Source: https://www.law.cornell.edu/supremecourt/text/244/590
Timestamp: 2019-04-26 06:08:08+00:00

Document:
'Section 1. The welfare of the state of Washington depends on the welfare of its workers and demands that they be protected from conditions that result in their being liable to imposition and extortion.
'The state of Washington therefore exercising herein its police and sovereign power declares that the system of collecting fees from the workers for furnishing them with employment, or with information leading thereto, results frequently in their becoming the victims of imposition and extortion and is therefore detrimental to the welfare of the state.
'Section 2. It shall be unlawful for any employment agent, his representative, or any other person to demand or receive either directly or indirectly from any person seeking employment, or from any person on his or her behalf, any remuneration or fee whatsoever for furnishing him or her with employment or with information leading thereto.
In Huntworth v. Tanner, 87 Wash. 670, 152 Pac. 523, the supreme court held schoolteachers were not 'workers' within the quoted measure, and that it did not apply to one conducting an agency patronized only by such teachers and their employers. And in State v. Rossman, 93 Wash. 530, L.R.A.1917B, 1276, 161 Pac. 349, the same court declared it did not in fact prohibit employment agencies, since they might charge fees against persons wishing to hire laborers; that it was a valid exercise of state power; that a stenographer and bookkeeper is a 'worker;' and that one who charged him a fee for furnishing information leading to employment violated the law.
As members of copartnerships and under municipal licenses, during the year 1914 and before, appellants were carrying on in the city of Spokane well established agencies for securing employment for patrons who paid fees therefor. November 25, 1914, in the United States district court, they filed their original bill against W. V. Tanner, attorney general of the state, and George H. Crandall, prosecuting attorney for Spokane county, asking that Initiative Measure Number 8 be declared void because in conflict with the 14th Amendment, Federal Constitution, and that the defendants be perpetually enjoined from undertaking to enforce it. On the same day they presented a motion for preliminary injunction, supported by affidavits which were subsequently met by countervailing ones. Appellees thereafter entered motions to dismiss the original bill because (1) 'said bill of complaint does not state facts sufficient to warrant this court in granting any relief to the plaintiffs; (2) that plaintiffs have a plain, speedy, and adequate remedy at law; (3) this court has no jurisdiction over the persons of these defendants or either of them, or the subject-matter of this action.' A temporary injunction was denied. The motions to dismiss were sustained and a final decree to that effect followed.
Considering the doctrine affirmed in Truax v. Raich, 239 U.S. 33, 60 L. ed. 131, L.R.A.1916D, 545, 36 Sup. Ct. Rep. 7, and cases there cited, the record presents no serious question in respect of jurisdiction.
We have held employment agencies are subject to police regulation and control. 'The general nature of the business is such that, unless regulated, many persons may be exposed to misfortunes against which the legislature can properly protect them.' Brazee v. Michigan, 241 U. S. 340, 343, 60 L. ed. 1034, 1036, 36 Sup. Ct. Rep. 561. But we think it plain that there is nothing inherently immoral or dangerous to public welfare in acting as paid representative of another to find a position in which he can earn an honest living. On the contrary, such service is useful, commendable, and in great demand. In Spokane v. Macho, 51 Wash. 322, 324, 21 L.R.A.(N.S.) 263, 130 Am. St. Rep. 1100, 98 Pac. 755, the supreme court of Washington said: 'It cannot be denied that the business of the employment agent is a legitimate business; as much so as is that of the banker, broker, or merchant; and under the methods prevailing in the modern business world it may be said to be a necessary adjunct in the prosecution of business enterprises.' Concerning the same subject, Ex parte Dickey, 144 Cal. 234, 236, 66 L.R.A. 928, 103 Am. St. Rep. 82, 77 Pac. 924, 1 Ann. Cas. 428, the supreme court of California said: 'The business in which this defendant is engaged is not only innocent and innocuous, but is highly beneficial, as tending the more quickly to secure labor for the unemployed. There is nothing in the nature of the business, therefore, that in any way threatens or endangers the public health, safety, or morals.' And this conclusion is fortified by the action of many states in establishing free employment agencies charged with the duty to find occupation for workers.
