This article draws upon research with men and women workers in ‘flat’ organizations, namely mixed‐sex and all‐women's worker co‐operatives and collectives in the voluntary sector. It argues that the denial of sales, contracts and grants to women's co‐operatives and collectives in particular, can be connected to discourses of sexuality generally and to the assumptions surrounding lesbianism and separatism in particular. Such discourses are often used to marginalize women workers and their co‐operatives and collectives, irrespective of whether the women in such organizations are lesbians or not. It is argued that when women workers organize in ways which challenge male‐dominated hierarchy, their marginalization necessarily takes a sexualized form because organizations, whether hierarchical or less/non‐hierarchical, are not only gendered but are also sexualized. This analysis thus offers an important additional dimension to the view that the marginalization of co‐operatives and collectives is due to their small size, lack of capital, location in certain sectors of the economy, or assumptions concerning the ‘alternative’ or ‘fringe’ nature of employment in such settings. This article also argues that sexuality can attach at the level of the organization, and not simply at the level of individual bodies or life‐styles, an argument often unacknowledged both in the literature on lesbians in the workplace, and in the literature on co‐operative businesses and less or non‐hierarchical volunta