An agency shop is a workplace arrangement where employees, regardless of whether they are union members, must pay union fees as a condition of employment. This arrangement is less restrictive than a "closed shop," where union membership is a prerequisite for being hired.
The rationale behind an agency shop is to prevent non-union members from becoming "free riders" who benefit from the union's collective bargaining efforts without contributing to the costs.
These fees, often called "agency fees," are meant to cover the union's expenses related to collective bargaining, contract administration, and grievance procedures. However, employees are not required to pay the portion of union dues used for political activities.
The legality and prevalence of agency shop arrangements vary widely based on jurisdiction and are subject to ongoing legal and political debates.
Labor Law: Involves the regulation of agreements between unions and employers regarding the representation and dues collection from employees.
Employment Relations: Impacts the dynamics between employees, unions, and employers, particularly in unionized sectors.
Many confuse agency shops with closed shops, believing both require union membership for employment. While closed shops mandate union membership, agency shops only require the payment of fees related to collective bargaining and representation, not full union membership.