CASE PREVIEW
on Mar 28, 2025
at 7:44 pm
The court will hear Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission on Monday. (Katie Barlow)
With most of the 2024-25 term behind them, the justices’ final stretch of oral arguments is stacked with all three religious rights cases of the year. All three cases look to the justices to take up an expansive view of the Constitution’s religious protections. The first of those cases, on Monday, could significantly shift the bounds of which organizations receive religious tax exemptions. In the other two, on April 22 and 30, the court will consider whether parents can opt to have their children excused from instruction with LGBTQ-themed storybooks, on religious grounds, and whether a Catholic online school can become the country’s first religious charter school.
At oral arguments on Monday, the court will take up a tax dispute between Wisconsin and Catholic Charities, which is a social ministry arm of each Roman Catholic diocese in Wisconsin. One Catholic Charities chapter contends that Wisconsin violated the Constitution when it rejected the group’s application for an exemption from a state unemployment tax that the state gives to churches, religious schools, and some religious groups.
The Catholic Charities chapter argues that the real question in the case is “whether Wisconsin can pick and choose which religious groups to tax based on the state’s own cramped, idiosyncratic understanding of what constitutes ‘religious’ behavior.” But Wisconsin counters that unless its rejection of the exemption stands, legislatures may have to choose between providing such accommodations to everyone or eliminating them altogether.
The chapter at the center of this case is the Catholic Charities for the diocese of Superior, in the northwestern part of the state. Its mission is to “carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the church.” Four separate groups operating under the Catholic Charities umbrella in the diocese are also involved in the case; each primarily provides social services to people with disabilities.
In 2016, Catholic Charities sought an exemption from having to pay a Wisconsin unemployment tax for its employees, arguing that they fall within a provision of the statute that carves out from the definition of “employment” anyone who works for (as relevant here) “an organization operated primarily for religious purposes.” Catholic Charities contended that the exemption applies because it carries out its charitable works to put Catholic principles into operation.
A state labor commission rejected Catholic Charities’ bid for an exemption. It reasoned that the group’s activities are secular, even if its motivations are religious.
The Wisconsin Supreme Court concluded that the group was not operated primarily for religious purposes. Although its motivations are primarily religious, the state supreme court acknowledged, its activities are not: It does not “attempt to imbue” people who participate in its programs “with the Catholic faith nor supply any religious materials to program participants or employees.” Indeed, it added, the group both employs and offers its services to people of all faiths.
Catholic Charities came to the Supreme Court, which agreed on December 13 to decide whether, by denying the group the tax exemption because it did not meet the state’s criteria for religious behavior, Wisconsin violates the First Amendment’s religion clauses, which bar the government from establishing a religion and from interfering with the free exercise of religion.
In its brief in the Supreme Court, Catholic Charities tells the justices that “Wisconsin’s effort to pick and choose among religious groups — and carve out works of mercy from the realm of the ‘religious’ altogether — thus violates the Constitution three times over.”
First, the group argues, the denial of the exemption violates the doctrine of church autonomy – the idea that the government should not interfere in internal church affairs, and in particular in how a religious organization governs itself. The Wisconsin Supreme Court’s ruling defies this principle by penalizing Catholic Charities because of the way that it is organized, the group insists.
If Catholic Charities were part of the diocese, as a single nonprofit, it would undoubtedly be entitled to the exemption, the group observes. But, Catholic Charities continues, when the state denies the exemption because it is organized (along with the groups under its umbrella) separately, it is being penalized for following specific Catholic teachings about church governance – specifically, the concept of subsidiarity, the idea that when work can be more efficiently performed by a less centralized group, it should be.
By denying the exemption to Catholic Charities, the group writes, the state also violates the Constitution’s bar on the entanglement of church and state. “Put simply,” Catholic Charities argues, “Wisconsin has taken it upon itself to decide which activities can be religious and which ones can’t. That is wrong. Wisconsin courts should not be in the business of deciding religious questions.” What’s worse, the group suggests, Wisconsin has attempted to hold the Catholic Church to standards – such as proselytizing and limiting its services to members of its own faith – “that directly contradict the Catholic Church’s actual religious beliefs.” Catholic Charities posits that courts should use a different approach that focuses on “the sincerity and religiosity of a claimant’s beliefs rather than trying to decide whether particular activities are ‘inherently religious.’”
The denial of the religious exemption also amounts to discrimination among religions by the state, Catholic Charities tells the justices. The Wisconsin Supreme Court declined Catholic Charities’ request for an exemption because the group adheres to the Catholic Church’s teachings in providing services – which departs “from what Wisconsin judged to be ‘typical’ religious activities.” Moreover, the group added, the Wisconsin Supreme Court’s decision also discriminates “against religious groups with more complex” structures, because the diocese operates Catholic Charities and the groups under its umbrella “as separately incorporated ministries that carry out Christ’s command to help the needy. But if Catholic Charities were not separately incorporated, it would be exempt.”
