Workplace where an employee, to retain his job, must pay a fee to the union representing him in collective bargaining within a time frame specified by the employer and the union. This fee is equivalent to the union's customary initiation fees and monthly dues.

Unlike employees in a union shop, employees in an agency shop are required only to pay dues. They need not:

A union may form an agency shop by negotiating for a collective bargaining agreement clause, which requires an employer to remove an employee from a union-represented position at the union's request if the employee does not pay fees to the union for the union's collective bargaining efforts on his behalf within a specified time. This period is often one month after hire or transfer into a position represented by the union.

The clause is generally called an agency shop clause and the fee is often called an agency fee or fair-share fee. The agency shop clause is one of several types of union security clauses historically used to ensure that employees are excluded from the bargaining unit if they either:

States may enact right-to-work laws prohibiting employers and unions from forming agency shops.

For more information, see Practice Notes: