • OR initiate employee-approved crisis protocols

Monitoring & Adjustment ​

  • Quarterly reviews: Financial status and benefit phase progression
  • Annual votes: Employees can accelerate or adjust phase timeline
  • Transparency dashboard: Real-time view of active vs. pending benefits
  • Employee input: Any employee can propose benefit priority changes

Goal: All benefits fully activated within 24-36 months of sustainable revenue generation.

ARTICLE I: OWNERSHIP & GOVERNANCE ​

Active from Phase 0 — no cash cost; these are structural/governance rights.

Section 1.1 – Equal Ownership 🔒 IMMUTABLE ​

  • Every employee is an owner with equal voting rights
  • One person = one vote on major decisions
  • Major decisions include: compensation structure, new hires above a certain level, strategic direction changes, amendments to this charter
  • This right cannot be removed or weakened (see Immutable Rights #1 and #2)

Section 1.2 – Profit Sharing 🔒 IMMUTABLE ​

  • All distributable profits are shared equally among all employee-owners
  • Distribution occurs quarterly (or annually if cash flow requires)
  • No employee receives more profit share than another, regardless of role or tenure
  • Formula:
    (Net profit after tax and reserves) ÷ (number of employee-owners) = per-person distribution
  • This right cannot be removed or weakened (see Immutable Rights #4)

Section 1.2.1 – Founder Work Compensation (First Year Exception) ​

Purpose: Recognize and compensate founders for pre-revenue work and sweat equity.

Provision:

  • During the first 12 months of official cash flow (starting when company begins paying salaries), the CEO/founding employee-owner may voluntarily defer at least 50% of their personal profit share
  • Deferred profit share is redistributed to other founding team members who contributed during Phase 0 (pre-revenue period)
  • Distribution proportional to founders' documented contribution hours/equity during Phase 0
  • This is a voluntary, one-time provision specific to compensating Phase 0 founder work
  • Requires documentation of founder contributions and 75% employee vote to activate
  • Automatically expires after first 12 months of cash flow; equal distribution resumes thereafter

Why this doesn't violate immutability:

  • Voluntary individual deferral, not a structural change to profit sharing
  • Time-limited (12 months only)
  • Specific purpose: compensating documented founder sweat equity
  • Equal distribution remains the default and resumes after 12 months
  • Cannot be used to create ongoing unequal distribution

Documentation required:

  • Founder contribution log (hours, role, equity contribution during Phase 0)
  • Employee vote approving activation of this provision
  • Transparent reporting of deferred amounts and redistribution

Section 1.3 – Financial Transparency 🔒 IMMUTABLE ​

  • All financial records are open to all employee-owners
  • Monthly financial reports published internally
  • Annual reports published publicly (with anonymized individual compensation data)
  • This right cannot be removed or weakened (see Immutable Rights #9)

Section 1.4 – Democratic Decision-Making 🔒 IMMUTABLE ​

  • Decisions affecting working conditions require majority vote
  • Decisions affecting ownership structure require 75% supermajority
  • Any employee can call for a vote on any topic
  • This right cannot be removed or weakened (see Immutable Rights #10)

ARTICLE II: COMPENSATION ​

Cash compensation activates at Phase 1 (MRR $10,000+ or seed funding). During Phase 0, all compensation is equity-only.

Section 2.1 – Salary Cap (3x Rule) 🔒 IMMUTABLE ​

Applies whenever any cash salaries are paid (Phase 1+).

  • Highest-paid employee may not earn more than 3× the lowest-paid employee in base salary
  • Minimum salary: 75,000/year (adjusted annually for inflation) — effective upon Phase 1 activation
  • Maximum salary: 225,000/year (3× minimum) — effective upon Phase 1 activation
  • Ratio locked; changes require 75% vote
  • Ratio can be lowered but NEVER exceed 3× (absolute ceiling) (see Immutable Rights #3)

Section 2.2 – Living Wage Guarantee 🔒 IMMUTABLE ​

Activates when the company begins paying any cash salaries (Phase 1+). If the company cannot afford this minimum, no cash salaries are paid to anyone (see Implementation Framework).

