Facts

On September 19, 1918, Congress enacted a law establishing a Minimum Wage Board for the District of Columbia to set minimum wages for women and minors, aiming to ensure wages sufficient for their health and morals based on living costs. The Board, after investigations and hearings, issued orders fixing minimum wages in various occupations.

Children's Hospital of the District of Columbia employed adult women in roles such as nurses and staff at wages below the Board's minimum, pursuant to mutual agreements satisfactory to both parties. The hospital faced enforcement of the order, which would require paying higher wages or facing penalties, disrupting existing contracts.

Separately, Willie Lyons, a 21-year-old woman, worked as an elevator operator at the Congress Hall Hotel Company, earning $35 per month plus two meals daily, an amount below the minimum wage. The job provided short hours, healthful conditions, and moral surroundings, and both Lyons and the hotel were satisfied, but the hotel terminated her employment to comply with the Board's order and avoid fines and imprisonment.

Children's Hospital filed suit in the Supreme Court of the District of Columbia against the Board members seeking an injunction to prevent enforcement of the wage order, claiming it violated the Fifth Amendment's due process clause by interfering with freedom of contract. Lyons similarly sued the Board members for an injunction on the same constitutional grounds, alleging the order deprived her of employment and wages without due process.

The trial court denied the injunctions and dismissed the bills. On appeal, the Court of Appeals of the District of Columbia initially affirmed but, after granting a rehearing, reversed, holding the act unconstitutional. The cases were remanded, and the trial court issued permanent injunctions barring enforcement. The Court of Appeals affirmed these decrees, leading to the Board's appeal to the Supreme Court of the United States.

Analysis

Issue #1

Issue

Did the Court of Appeals have jurisdiction to grant a rehearing after initially denying it and affirming the trial court's decision?

Legal Rule

Appellate courts have authority to manage their dockets and grant rehearings during the same term, provided the proceedings do not affect the validity of subsequent appeals; jurisdiction over subsequent appeals remains intact if the lower court properly entertains them.

Rule Analysis

The proceedings in question occurred during the first appeals, where a substitute justice participated due to illness, and the rehearing was granted by two appellate justices during the term.

This did not invalidate the Court of Appeals' ability to hear the second appeals from the remanded decrees, as the appellants themselves invoked that jurisdiction, confirming its propriety.

Conclusion

Yes, the Court of Appeals properly entertained the second appeals and decided the cases.

Issue #2

Issue

Does the Minimum Wage Act violate the due process clause of the Fifth Amendment by unconstitutionally interfering with freedom of contract?

Legal Rule

The due process clause protects the liberty to contract, including employment contracts, allowing parties equal rights to bargain terms; legislative interference is permissible only in exceptional circumstances, such as businesses affected with public interest, public works, wage payment methods, or health-based hours restrictions, but not for general wage-fixing absent such justifications.

Rule Analysis

The act established a board to fix minimum wages for women and minors based on living costs, health, and morals, without regard to public interest in affected businesses, emergency conditions, or wage payment methods.

Unlike hours-of-labor laws, which address health risks from prolonged work and leave wage bargaining intact, this statute directly fixed wages, ignoring employee capacity, employer burdens, and service value, making it a pure price-fixing measure.

The statute's standard was vague, varying by individual circumstances without precise application, and one-sided, compelling employers to pay regardless of business viability while ignoring efficiency or mutual agreement.

It lacked causal connection to the employment, basing wages on extraneous employee needs rather than service value, akin to arbitrary exactions unconstitutional in other contexts like compelled sales.

Prior cases upholding restrictions were distinguished as not involving wage-fixing, and the act's broad application to all occupations without exceptional justifications exceeded police power limits.

Conclusion

Yes, the act unconstitutionally interferes with freedom of contract under the due process clause, rendering it invalid.

Additional Opinions

William H. Taft: Dissent

Justice Taft dissents, regretting his disagreement with the majority, and argues that the minimum wage law for women does not violate the Fifth and Fourteenth Amendments' guarantees of liberty. He emphasizes that legislatures assume employees, especially low-paid ones, lack equal bargaining power and are vulnerable to exploitation, justifying police power interventions like minimum wages to combat sweating systems and low wages. Taft contends that the Court should not invalidate laws based on economic policy disagreements, as legislatures presume such laws benefit employees and society by forcing employers to adjust profits rather than exploit necessities. He notes that maximum hours laws have been upheld for health reasons, citing cases like Holden v. Hardy and Muller v. Oregon, and argues that Bunting v. Oregon effectively overruled Lochner v. New York sub silentio. Taft rejects the distinction between minimum wages and maximum hours, viewing both as equivalent restrictions on freedom of contract, with evidence showing low wages harm health similarly to long hours. While not opining on minimum wages for adult men, Taft asserts that for women, the law aligns with Muller v. Oregon's recognition of physical differences, unaffected by the Nineteenth Amendment. He concurs with Holmes' reasoning but provides his own for emphasis, and notes Justice Sanford's concurrence.

Mr. Justice Holmes: Dissent

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