It is alleged: 'That plaintiffs have furnished positions for approximately ninety thousand persons during the last year, and have received applications for employment from at least two hundred thousand laborers, for whom they have been unable to furnish employment. . . . That such agencies have been established and conducted for so long a time that they are now one of the necessary means whereby persons seeking employment are able to secure the same.' A suggestion in behalf of the state, that while a pursuit of this kind 'may be beneficial to some particular individuals or in specific cases, economically it is certainly nonuseful, if not vicious, because it compels the needy and unfortunate to pay for that which they are entitled to without fee or price, that is, the right to work,' while possibly indicative of the purpose held by those who originated the legislation, in reason, gives it no support.
Because abuses may, and probably do, grow up in connection with this business, is adequate reason for hedging it about by proper regulations. But this is not enough to justify destruction of one's right to follow a distinctly useful calling in an upright way. Certainly there is no profession, possibly no business, which does not offer peculiar opportunities for reprehensible practices; and as to every one of them, no doubt, some can be found quite ready earnestly to maintain that its suppression would be in the public interest. Skilfully directed agitation might also bring about apparent condemnation of any one of them by the public. Happily for all, the fundamental guaranties of the Constitution cannot be freely submerged if and whenever some ostensible justification is advanced and the police power invoked.
The general principles by which the validity of the challenged measure must be determined have been expressed many times in our former opinions. It will suffice to quote from a few.
'If, looking at all the circumstances that attend, or which may ordinarily attend, the pursuit of a particular calling, the state thinks that certain admitted evils cannot be successfully reached unless that calling be actually prohibited, the courts cannot interfere, unless, looking through mere forms and at the substance of the matter, they can say that the statute enacted professedly to protect the public morals has no real or substantial relation to that object, but it a clear, unmistakable infringement of rights secured by the fundamental law.' Booth v. Illinois, 184 U. S. 425, 429, 46 L. ed. 623, 626, 22 Sup. Ct. Rep. 425.
'It is also true that the police power of the state is not unlimited, and is subject to judicial review, and when exerted in an arbitrary or oppressive manner such laws may be annulled as violative of rights protected by the Constitution. While the courts can set aside legislative enactments upon this ground, the principles upon which such interference is warranted are as well settled as is the right of judicial interference itself. The legislature, being familiar with local conditions, is, primarily, the judge of the necessity of such enactments. The mere fact that a court may differ with the legislature in its views of public policy, or that judges may hold views inconsistent with the propriety of the legislation in question, affords no ground for judicial interference, unless the act in question is unmistakably and palpably in excess of legislative power. . . . If there existed a condition of affairs concerning which the legislature of the state, exercising its conceded right to enact laws for the protection of the health, safety, or welfare of the people, might pass the law, it must be sustained; if such action was arbitrary interference with the right to contract or carry on business, and having no just relation to the protection of the public within the scope of legislative power, the act must fail.' McLean v. Arkansas, 211 U. S. 539, 547, 548, 53 L. ed. 315, 319, 320, 29 Sup. Ct. Rep. 206.
'The 14th Amendment protects the citizens in his right to engage in any lawful business, but it does not prevent legislation intended to regulate useful occupations which, because of their nature or location, may prove injurious or offensive to the public. Neither does it prevent a municipality from prohibiting any business which is inherently vicious and harmful. But, between the useful business which may be regulated and the vicious business which can be prohibited lie many nonuseful occupations which may, or may not be harmful to the public, according to local conditions, or the manner in which they are conducted.' Murphy v. California, 225 U. S. 623, 628, 56 L. ed. 1229, 1232, 41 L.R.A.(N.S.) 153, 32 Sup. Ct. Rep. 697.
We are of opinion that Initiative Measure Number 8, as constructed by the supreme court of Washington, is arbitrary and oppressive, and that it unduly restricts the liberty of appellants, guaranteed by the 14th Amendment, to engage in a useful business. It may not therefore be enforced against them.
The judgment of the court below is reversed and the cause remanded for further proceedings in conformity with this opinion.
Mr. Justice McKenna dissents upon the ground that, under the decisions of this court,some of them so late as to require no citation or review,the law in question is a valid exercise of the police power of the state, directed against a demonstrated evil.
