A psychological contract, also known as a work-at-home contract or a work-at-home agreement, is a legally binding agreement between an employee and an employer which stipulates rights and responsibilities of each party. In the United States, this legal agreement has been used increasingly as companies seek to avoid lawsuits related to worker exploitation. Such agreements have been especially popular in the entertainment and media industries where the production and employment of employees can be carried out in a range of settings, from television sets to warehouse environments. While the idea of a contractual arrangement between two parties that is legally binding may seem foreign, it is gaining popularity with organizations that have not traditionally had formal work-at-home arrangements. For example, some prominent entertainment companies such as Disney have signed agreements with online gaming portal Yahoo!
In the case of entertainment companies, one company may enter into a contractual agreement with another company that both will share production costs, and reap the benefits of revenue generated from advertising. The employees of the two companies sign the agreement as mutually agreed upon; the employees are considered the property of the employer in most cases. Under psychological contracts that are based on trust and vulnerability, an employee who discloses information about another employee to a third party without authorization from his or her employer is considered to have breach of confidence, a term that can impose severe penalties. As in any other type of employment relationship, it is important for an employer to take steps to ensure the protection of its most valuable assets - the workers.
Although the use of a psychological contract has been extremely effective in the past, some employers have been hesitant to use this method in light of the potential for lawsuits and employees suing for breach of their employment expectations. Nevertheless, these issues are likely to become less of a problem as more employers learn of the benefits to be gained from these agreements. To date, online sources such as Yahoo! Finance offer information on how to obtain and read existing contracts, which employers should take advantage of when making employment deals.