Adkins v. Children’s Hospital, 261 U.S. 525; 43 S. Ct. 394; 67 L. Ed. 785 (1923)
Facts—The Minimum Wage Act of 1918 provided for the creation in the District of Columbia of a Minimum Wage Board. The board was authorized to investigate and ascertain the wages of women and minors and to set up standard minimum wages, which employers were forbidden to lower. The Children’s Hospital employed several women at less than the minimum wage fixed by the board. Through the action of the Minimum Wage Board, these women lost their jobs. They were satisfied with their pay and working conditions. The women brought suit seeking to enjoin the enforcement of the minimum wage law and to permit the taking of whatever jobs they desired.
Question—Does the Minimum Wage Act violate the due process clause of the Fifth Amendment?
Decision—Yes.
Reasons—J. Sutherland (5–3). The right to contract about one’s affairs is part of the liberty of the individual protected by the Fifth Amendment. There is no such thing as absolute freedom of contract, but freedom is the rule and restraint is the exception. The statute in question is simply a price-fixing law forbidding two parties to contract in respect to the price for which one shall render service to the other.
In distinguishing this decision from others allowing for the regulation of the hours of employment, Sutherland distinguished between “incidents of employment having no necessary effect upon the heart of the contract, that is, the amount of wages to be paid and received.”
The price fixed by the board has no relation to the capacity and earning power of the employee, the number of hours worked, the character of the place or the circumstances or surroundings involved, but is based solely on the presumption of what is necessary to provide a living for a woman and preserve her health and morals.
The law considers the necessities of one party only. It ignores the necessities of the employer by not considering whether the employee is capable of earning the sum. If the police power of a state may justify the fixing of a minimum wage, it may later be invoked to justify a maximum wage, which is power widened to a dangerous degree. To uphold individual freedom is not to strike down the common good, but to further it by the prevention of arbitrary restraint upon the liberty of its members.
C.J. Taft and J. Holmes authored dissents. Taft saw the legislation as a way of preventing the evils of “the sweating system.” Holmes further questioned the “dogma” of “freedom of contract.”
Note—The Supreme Court reversed Adkins in West Coast Hotel Co. v. Parrish (1937).