To declare the statute of a state, enacted in the exercise of the police power, invalid under the 14th Amendment, is a matter of such seriousness that I state the reasons for my dissent from the opinion of the court.
Plaintiffs, who are proprietors of private employment agencies in the city of Spokane, assert that this statute, if enforced, would compel them to discontinue business and would thus, in violation of the 14th Amendment, deprive them of their liberty and property without due process of law. The act leaves the plaintiffs free to collect fees from employers; and it appears that private employment offices thus restricted are still carrying on business. 2 But even if it should prove, as plaintiffs allege, that their business could not live without collecting fees from employees, that fact would not necessarily render the act invalid. Private employment agencies are a business properly subject to police regulation and control. Brazee v. Michigan, 241 U. S. 340, 60 L. ed. 1034, 36 Sup. Ct. Rep. 561. And this court has made it clear that a statute enacted to promote health, safety, morals, or the public welfare may be valid, although it will compel discontinuance of existing businesses in whole or in part. Statutes prohibiting the manufacture and sale of liquor present the most familiar example of such a prohibition. But where, as here, no question of interstate commerce is involved, this court has sustained also statutes or municipal ordinances which compelled discontinuance of such business as (a) of manufacturing and selling oleomargarin (Powell v. Pennsylvania, 127 U. S. 678, 32 L. ed. 253, 8 Sup. Ct. Rep. 992, 1257); (b) of selling cigarettes (Austin v. Tennessee, 179 U. S. 343, 45 L. ed. 224, 21 Sup. Ct. Rep. 132); (c) of selling futures in grain or other commodities (Booth v. Illinois, 184 U. S. 425, 46 L. ed. 623, 22 Sup. Ct. Rep. 425); (d) of selling stocks on margin (Otis v. Parker, 187 U. S. 606, 47 L. ed. 323, 23 Sup. Ct. Rep. 168); (e) of keeping billiard halls (Murphy v. California, 225 U. S. 623, 56 L. ed. 1229, 41 L.R.A.(N.S.) 153, 32 Sup. Ct. Rep. 697); (f) of selling trading stamps (Rast v. Van Deman & L. Co. 240 U. S. 342, 368, 60 L. ed. 679, 691, L.R.A.1917A, 421, 36 Sup. Ct. Rep. 370).
These cases show that the scope of the police power is not limited to regulation as distinguished from prohibition. They show also that the power of the state exists equally, whether the end sought to be attained is the promotion of health, safety, or morals, or is the prevention of fraud or the prevention of general demoralization. 'If the state thinks that an admitted evil cannot be prevented except by prohibiting a calling or transaction not in itself necessarily objectionable, the courts cannot interfere, unless in looking at the substance of the matter, they can see that it 'is a cear, unmistakable infringement of rights secured by the fundamental law." Otis v. Parker, 187 U. S. 606, 609, 47 L. ed. 323, 327, 23 Sup. Ct. Rep. 168; Booth v. Illinois, 184 U. S. 425, 429, 46 L. ed. 623, 626, 22 Sup. Ct. Rep. 425. Or, as it is so frequently expressed, the action of the legislature is final, unless the measure adopted appears clearly to be arbitrary or unreasonable, or to have no real or substantial relation to the object sought to be attained. Whether a measure relating to the public welfare is arbitrary or unreasonable, whether it has no substantial relation to the end proposed, is obviously not to be determined by assumptions or by a priori reasoning. The judgment should be based upon a consideration of relevant facts, actual or possibleEx facto jus oritur. That ancient rule must prevail in order that we may have a system of living law.
It is necessary to inquire, therefore: What was the evil which the people of Washington sought to correct? Why was the particular remedy embodied in the statute adopted? And, incidentally, what has been the experience, if any, of other states or countries in this connection? But these inquiries are entered upon, not for the purpose of determining whether the remedy adopted was wise, or even for the purpose of determining what the facts actually were. The decision of such questions lies with the legislative branch of the government. Powell v. Pennsylvania, 127 U. S. 678, 685, 32 L. ed. 253, 256, 8 Sup. Ct. Rep. 992, 1257. The sole purpose of the inquiries is to enable this court to decide whether, in view of the facts, actual or possible, the action of the state of Washington was so clearly arbitrary or so unreasonable that it could not be taken 'by a free government without a violation of fundamental rights.' See McCray v. United States, 195 U. S. 27, 64, 49 L. ed. 78, 99, 24 Sup. Ct. Rep. 769, 1 Ann. Cas. 561.
