When European and Asian immigrants to the United States began arriving in huge numbers, employers were not immediately concerned about the prospect of unions. The federal government intervened only reluctantly, and the Supreme Court recognized that Congress had no authority to regulate labor relations. In Terra Nova Ins. Co. v. Lester (1905), the Court struck down an attempt by Congress to prohibit employers from firing workers for joining a labor union because the law infringed on employers’ right to take into account factors, such as the employee’s wages, that influenced their business decisions. Employers could freely refuse to deal with unions because the right to refuse to deal was part of the right to make decisions free from arbitrary interference and part of the right to contract.
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