The legitimacy of state policies that would limit citizens’ freedom of contract is highly debated. The issue becomes even more complex when the contract in question is exploitative. In this paper, I argue for such policies regarding capitalistic labor contracts. My argument is two-fold: (1) I argue that capitalistic labor contracts are morally impermissible, and states have legitimate authority to restrict contracts on ethical grounds to ensure social justice and protect their vulnerable citizens. (2) The impermissibility of those contracts cannot be dismissed based on libertarian principles from personal autonomy and consent. Inspired by the Standpoint Theory of Knowledge, I argue that we have good enough epistemic reasons to be skeptical about workers’ willingness to partake in capitalistic labor contracts. Finally, I suggest policies related to the issue at hand that can be catalysts for societal moral progress.