The evils with which the people of Washington were confronted arose partly from the abuses incident to the system of private employment agencies and partly from its inadequacy.
'1. Charging a fee and failing to make any effort to find work for the applicant.
'2. Sending applicants where no work exists.
'3. Sending applicants to distant points where no work or where unsatisfactory work exists, but whence the applicant will not return on account of the expense involved.
'4. Collusion between the agent and employer, whereby the applicant is given a few days' work and then discharged to make way for new workmen, the agent and employer dividing the fee.
'5. Charging exorbitant fees, or giving jobs to such applicants as contribute extra fees, presents, etc.
'Fees are often charged out of all proportion to the service rendered. We know of cases where $5, $9, $10, and even $16 apiece has been paid for jobs at common labor. In one city the fees paid by scrubwomen is at the rate of $24 a year for their poorly paid work. Then there is discrimination in the charges made for the same jobs. Often, too, men are sent a long distance, made to pay fees and transportation, only to find that no one at that place ordered men from the employment agent. A most pernicious practice is the collusion with foremen or superintendents by which the employment agent 'splits fees' with them. That is, the foreman agrees to hire men of a certain employment agent on condition that one fourth or one half of every fee collected from men whom he hires be given to him. This leads the foreman to discharge men constantly in order to have more men hired through the agent and more fees collected. It develops the 'three-gang' method so universally complained of by railroad and construction laborers, namely, one gang working, another coming to work from the employment agent, and a third going back to the city.
But the evils were not limited to what are commonly called abuseslike the fraud and extortion described above. Even the exemplary private offices charging fees to workers might prove harmful, for the reason thus stated in the report to Congress of the United States Commission on Industrial Relations, cited supra.
'18. . . . Investigations show, however, that instead of relieving unemployment and reducing irregularity, these employment agencies actually serve to congest the labor market and to increase idleness and irregularity of employment. They are interested primarily in the fees they can earn, and if they can earn more by bringing workers to an already overcrowded city, they do so. Again, it is an almost universal custom among private employment agents to fill vacancies by putting in them people who are working at other places. In this way new vacancies are created and more fees can be earned.
'19. They also fail to meet the problem because they are so numerous and are necessarily competitive. With few exceptions, there is no co-operation among them. This difficulty is further emphasized by the necessity of paying the registration fees required by many agencies; obviously the laborer cannot apply to very many if he has to pay a dollar at each one.
'20. The fees which private employment offices must charge are barriers which prevent the proper flow of labor into the channels where it is needed and are a direct influence in keeping men idle. In the summer, when employment is plentiful, the fees are as low as 25 cents, and men are even referred to work free of charge. But this must necessarily be made up in the winter, when work is scarce. At such times, when men need work most badly, the private employment offices put up their fees and keep the unemployed from going to work until they can pay $2, $3, $5, and even $10 and more for their jobs. This necessity of paying for the privilege of going to work, and paying more the more urgently the job is needed, not only keeps people unnecessarily unemployed, but seems foreign to the spirit of American freedom and opportunity.
During the fifteen years preceding 1914 there had been extensive experimentation in the regulation of private employment agencies. Twenty-four states had attempted direct regulation under statutes, often supplemented by municipal ordinances. 6 Nineteen states had attempted indirect regulation through the competition of state offices, and seven others through competition of municipal offices. 7 Other experiments in indirect regulation through competition petition were made by voluntary organizations, philanthropic, social, and industrial. 8 The results of those experiments were unsatisfactory. The abuses continued in large measure; and the private offices survived to a great extent the competition of the free agencies, public and private. There gradually developed a conviction that the evils of private agencies were inherent and ineradicable, so long as they were permitted to charge fees to the workers seeking employment. And many believed that such charges were the root of the evil.
