Agency shop

An agency shop is defined as a place of employment where workers are required to pay union dues regardless of whether they are union members. In the school environment, a union and a school board enter into agency shop agreements when employees who decline union membership but are still part of collective bargaining units are required to pay union “service fees.” The entry reviews court rulings on when such fees may be required and for what they may be used.
In the 1977 case of Abood v. Detroit Board of Education, the U.S. Supreme Court upheld the legal permissibility of agency shop service fees for nonunion employees. The Court held that agency shop fees did not violate the First Amendment rights of nonunion employees. In Abood, the Court ruled that a government employer and union may reach an agreement requiring employees to pay an agency service fee encompassing the costs of collective bargaining, contract administration, and grievance adjustment. However, Abood clarified that objecting nonunion employees have a constitutional right to withhold payment of any agency service fees that support political and ideological causes. In other words, the Court explained that objecting nonunion school employees can be compelled to pay only those expenses directly related to collective bargaining. Mandatory agency service fees may not be used by unions to subsidize ideological or political causes or perspectives. Based on Abood, all public employees have a constitutional right to prevent a union from spending part or all of their required agency service fees on political contributions or costs associated with the advancement of political views that are unrelated to the union’s duties as an exclusive bargaining representative.
School boards that negotiate contracts requiring employees to pay union representation fees are acting within their own discretion to force employees to join unions and are therefore legally liable for any failure to protect the rights of objecting employees. Under Abood, employees must be given the clear choice of joining the union and paying full dues or, as an alternative, paying only a service fee to cover the direct costs associated with collective bargaining. Contracts that fail to give school employees this choice violate the employees’ constitutional rights.
In another U.S. Supreme Court case, Chicago Teachers Union, Local No. 1 v. Hudson, which was decided nine years after Abood, the justices held that specific and proper procedures must be in place to protect agency service fees from being improperly used by unions. Basically, Hudson reinforces Abood. In Hudson, the Court found further that unions must hold disputed agency service fee money in escrow while resolving worker disputes before an impartial decision maker. The Court considered it essential for unions to provide adequate information concerning the portion of financial cost charged specifically for collective bargaining to employees who object to agency service fee payments.
In yet a third U.S. Supreme Court case, Lehnert v. Ferris Faculty Association, the Court attempted to provide even greater clarity concerning union activities that may not be supported by agency service fees. In Lehnert, the Court discovered that up to 90% of the National Education Association (NEA) and local union fees were being charged to objecting nonunion faculty members and being spent on union activities unrelated to collective bargaining. Lehnert again upheld the legal principle that objecting nonunion school employees cannot be compelled to pay for a union’s lobbying, organizing, public relations, or any other activities not directly related to collective bargaining representation.
More recently, in a case not related to education, Air Line Pilots Association v. Miller, the Supreme Court held that nonunion employees with complaints concerning agency service fees are not compelled to exhaust a union-controlled arbitration procedure. Instead, the Court decided that nonunion employees may immediately proceed to federal court. In Air Line Pilots, the Court noted that the union requirement that nonunion airline pilots exhaust union arbitration did not meet the impartial decision maker requirement set forth in the Court’s Chicago Teachers Union decision.
Lower courts continue to define more precisely the rules that states must follow when addressing agency service fee disputes. For example, lower courts have established that it is not necessary for all states to employ an independent auditor to verify the correctness of union fee allocations (Belhumeur v. Labor Relations Commission, 1991). Additionally, lower courts have considered whether unions can be required to provide affirmative consent to agency service fee deductions. These courts have maintained that it is legally sufficient to provide only notice of the deduction of agency fees and an opportunity to object to agency service fees (Mitchell v. Los Angeles Unified School District, 1992).
Legal issues associated with union dues and associated fees have generated significant litigation in the area of collective bargaining involving school employees. This trend of heightened litigation associated with union dues and associated fees is likely to continue.
Kevin P. Brady

See also Abood v. Detroit Board of Education; Chicago Teachers Union, Local No. 1 v. Hudson; Collective Bargaining; Davenport v. Washington Education Association; Unions
Further Readings
Dodd, V. J. (2003). Practical education law for the twentyfirst century. Durham, NC: Carolina Academic Press.
Legal Citations
Abood v. Detroit Board of Education, 433 U.S. 915 (1977).
Air Line Pilots Association v. Miller, 523 U.S. 866 (1998).
Belhumeur v. Labor Relations Commission, 580 N.E.2d 746 (Mass. 1991).
Chicago Teachers Union, Local No. 1 v. Hudson, 475 U.S. 292 (1986).
Davenport v. Washington Education Association, 127 S. Ct. 2372 (2007).
Lehnert v. Ferris Faculty Association, 501 U.S. 1244 (1991).
Mitchell v. Los Angeles Unified School District, 963 F.2d 258 (9th Cir. 1992), cert. denied, 506 U.S. 940 (1992).