  • All employee-owners earn a living wage based on cost of labor
  • Base minimum: 75,000/year (San Diego 2026 dollars) — effective upon Phase 1 activation
  • Adjusted annually using MIT Living Wage Calculator
  • No geographic wage discrimination for remote employees
  • This right cannot be removed or weakened (see Immutable Rights #7)

Section 2.3 – Salary Transparency ​

  • Salary bands published internally
  • Salary formula is public and objective
  • Employees may request salary review at any time

ARTICLE III: TIME & FLEXIBILITY ​

Paid time-off and reduced-hour benefits activate at Phase 1–2. During Phase 0, founders set their own schedules voluntarily.

Section 3.1 – Four-Day Work Week (Phase 2) ​

  • Standard work week: 32 hours (four 8-hour days)
  • No reduction in compensation
  • Optional 40-hour weeks at same salary
  • All meetings must fit within 4-day schedule

Section 3.2 – Unlimited PTO (Phase 1) ​

  • No accrual, no cap, no "use it or lose it"
  • Minimum required: 4 weeks (20 days) per year
  • At least 1 full week off per quarter required
  • Manager approval for coordination only
  • Unused minimum PTO triggers mandatory time off

Section 3.3 – Parental Leave (Phase 2–3) ​

  • 26 weeks fully paid for primary caregiver (full benefit at Phase 3; 12 weeks at Phase 2)
  • 12 weeks fully paid for secondary caregiver
  • Applies to birth, adoption, foster placement
  • Available from Day 1 of the employee's phase activation (not Day 1 of Phase 0)
  • Flexible phased return allowed

Section 3.4 – Sabbatical (Phase 3) ​

  • 12 weeks paid after 5 years (repeats every 5 years)
  • Fully paid at regular salary
  • Must be taken within 6 months of eligibility
  • 5,000 sabbatical bonus for travel/education

Section 3.5 – Sick Leave (Phase 1) ​

  • Unlimited sick leave
  • Mental health days = sick days
  • Chronic illness accommodations supported
  • No penalties for usage

Section 3.6 – Bereavement Leave (Phase 1) ​

  • 4 weeks paid for immediate family
  • 2 weeks paid for extended family
  • Additional unpaid leave as needed

ARTICLE IV: WORK ENVIRONMENT ​

Remote-first culture is active from Phase 0. Paid stipends and retreats activate at later phases.

Section 4.1 – Remote First ​

  • All roles remote-eligible by default (Phase 0+)
  • Optional office space in San Diego (when financially feasible)
  • Two fully paid company retreats per year (Phase 3)
  • 3,000 equipment stipend every 3 years (Phase 1: $1,000 initial; Phase 2+: $3,000)

Section 4.2 – Work Hours Flexibility ​

  • Async-first, no core hours
  • Time zone flexibility (US, eventually global)
  • Results-oriented, not hours-logged

Section 4.3 – Meeting Culture ​

  • No meetings before 10am or after 3pm
  • No meetings on Fridays
  • Agenda + notes required
  • Async communication by default
  • Max 15 meeting hours/week

ARTICLE V: HEALTH & WELLNESS ​

Health and wellness benefits activate progressively from Phase 1–3. Not available during Phase 0.

Section 5.1 – Health Insurance (Phase 1: employee only; Phase 2: employee + family) ​

  • 100% premiums covered (employee-only at Phase 1; employee + family at Phase 2)
  • HMO and PPO options (PPO option at Phase 2+)
  • Dental and vision included
  • Available Day 1 of phase activation (not Day 1 of employment during Phase 0)

Section 5.2 – Mental Health (Phase 2–3) ​

  • 2,000/year wellness stipend (Phase 2: $1,000; Phase 3: $2,000)
  • Mental health days fully protected
  • Therapy app access provided
  • Mental health training for managers

Section 5.3 – Physical Wellness (Phase 2–3) ​

  • 1,000/year fitness stipend (Phase 2: $500; Phase 3: $1,000)
  • Ergonomic equipment covered
  • Gym reimbursement up to 100/month

ARTICLE VI: PROFESSIONAL GROWTH ​

Professional development benefits activate at Phase 2–3. Not available during Phase 0.