3. Conditions in the state of Washington.
The peculiar needs of Washington emphasized the derects of the system of private employment offices.
'In no part of the United States perhaps is there so large a field for employment offices as in the Pacific states. As has been noted, industrial conditions there favor inconstancy of employment. Much of the business activity is based upon the casual, short-time job. This in itself means the frequent shifting of workers from place to place. And the shifting is the more difficult, as much of the work offered is in more or less remote districts of the country. . . .
The necessity laid upon so many workers of constantly seeking new jobs opens a peculiarly fertile field for their exploitation by unscrupulous private employment agencies. There is much testimony to the fact and frequency of such exploitation. The most striking evidence of this is that in the state of Washington private agencies made themselves so generally distrusted that in 1915 their complete abolition was ordered by popular vote. . . .
The abuses and the inadequacy of the then existing system are also described by state officials in affidavits included in the record.
It is facts and considerations like these which may have led the people of Washington to prohibit the collection by employment agencies of fees from applicants for work. And weight should be given to the fact that the statute has been held constitutional by the supreme court of Washington and by the Federal district court (three judges sitting),courts presumably familiar with the local conditions and needs.
In so far as the statute may be regarded as a step in the effort to overcome industrial maladjustment and unemployment by shifting to the employer the payment of fees, if any, the action taken may be likened to that embodied in the Washington Workmen's Compensation Law (sustained in Mountain Timber Co. v. Washington, 243 U. S. 219, 61 L. ed. 685, 37 Sup. Ct. Rep. 260), whereby the financial burden of industrial accidents is required to be borne by the employers.
As was said in Holden v. Hardy, 169 U. S. 366, 387, 42 L. ed. 780, 789, 18 Sup. Ct. Rep. 383.
In my opinion, the judgment of the District Court should be affirmed.
'An Act to Prohibit the Collection of Fees for the Securing of Employment, or Furnishing Information Leading Thereto, and Fixing a Penalty for Violation Thereof.
'The state of Washington therefore exercising herein police and sovereign power declares that the system of collecting fees from the workers for furnishing them with employment, or with information leading thereto, results frequently in their becoming the victims of imposition and extortion and is therefore detrimental to the welfare of the state.
'Section 2. It shall be unlawful for any employment agent, his representative, or any other person to demand or receive either directly or indirectly from any person seeking employment, or from any person in his or her behalf, any remuneration or fee whatsoever for furnishing him or her with employment or with information leading thereto.
The supreme court of Washington has twice passed upon the scope of the act; holding in Huntsworth v. Tanner, 87 Wash. 670, 152 Pac. 523, that it is not applicable to teachers, and in State v. Rossman, 93 Wash. 530, L.R.A. 1917B, 1276, 161 Pac. 349, that it is applicable to stenographers and bookkeepers.
See Report of the State of Washington Bureau of Labor (1915, 1916), pp. 120, 121.
The evils incident to private employment agencies first arrested public attention in America about 1890. During the fifteen years preceding the enactment of the Washington law there were repeated investigations, official and unofficial, and there was much discussion and experimentation. See Free Public Employment Offices in the United States; U. S. Bureau of Labor, Bulletin No. 68, p. 1; Statistics of Unemployment and the Work of Employment Offices, U. S. Bureau of Labor Bulletin 109, p. 5; Subject Index of the U. S. Bureau of Labor Statistics, Bulletin No. 174, pp. 85-87; Munro, Bibliography of Municipal Government, pp. 379-381.
United States Bureau of Labor Bulletin No. 109, p. 36.
Final Report and Testimony submitted to Congress by the Commission on Industrial Relations created by the Act of August 23, 1912, 64th Congress, 1st Session, Doc. 415, vol. 1, pp. 109-111. See also vol. 2. pp. 1165-1440.
Public Employment OfficesW. M. Leiserson, 29 Political Science Quarterly (March, 1914), p. 36.
Proceedings of the Association of Public Employment Offices (September 25, 1914), U. S. Dep. of Labor, Bureau of Labor Statistics, Bulletin 192, p. 61.
Unemployment and Work of Employment Offices, Bulletin of U. S. Bureau of Labor No. 109, pp. 5, 37 (October, 1912).
