The case arose after the National Labor Relations Board (NLRB) ordered Jones & Laughlin Steel to rehire workers who had been fired for seeking to unionize.

In his dissent, Associate Justice James Clark McReynolds argued that Congress's power to regulate interstate commerce should be limited to cases in which a violation is "direct and material."

The NLRB ruled against the company and ordered that the workers be rehired and given back pay, but Jones & Laughlin refused to comply on the grounds and believed the Act to be unconstitutional.

[2] Chief Justice Charles Evans Hughes wrote the majority opinion in the case, which reversed the lower court's ruling, in a 5–4 decision: ...the statute goes no further than to safeguard the right of employees to self-organization and to select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer.

Discrimination and coercion to prevent the free exercise of the right of employees to self-organization and representation is a proper subject for condemnation by competent legislative authority.

American Steel Foundries v. Tri-City Central Trades Council, 257 U.S. 184, 209... We reiterated these views when we had under consideration the Railway Labor Act of 1926, 44 Stat.