Forms of Union Agreements

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: Tactics for Resolving Labor-Management Conflicts

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
Your next lesson will play in 10 seconds
  • 0:32 Collective Bargaining…
  • 1:13 Closed Shop
  • 1:36 Union Shop
  • 2:19 Open Shop
  • 2:49 Agency Shop
  • 3:32 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Lesson Transcript
Instructor: Shawn Grimsley
While currently in decline, unions are still an important presence in the workplace. In this lesson, you'll learn about different types of union agreements regarding union membership and employment, including open, closed, agency and union shops.


Imagine that you're a carpenter who has just received an offer of employment at one of your city's largest construction companies. You're elated that you've received the offer because the pay is the best in town, but you're a bit confused when the HR representative informs you that you must join the carpenters' union within 60 days of your start date. You ask why, and the HR rep tells you that the company is a union shop, which means nonunion members must go to the union.

Collective Bargaining Agreement

You've never been a member of a union before, but a friend of yours is a member of a plumbing union, so you give him a call to find out more. He meets you at your local bar and starts to give you a crash course in unions.

Your friend explains that a union is an organization of workers that work together to negotiate for better pay, benefits, and working conditions. Since employers have to deal with all of you at once, your bargaining power, as a unit, is more equal to the employer's bargaining power. The union levels the playing field. The result of this collective bargaining between the union and the employer is the collective bargaining agreement. As part of the collective bargaining agreement, an employer may agree to a union shop, agency shop, or an open shop.

Closed Shop

Your friend explains that once upon a time, some companies were closed shops. In a closed shop, a company has agreed only to hire union members. If a worker quit the union in a closed shop, the employer terminates the employee. Closed shops were made illegal under the Labor-Management Relations Act because some people thought a closed shop gave unions too much power.

Union Shop

The company that you work for is a union shop. A union shop agreement means that the company can hire anyone it wants, but any new, nonunion employee must join the union. You can distinguish a union shop from a closed shop by the fact that the closed shop will not hire anyone who is not already a member of the union, while a union shop will hire nonunion workers, but they have to join the union.

The agreement with the union usually provides that an employer will terminate a new employee who does not join the union within so many days of being hired. Your friend also tells you that some states don't even allow collective bargaining agreements to establish a union shop. These state laws are often referred to as 'right-to-work laws' and states are called 'right-to-work states.'

Open Shop

Your friend explains that the opposite of a closed shop agreement is an open shop agreement. In an open shop, a company will hire anyone it wants, and employees do not have to be union members or stay in a union to keep their jobs. Even though nonunion members don't have to pay union dues or other fees, the law still requires that the union represent non-union members in negotiations with the company. Some people refer to open shops as merit shops since union membership isn't required.

To unlock this lesson you must be a Member.
Create your account

Register for a free trial

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use

Become a member and start learning now.
Become a Member  Back
What teachers are saying about
Free 5-day trial

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it free for 5 days!
Create an account