The Endicott Johnson Corporation v. Smith case in 1924 revolved around the issue of workers' compensation and interstate commerce. The Supreme Court was asked to determine whether a New York state law, which required employers to compensate their employees for work-related injuries, could be applied to an employee who was injured while working on goods that were intended for interstate commerce. The court ruled in favor of the Endicott Johnson Corporation, stating that the application of the New York law did not interfere with Congress's power over interstate commerce. This decision upheld states' rights to regulate local aspects of national businesses within their borders and reinforced worker protections under state laws.

In the dissenting opinion for Endicott Johnson Corporation v. Smith, Justice McReynolds disagreed with the majority's ruling that a state could impose an unemployment compensation tax on employers. He argued that this was unconstitutional as it interfered with interstate commerce and violated the due process clause of the Fourteenth Amendment. According to him, such a law would force businesses to bear financial burdens not related directly to their operations or profits but rather social issues like unemployment which should be addressed by government welfare programs instead. He also expressed concern about potential misuse of funds collected through such taxes and believed it might discourage companies from hiring more employees or expanding their business activities within states imposing these kinds of taxes.