Section 6.1 – Professional Development (Phase 2–3) ​

  • 5,000/year learning budget (Phase 2: $2,500; Phase 3: $5,000)
  • No approval needed under 500
  • Up to 80 hours/year learning time
  • Internal mentorship program

Section 6.2 – Conference & Travel (Phase 3) ​

  • One fully paid conference per year
  • Speaker opportunities supported
  • Internal lunch & learn sessions

Section 6.3 – Internal Mobility (Phase 1+) ​

  • Team/role changes with 3 months notice
  • Internal promotions prioritized
  • Transparent career ladders

ARTICLE VII: JOB SECURITY ​

Job security provisions apply once the company is paying salaries (Phase 1+). During Phase 0, participation is voluntary.

Section 7.1 – No Layoffs Policy (Phase 1+) ​

  • Zero layoffs except existential crisis
  • Existential crisis defined as < 6 months runway with no profitability path
  • Layoffs require 75% employee vote
  • Required steps before layoffs:
    • Profit sharing reduced to 0
    • Salaries reduced proportionally (top-down)
    • Hiring freeze

Section 7.2 – Severance (Phase 1+; Phase 3 for enhanced) ​

  • Company closure: 6 months severance
  • Terminated for cause: 1 month minimum
  • Terminated without cause: 3 months minimum

Section 7.3 – Performance Management ​

  • Clear expectations documented
  • Quarterly reviews
  • 3-month improvement plan before termination

ARTICLE VIII: EQUITY & INCLUSION ​

Anti-discrimination and accessibility rights are active from Phase 0. Pay equity audits activate when salaries are paid (Phase 1+).

Section 8.1 – Pay Equity (Phase 1+) ​

  • No identity-based pay gaps
  • Annual internal equity audit
  • Salary bands published in job postings

Section 8.2 – Anti-Discrimination ​

  • Zero tolerance for discrimination or retaliation
  • Anonymous reporting
  • Third-party investigations
  • Termination by employee vote if needed

Section 8.3 – Accessibility ​

  • WCAG 2.1 AA compliance required
  • Accommodations without bureaucracy
  • Neurodiversity-friendly practices

ARTICLE IX: COMPANY VALUES ​

Section 9.1 – Values in Practice ​

  • Presence over profiles → Unlimited PTO
  • Clarity over constant connection → Async-first, 4-day weeks
  • Real places create boundaries → Enforced work-life balance
  • Anonymity increases safety → Protected reporting

Section 9.2 – Rights, Not Benefits ​

  • Constitutional ownership rights
  • Require 75% vote to change
  • Effective Day 1 for all employees (governance and structural rights from Phase 0; cash-dependent benefits per phase activation)

ARTICLE X: AMENDMENT PROCESS ​

Section 10.1 – How to Amend ​

  • Any employee-owner may propose amendments
  • 30-day review period before voting
  • Requires 75% supermajority
  • Anonymous voting

Section 10.2 – Annual Review ​

  • Reviewed annually
  • Updates proposed based on experience
  • Inflation adjustments automatic (no vote required)

ARTICLE XI: ENFORCEMENT ​

Section 11.1 – Violations ​

  • Anonymous reporting available
  • Elected rotating employee committee investigates
  • Remedies include back pay, policy change, termination

Section 11.2 – Dispute Resolution ​

  • Internal mediation first
  • External arbitration second
  • Legal action last (company pays legal fees)

RATIFIED BY ​

Founding Employee-Owners (as of 2026-01-09):

  • [ ] Mechelle (CEO/Acting CTO)
  • [ ] Alexx (COO)
  • [ ] TBD (CTO)
  • [ ] Stephen (CGO)
  • [ ] Pallavi (CMO)

Constitutional Framework ​

Governance & Control ​

Note: This charter represents the cooperative values and commitment to employee ownership at Lantern. It should be formalized with legal counsel when establishing the official cooperative or ESOP structure. See GOVERNANCE.md for implementation guidance.

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