The Court has also applied its general limitation on union dues collected from public sector employees. Michigan citizens have been at the forefront of developing this law and standing up for the exercise of their Constitutional rights.

Abood v Detroit Board of Education ²⁶  is the first case involving union security arrangements in government employment. In this case, Detroit public school teachers who were opposed to public sector unionism challenged the constitutionality of agency fee clauses and the use of the collected fees to finance political and ideological causes. The agency shop clause in the collective bargaining agreement was enforceable under Michigan state law, the Public Employee Relations Act (PERA), which specifically authorized agency shop arrangements.

Relying on its prior decision in Street, the Court upheld the validity of the state-authorized agency shop clause but additionally held that the First and Fourteenth Amendments to the U.S. Constitution prohibited unions from using objecting employees’ dues to finance political or ideological causes unrelated to collective bargaining. The Court established the principle that the U.S. Constitution—not a statute such as the RLA—bars public sector unions from imposing mandatory dues for political purposes when a union member objects.

Chicago Teachers Union v Hudson ²⁷  is the Supreme Court public employee case which most thoroughly sets forth the constitutional requirements for union reduced fee procedures in an agency shop.

• First, nonmembers must be given adequate information about the basis for the representation fee to enable them to know the propriety of the dues calculated prior to the time for objection. ²⁸  The Court reasoned that although the employee retains the burden of objecting, the union keeps the burden of disclosure because of its greater access to such information. ²⁹  The Court acknowledged that while "absolute precision" in the union’s calculations was not practically possible, it nevertheless found that this disclosure must include the identification of "the major categories of expenses, as well as verification by an independent auditor." ³⁰ 

• Second, the procedure must place 100 % of the dissenters’ representation fees in an interest-bearing escrow account unless the initial disclosure includes a CPA’s verification of expenses. If the fee schedule is verified by a CPA, the union may place in escrow only that portion of expenditures which an objector could reasonably challenge, and the union may retain the remainder. ³¹ 

• Finally, the procedure must provide for a "reasonably prompt decision by an impartial decisionmaker" to confirm the nature of the challenged union expenditures and to guarantee that the dues have been used for permissible purposes. ³² 

The Court went on to rule that the internal procedures of the union were constitutionally inadequate because all three steps of the review of challenges were fully controlled by the union and its officials. ³³  The union bears the burden of justifying contested expenditures (those not clearly allocated to either collective bargaining or ideological purposes) promptly and through an impartial decisionmaker. ³⁴  The Court suggested that two procedures would satisfy this requirement: prompt judicial or administrative review or an expeditious arbitration by a neutral arbitrator (not of the union’s unrestricted choice). ³⁵ 

Despite the rulings in Abood and Hudson, the Court had to revisit the subject of defining the limits to permissible union expenditures as recently as 1991 in Lehnert v Ferris Faculty Association. ³⁶  The Court in Lehnert held that the public sector union representing faculty members could not charge objecting dissenters for the costs of the union’s lobbying efforts and political activities. Despite the union’s argument that the lobbying and political activities were aimed at increasing public funding and support of teaching, the Court concluded that the First Amendment precluded the union from charging dissenters for these practices because these activities were too attenuated to justify compelled support.