Made in August, 1915, and cited supra, Note 4. Between 1914 and this date six states had legislated on the subject. See Unemployment Survey, 1914, 1915. 5 American Labor Legislation Review, p. 560.
The fire was so extensive that the Congress appropriated $200,000 for relief of all sufferers (Act of August 1, 1914, chap. 223, 38 Stat. at L. 681).
Labor Laws and their Administration in the Pacific States. United States Department of Labor, Bureau of Labor Bulletin No. 211 (1917), pp. 17, 18.
Washington State Bureau of Labor, Report 1913, 1914, pp. 27, 28.
Washington State Bureau of Labor, Report 1915, 1916, p. 120.
The first free public employment office in the United States was the municipal agency established in Cleveland in 1890. Then followed (in 1893) the Los Angeles office. Bulletin of United States Bureau of Labor No. 68, p. 1. (Jan. 1907).
Washington State Bureau of Labor Report 1913, 1914, p. 291.
W. D. Wheaton, Labor Agent.'The complaint against the private office is almost universal. The experience of this office is that private agencies charge all that the traffic will bear and that in hard times, when work is scarce and the worker poverty-stricken, the fee is placed so high as to be almost prohibitive, and the agencies take longer chances, sometimes sending men on only a rumor, depending on their financial straits to make it impossible to return.
'The fees charged run from $1 for the poorest job of uncertain duration to as high as 10 per cent of the first year's salary in educational lines, and 30 per cent of the first month's salary in office or mercantile lines. Most of the agencies catering to the better class of positions charge a registration fee which is worked to the limitor rather without limit. Advertisements for attractive positions are placed with the newspapers and registration is made of all that apply, irrespective of whether the position has been filled or not, and generally at a fee of $2 or more. This registration fee is always followed by a percentage of the earnings when a position is secured, but only a small proportion of those registering are placed in positions.
United States Bureau of Labor Bulletin No. 109, p. 136.
See Report of Secretary of Labor, 1914, p. 51.
'Aberdeen, Bellingham, Custer, Everett, Friday Harbor, Lynden, Noosack, North Yakima, Port Angeles, Port Townsend, Spokane, Takoma, Walla Walla. Monthly Review of U. S. Labor Statistics, July, 1915, p. 9. See Report of Secretary of Labor, 1915, p. 36; 1916, p. 54. Hearings Committee on Labor, on H. R. 5783, to establish a National Employment Bureau. 64th Cong. 1st Session, February, 1916, p. 49.
The Unemployment Crisis of 1914, 1915, 5 American Labor Legislation Review, p. 475.
Washington State Bureau of Labor Report, 1913, 1914, pp. 13, 16, 17. Unemployment Survey, 5 American Labor Legislation Review, 482, 483 (1915).
Recent Advances in the Struggle against Unemployment, by Prof. Charles R. Henderson, 2 American Labor Legislation Review, 105, 106 (1911). 'The point of starting ameliorative effort is the employment agency or 'labor exchange."
The unemployed in Philadelphia, Department of Public Works (1915) p. 113.
What is done for the Unemployed in European Countries, U. S. Bureau of Labor Bulletin, No. 76, pp. 741-934; The British System of Labor Exchanges, U. S. Bureau of Labor Statistics, No. 206.
'Anyone who knows the employment agency business and everyone who has tried earnestly to regulate private agencies will testify to the futility of regulation.
General Discussion on Unemployment, 5 American Labor Legislation Review, p. 451; T. S. McMahon, Univ. of Washington.
'The people of the state of Washington are not indifferent to the problem of unemployment, nor do they show any tendency to offer charitable panaceas as a permanent remedy. They trying to work out some constructive policy, and as a preliminary step have made it illegal for employment offices to charge fees for jobs.
'A bill will be presented to the next legislature for the establishment of a network of public employment offices all over the state. This will make possible the complete organization of the labor market, which we hope is the first step toward the organization of industry itself.
'The aggressive attitude of the leaders among the workers has impressed upon the mind of the people the fact that the problem will have to be met in another way than by providing food and clothing for a period of distress such as we are passing through at the present time.

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