By: César F. Rosado Marzán, PhD JD*
In the early 20th Century U.S. employers effectively escaped from government regulation of employment relations by arguing to the courts, and convincing them, that such actions violated the right of liberty and its alleged derivative, the freedom to contract. Lochner v. New York crystallized this right and was the law of the land for the first decades of the 20th century. This doctrine, however, changed about three decades after Lochner in cases such as West Coast Hotel Co. v. Parrish, where, amidst the worst economic depression experienced in the U.S., the Court upheld the constitutionality of minimum wage legislation. Government could now restrict freedom to contract in employment relations as such regulations were seen to be in the public interest.
But the pressure for profits in an evermore competitive, market economy compels employers to fashion new strategies and repackage old ones to lower their labor costs. Chilean employers, one of the key political forces behind the country’s internationally discussed free market model, have been particularly creative and assertive in trying to escape government regulation of employment relations through a number of creative legal strategies.