April 12, 1937 – The Supreme Court Decides NLRB v. Jones & Laughlin Steel

In NLRB v Jones & Laughlin Steel Corp, 301 U.S. 1 (1937), the U.S. Supreme Court upheld the National Labor Relations Act of 1935, commonly referred to as the Wagner Act. Jones & Laughlin Steel Co. was at that time the country’s fourth largest steel producer. The Jones & Laughlin dispute involved ten steelworkers who had been fired from one of the company’s mills for trying to organize a union.

The question before the Court was whether labor-management disputes were directly related to the flow of interstate commerce and so could be regulated by the national government.

Congress claimed authority to pass the Wagner Act under its power to regulate interstate commerce, enumerated in Article I of the Constitution. Jones & Laughlin challenged the law, arguing that the act was an attempt to regulate all industry, “thus invading the reserved powers of the States over their local concerns.” This went beyond the commerce power of Congress, they asserted. As Chief Justice Charles Evans Hughes wrote about the position of Jones & Laughlin, the company argued “the Act is not a true regulation of such commerce or of matters which directly affect it, but, on the contrary, has the fundamental object of placing under the compulsory supervision of the federal government all industrial labor relations within the nation.”

Charles Evans Hughes, Chief Justice of the U.S. Supreme Court

In his opinion, Justice Hughes observed first that “[t]he distinction between what is national and what is local in the activities of commerce is vital to the maintenance of our federal form of government.” The Court held that “[a]lthough activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential, or appropriate, to protect that commerce from burdens and obstructions, Congress has the power to exercise that control.”

In the instant case, the Court noted that “[t]he relation to interstate commerce of the manufacturing enterprise . . . was such that a stoppage of its operations by industrial strife would have an immediate, direct and paralyzing effect upon interstate commerce. Therefore, Congress had constitutional authority, for the protection of interstate commerce, to safeguard the right of the employees in the manufacturing plant to self-organization and free choice of their representatives for collective bargaining.”

Specifically, the National Labor Relations Act of July 5, 1935 empowered the National Labor Relations Board to prevent any person from engaging in unfair labor practices “affecting commerce.” According to Sec. 7. [§ 157]:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 8(a)(3) [section 158(a)(3) of this title].”

Thus the Court held in part that “The Act imposes upon the employer the duty of conferring and negotiating with the authorized representatives of the employees for the purpose of settling a labor dispute. . . . .”

Moreover, it found that “The provision of the National Labor Relations Act, § 10(c), authorizing the Board to require the reinstatement of employees found to have been discharged because of their union activity or for the purpose of discouraging membership in the union, is valid.”

The Oyez website points out that Justice Hughes carefully limited the opinion to exclude situations in which an activity had such an inconsequential or remote impact on interstate commerce that it exclusively impacted local matters. 

In his dissent, however, Justice James C. McReynolds cited the lack of actual demonstrated effect on interstate commerce and questioned Congress’s enhanced power under the Commerce Clause. 

Chris Schmidt, writing for the Chicago-Kent College of Law SCOTUS blog, maintains:

The decision was a landmark ruling on the meaning of the Commerce Clause. Its reasoning granted far more authority to Congress to regulate economic relations than the Court had previously allowed. It was also a major victory for industrial and factory workers across the country. The Wagner Act helped usher in a new era of labor relations, one in which union power, backed by the authority of the federal government, entered into negotiations with industry on far more equal footing than before.”

But unions have been taking blows from other directions, most recently with the Supreme Court decision on June 27, 2018 in the case Janus v. AFSCME (No. 16-1466). By a 5-to-4 vote, with the more conservative justices in the majority, the court ruled that government workers who choose not to join unions may not be required to help pay for collective bargaining. The court overruled 41 years of precedent in deciding that requiring employees to pay fees violates their First Amendment rights.

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