In McComb v. Jacksonville Paper Co., the U.S. Supreme Court ruled in favor of the Wage and Hour Administrator, asserting that employers who knowingly violate labor laws should be held accountable for their actions. The case involved a paper company that had been consistently violating the Fair Labor Standards Act by not paying overtime wages to its employees and falsifying records to hide these violations. Despite being ordered by a lower court to comply with federal law, they continued their illegal practices. The Supreme Court decided that an injunction was necessary to force compliance with wage and hour laws, setting a precedent for future cases involving deliberate non-compliance with labor regulations.

In the dissenting opinion for McComb v. Jacksonville Paper Co., Justice Frankfurter, joined by Justices Reed and Burton, argued that the majority's decision to impose personal liability on corporate officers for unpaid wages was a departure from established principles of corporate law. They contended that treating these individuals as "employers" under the Fair Labor Standards Act (FLSA) stretched its language beyond reasonable interpretation. The dissent emphasized that Congress did not intend to pierce the corporate veil in this manner when it enacted FLSA; rather, it sought to regulate businesses' labor practices through their formal legal entities - corporations themselves - not their individual officers or directors personally. Furthermore, they warned against setting a dangerous precedent where courts could arbitrarily assign personal liability without clear legislative guidance or justification based on traditional common-law rules governing corporations and their agents.