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What is an Agency Shop?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 11 November 2016
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    Conjecture Corporation
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An agency shop is a workplace where both union and nonunion workers may be present, and nonunion workers are required to pay a fee to compensate the union for representing their interests. The assumption is that in workplaces where a union is active, people not in the union receive benefits, and could be considered freeloaders if they are not providing compensation to the union. The fees paid by nonunion employees are known as agency fees and they are set by the union during collective bargaining with the employer.

Not all regions allow agency shops. In nations where this practice is not legal, workplaces may get around the law by having what is known as a “fair share provision.” This provision is similar to the fees set at an agency shop, but is more limited in scope. Like the agency fee, it is designed to get employees who do not belong to the union to pay for collective bargaining activity and other union actions that provide benefits.

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Some workplaces favor the agency shop model because it theoretically allows employees to choose whether they want to belong to a union, unlike a closed shop, where everyone must join the union in order to work. Employers argue it is not fair to force people to join a union to seek employment. If the alternative is no unionization or bitter arguments over unionization, unions may accept an agency shop as a compromise. It allows them to advocate for workers without essentially paying for nonunion workers.

Labor law is complex and the laws surrounding the roles of unions in the workplace can become quite byzantine, depending on the nation. The law allows for many different mixtures of union and nonunion workers with the goal of allowing workers more freedom and self determination. Some unions feel these laws undermine the strength of the union, as the power of unions lies in representing as many employees as possible.

Workers in an agency shop will be offered the opportunity of joining the union, should they so desire. Employees may want to weigh the costs and benefits carefully. Joining the union is accompanied with dues, but also comes with more employee benefits and can contribute to the union's clout when it comes to negotiating for workers. On the other hand, people in a workplace for a short period of time may not receive enough benefits from union membership to make joining worth the expense.

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