There is no such thing as absolute freedom of contract. It is subject to a great variety of restraints. Freedom of contract is, nevertheless, the general rule and restraint the exception; and the exercise of legislative authority to abridge it can be justified only by the existence of exceptional circumstances.
Appellant sought review of a lower court's determination that the Act of September 19, 1918 (Act), ch. 174, 40 Stat. 960, which fixed minimum wages for female employees in private employment, was an unconstitutional interference with the freedom to contract. The decision of the lower court was affirmed on appeal. Appellant challenged the decision and the Court affirmed the lower court's decision.
Does the contested statute violate the employer and employees' freedom to contract?
The United States Supreme Court held that the Act interfered with U.S. Const. amend. V guaranties, as the Act prevented private employers and employees from bargaining for the best contractual terms. The Court also held that the wage fixed by the Act had no relation to the capacity of female employees but, rather, was an invalid exercise of state police power by attempting to establish an arbitrary amount necessary to provide a living for women. Further, the Act required an employer to make an arbitrary payment to female employees without any causal connection to his business or the type of work the employee performed.