Olsen v. Nebraska Ex Rel. Western Reference & Bond Assn., Inc.

Background

The state Secretary of Labor refused to issue a license to a private employment agency because the agency would not limit its fee to ten percent of a new hire’s first month’s pay, as Nebraska law required. The agency and several similar firms sued and asked a court to force the Secretary to issue a license, arguing the fee limit violated the Fourteenth Amendment’s protection against being deprived of property or liberty without fair legal process.

Reasoning

The key question was whether a state may set maximum fees that private employment agencies can charge. The Court said yes: the fee cap does not violate due process. The opinion explained that earlier tests requiring a business to be “devoted to the public use” are outdated and that more recent decisions allow states to control prices or business practices for the public good. The Court refused to second-guess the legislature’s policy choices and reversed the Nebraska Supreme Court’s holding that the statute was unconstitutional.

Real world impact

The ruling lets Nebraska and similar states enforce maximum-fee limits for private employment agencies and makes refusal to comply a lawful ground for denying a license. It affirms broad state authority to regulate business charges and leaves practical policy questions—such as whether fee caps help or hurt jobseekers—for state lawmakers and courts rather than for the federal due process clause.

Dissents or concurrances

A single justice dissented in the Nebraska court, and some agencies argued special facts or competition made limits unnecessary, but the Supreme Court found those arguments insufficient.