English COMMON LAW, and subsequently early U.S. law, defined the relationship between an employer and an employee as that of MASTER AND SERVANT. The master-and-servant relationship arose only when the tasks performed by the servant were under the direction and control of the master and were subject to the master's knowledge and consent.
With the rise of industrialization and mass production in the 1800s, the U.S. economic structure changed dramatically. Employers needed masses of employees to run the equipment that produced capital and consumer goods. By the end of the nineteenth century, the U.S. economy was attracting millions of immigrants. In addition, migration from country to city accelerated.
Nineteenth-century employment law was based on the concept of liberty of contract: a worker had the freedom to bargain with an employer for terms of employment. This concept was challenged when workers organized into unions and engaged employers in collective bargaining. The U.S. legal and economic systems at the time were opposed to the idea of collective bargaining. Union organizers noted the inequality of bargaining power between a prospective employee and an employer.
Judges were hostile to attempts by state governments to regulate the hours and wages of employees. In LOCHNER V. NEW YORK, 198 U.S. 45, 25 S. Ct. 539, 49 L. Ed. 937 (1905), the U.S. Supreme Court, on a 5–4 vote, struck down a New York State law (N.Y. Laws 1897, chap. 415, art. 8, § 110) that specified a maximum 60-hour week for bakery employees. The Court ruled that the law was a "meddlesome interference" with business, concluding that the regulation of work hours was an unjustified infringement on "the right to labor, and with the right of freedom of contract on the part of the individual, either as employer or employee."
The U.S. labor movement's persistent attempts to break free of the freedom-of-contract doctrine ultimately led to major changes in employment law. The NEW DEAL era of the 1930s brought federal recognition of the right of workers to organize themselves as unions and to bargain collectively with management. The passage of the WAGNER ACT, also known as the National Labor Relations Act of 1935 (29 U.S.C.A. § 151 et seq.), established these rights and also proscribed UNFAIR LABOR PRACTICES (i.e., actions taken by employers that interfere with the union rights of employees). The act also established the NATIONAL LABOR RELATIONS BOARD, a federal ADMINISTRATIVE AGENCY, to administer and enforce its provisions.
Since the 1950s, the federal government has led the way in providing employees more rights concerning the employment relationship.
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