With the spread of alternative work arrangements across European labor markets, union responses to nonstandard employment have increasingly received scholarly attention. Based on a process-tracing analysis of the Netherlands between 1971 and 1996, I propose an alternative framework for understanding the divergence between early and late union responses to nonstandard employment. Rather than a choice between cooperation with management or outsiders, this case study shows that trade unions initially faced a dilemma between a legitimacy-based and an incentive-based strategy when nonstandard employment took off. Whereas the first strategy is inherently exclusive, the latter allows for more inclusive union responses. Contrary to the incentive-based strategy, the attractiveness of the legitimacy-based strategy decreases with higher levels of nonstandard employment, explaining why inclusive union responses typically become more dominant over time.