In order to build membership and bolster their financial resources, unions often try to convince employers to include a "union security clause" in the contracts they negotiate. These clauses specify union membership and financial support requirements for employees. Security clauses are necessary, argue the unions, to support the costs of bargaining and employee representation.

Many employers mistakenly believe that they are legally required to have such clauses in their contracts, but the law does not mandate union membership or employees' financial support. A union security agreement is only a permissive topic of bargaining, not a mandatory one: The employer must agree to it before it can be enforced against employees as part of a collective bargaining agreement. In other words, no employee is automatically bound to join or make financial contributions to a union until a valid employer-union agreement on this issue has been reached.

Several terms are used to describe the employer-employee relationship with respect to union membership and financial support:

  • A "merit shop" or "open shop" describes a workplace where there is no contract between a union and the employer.

  • An "agency shop" is a workplace where there is a union contract that does not require union membership, but does require each worker to pay a union representation or service fee.

  • A "union shop" is a workplace where the union contract requires each worker to join the union within a certain time period after employment and to financially support the union by paying dues.

  • A "closed shop" is a workplace where a union contract requires the employer to hire only workers who are already union members. (This type of contract is illegal under the Taft-Hartley amendments of 1947.)

In Michigan, PERA, which governs labor relations for public-sector employees, prohibits labor-management agreements from requiring employees to join a labor union.39 The maximum form of compulsory unionism permitted under PERA is an agency shop agreement, which compels all employees to either join the union that represents them or pay a "service fee" to it as a condition of employment.