In upholding the National Labor Relations Act (NLRA), the Supreme Court departed from its precedents prohibiting governmental interference with freedom of contract and also rejected its earlier distinctions between commerce and manufacturing and between direct and indirect burdens on interstate commerce.

The NLRANational Labor Relations Act (also called the Wagner Act) of 1935 was one of the most important statutes enacted during President Franklin D. Roosevelt’s New DealNew Deal. The statute guaranteed the right of labor unions to bargain collectively and authorized the National Labor Relations Board (NLRB) to investigate and prevent unfair labor practices. When a steel manufacturer fired ten employees for engaging in union activities, the NLRB obtained a court order compelling their reinstatement. Lawyers for the company argued that the NLRA was unconstitutional for two reasons: It interfered with the freedom of contract and invaded the reserved powers of the states when it regulated manufacturing activities.Contract;National Labor Relations Board v. Jones and Laughlin Steel Corp.[National Labor Relations Board v. Jones and Laughlin Steel Corp.]Commerce clause;National Labor Relations Board v. Jones and Laughlin Steel Corp.[National Labor Relations Board v. Jones and Laughlin Steel Corp.]

Writing for a 5-4 majority, Chief Justice Charles Evans HughesHughes, Charles Evans;National Labor Relations Board v. Jones and Laughlin Steel Corp.[National Labor Relations Board v. Jones and Laughlin Steel Corp.] held that Congress had the authority to prohibit unfair labor practices as an appropriate means of promoting the smooth and peaceful flow of interstate commerce, which was threatened by strikes and other labor-management conflicts. He found that Congress had plenary power to protect interstate commerce from whatever sources of dangers might threaten it. In regard to the freedom of contract objection, Hughes found that protecting the right of workers to organize for collective bargaining was reasonable given the unequal relationship between workers and management. Therefore, he concluded that the NLRA did not arbitrarily interfere with the freedom to negotiate contracts. An interesting feature of Hughes’s opinion is its emphasis on using statutory interpretations that uphold rather than overturn statutes.

The Jones and Laughlin decision signaled that the majority of the justices were ready to accept New Deal legislation by using a broad interpretation of the commerce clause and a narrow defense of the freedom of contract doctrine. The Court further expanded the authority of Congress to regulate productive activities in United States v. Darby Lumber Co.[case]Darby Lumber Co., United States v.[Darby Lumber Co., United States v.] (1941) and Wickard v. Filburn[case]Wickard v. Filburn[Wickard v. Filburn] (1942).

Commerce, regulation of

Contract, freedom of

Court-packing plan

Darby Lumber Co., United States v.

Due process, substantive

Federalism

Labor

New Deal

Statutory interpretation

Wickard v. Filburn