The New Psychological Contract: Implications of the Changing Workplace for Labor and Employment Law

48 UCLA Law Review 519 (2001) In this article, Professor Stone describes the profound changes that are occurring in the employment relationship in the United States. Firms are dismantling their internal labor markets and abandoning their implicit promises of orderly promotion and long-term job security. No longer is employment centered on a single, primary employer. Instead, employees operate in a boundaryless workplace in which they expect to move frequently between firms, and between divisions within firms, throughout their working lives. At the same time, employers and employees have a new understanding of their mutual obligations, a new psychological contract, in which expectations of job security and promotional opportunities have been replaced by expectations of employability, training, human capital development, and networking opportunities. The changes in the nature of the employment relationship have many implications for labor and employment regulation. The U.S. system of labor and employment law that originated in the New Deal period is built upon the assumption of long-term attachment between employer and employee. The collective bargaining laws as well as the social welfare measures that provide old age assistance, unemployment insurance, health insurance, and disability insurance are employer-centered and depend upon an on-going employment relationship. These legal structures are not well-suited to the boundaryless workplace. Professor Stone discusses the implications of the new workplace for three issues that are problematic in the new workplace: ownership of human capital, employment discrimination, and employee representation. In each area, she makes suggestions to address problems of insecurity, unfairness and injustice that frequently arise. These proposals are part of an effort to begin to imagine, and create, a new labor and employment law, one that can foster equity and justice in the new workplace.