The Slipperiness of Stability: Contracting for Flexible and Triangular Employment Relationships in the New Economy

Abstract

Our era has been called the "age of flexibility." The need for flexibility is what is said to be driving the new economy, and in turn, driving new policies, new regulatory approaches, and more experimentation with alternative forms of governance. The questions that policy makers must first ask when faced with claims about the necessity, legality, and desirability of flexibility is: flexible in what way and compared to what other possibilities? The range of flexible arrangements in the labor market that have developed in recent years is vast.

In this article, written for the law review symposium, The Role of Contract in the Modern Employment Relationship, Professor Lobel considers the many meanings and implications of the concept of stability in employment relations. In particular, the article examines flexibilization which involve the use of a third party labor intermediary for the supply of workers to a firm. The Article argues for the need for new laws and adequate guidelines for today's flexible staffing arrangements. The article uncovers the range of taxonomies and categories that have developed in the flexible staffing industry. The article sets forth the argument that the complexity and variety that characterize the industry is not accidental, but a product of legal and economic struggles for recognition of flexible employment arrangements as legitimate practices in the new economy. The article analyzes the recent efforts by courts, administrative agencies, and legislative commissions to define the legal parameters of the various new flexible employment arrangements. Drawing on comparative insights, as well as the problems and inconsistencies among recent cases, the article demonstrates the inadequacies of the existing common law doctrine in addressing these new challenges and suggests alternative doctrines and policies that would be better suited to achieve the necessary balance between flexibility and fairness. It shows how the flexible employment arrangements in the new market are simultaneously efficiency-driven and developed through continuous political and legal action. While the employment agency industry is potentially a welfare-enhancing sector in certain environments, it also produces new forms of mistreatment of workers in the absence of adequate regulatory incentives. These new economic structures necessitate the development of a new normative model that allows certain forms of market flexibility yet maintains the social norms that continue to inform fair employment policies.

Keywords: New Economy, Service Economy, Labor and Employment Law, Fair Employment Practice

JEL Classification: A00, A10, K31