If a state, for union and labor purposes, is an "Open Shop" state then it means which of the following? Employee unions in both the public and private sector are TOTALLY BANNED. Unions can be formed by public and private entities, but employees have the option of joining them or not. They cannot be punished if they "opt out." If there is an employee union employees have NO CHOICE but to join. Unions can be formed but they are not covered by the provisions of the National Labor Relations Act