The right to make contracts about one's affairs is a part of the liberty protected by the Due Process Clause, U.S. Const. amend. V. Within this liberty are provisions of contracts between employer and employee fixing the wages to be paid. In making contracts of employment, generally speaking, the parties have equal right to obtain from each other the best terms they can by private bargaining. Legislative abridgement of that freedom can only be justified by the existence of exceptional circumstances. Freedom of contract is the general rule and restraint the exception.
The prisoner was indicted for violation of a statute that required payment of a minimum wage for female employees. The statute declared it against public policy for employers to have employed women at unreasonable or oppressive wages, or those that were both less than the fair and reasonable value of the services rendered and less than sufficient to meet the minimum cost of living necessary for health. A case was filed challenging the statute as violative of the freedom of contract contained in the Due Process Clause of the United States Constitution. The Supreme Court of New York ruled on the unconstitutionality of the statute. The warden appealed.
Was the statute violate one's freedom to contract?
The court held that the state court had construed the statute to require both the minimum fair wage rate and value of service elements in the minimum wage, and the meaning was thus fixed. The court noted that it had previously declared unconstitutional a District of Columbia statute that prescribed a minimum wage for women adequate to supply the necessary cost of living and maintain good health and morals, because it violated freedom of contract under the Due Process Clause. The court held that the New York statute was not distinguishable merely because it added a requirement that the wage was commensurate with the value of services rendered. States were without power to change or nullify contracts between employers and adult women workers as to wages paid.