The Trump administration filed a “friend of the court” brief supporting Catholic Charities, noting that the Wisconsin law “mirrors and implements” a federal unemployment tax law. It tells the justices that they could reverse the Wisconsin Supreme Court’s ruling based only on the text of the law, which “makes clear that the inquiry focuses on whether the organization actually operates primarily for religious reasons, not on the nature of its activities or on whether another organization could undertake the same activities for nonreligious reasons.”
Two other “friend of the court” briefs – filed by the Jewish Coalition for Religious Liberty and the International Society for Krishna Consciousness – assert that the Wisconsin Supreme Court’s reasoning could have a particularly negative effect on religious minorities. The Jewish Coalition for Religious Liberty writes that “[b]y limiting eligibility for the tax exemption based on the perceived religiosity of an organization’s activities, the State’s approach will require courts to use their own judgment about what activities qualify. Yet courts make basic errors concerning Judaism, misunderstanding or lacking awareness of even foundational aspects of the faith like Sabbath observance.”
The International Society for Krishna Consciousness echoes this concern, telling the justices that in cases involving Hare Krishnas, determining whether particular conduct is sincerely motivated by religion would require courts to review Hindu religious texts. “Absent an understanding of how these sacred texts have been interpreted by religious adherents and leaders over time, and within the current cultural context, judicial scrutiny of the Hare Krishna’s faith’s religious tenets will inevitably yield an incomplete and misleading picture of what that faith requires.”
Wisconsin counters that the First Amendment does not prohibit all entanglements with religion, but only “excessive” ones – which normally involve “official and continuing surveillance” of religious organizations. But to determine whether a group like Catholic Charities is entitled to an exemption, the state explains, Wisconsin merely engages in a “one-time examination” of the group’s activities so that the exemption serves “its disentangling purpose: keeping the state out of employment disputes that turn on distinctively religious conduct.”
Religiously affiliated organizations only qualify for the exemption if they are “operated primarily for a religious purpose,” the state explains, “which covers those that primarily perform distinctively religious functions such as religious education or worship.” The mere fact that a group’s activities are motivated by religion is not enough to create the prospect that the state will become entangled in employment disputes, Wisconsin reasons, and so it “permissibly requires more” – looking in particular at whether a group’s main activities are “distinctively religious.” This does not, the state insists, require courts to look at “what is and is not religious” or what is “typical” of a religion. Catholic Charities misconstrues the Wisconsin Supreme Court’s decision.
Wisconsin emphasizes that the state supreme court did not deny the exemption because Catholic Charities does not engage in proselytization. Indeed, the state stresses, the court indicated that if the group did, it would weigh in favor of its religious status.
Catholic Charities was “ultimately denied the exemption because” it “identified no distinctively religious activities whatsoever, not just a lack of proselytization,” the state tells the justices. And Catholic Charities’ sincere religious beliefs are “beside the point,” because the exemption “does not seek to alleviate burdens on specific religious beliefs or practices,” but instead is intended to “preserve the religious autonomy of organizations likely to present entangling unemployment questions.”
Wisconsin next pushes back against any suggestion that it unconstitutionally discriminates based on religion when it denies Catholic Charities the exemption. Subjecting Catholic Charities “to the unemployment system does not burden their exercise of religious faith, target them as a disfavored religion, or amount to preferential treatment for secular groups over religious ones,” the state maintains. Instead, the state contends, the purpose of the unemployment exemption – “avoiding interference with employment decisions that may turn on faith and doctrine” – is purely secular, and “does not raise concerns about favoring particular religions.”
Finally, the state tells the justices that denying Catholic Charities the unemployment exemption does not violate the principle of church autonomy, because the purpose of the doctrine is to protect religious institutions from government compulsion. The dispute in this case, the state says, merely imposes “minor and incidental incentives” on how the group is structured. Because it is a nonprofit, the state notes, it does not pay a tax but must instead “reimburse the State for benefits (if any) provided to their laid-off employees.” Catholic Charities does not indicate that “this threatens their autonomy.” And the denial of the exemption does not require Catholic Charities to restructure its operations: It has not had the exemption “for decades yet remained separately incorporated,” the state observes.
Wisconsin urges the Supreme Court not to weigh in on whether the Wisconsin Supreme Court correctly interpreted the state’s unemployment law, because Catholic Charities did not ask it to do so, the justices did not agree to take up that question, and the Supreme Court cannot review state court’s interpretation of state laws. But in any event, the state maintains, that court’s interpretation was proper.
A “friend of the court” brief by the group Freedom from Religion warned that a ruling for Catholic Charities could have widespread implications, allowing other organizations affiliated with religious institutions to invoke the exemptions as well as long as they “can draw a connection between its operation and the religious mission of its parent entity.” “Such connections,” Freedom from Religion contends, “would be trivially easy to make for religiously-affiliated hospital systems” and could lead to the invalidation of “numerous other government regulatory programs that currently protect over 787,000 healthcare workers at Catholic-affiliated hospital systems throughout the nation.”
More broadly, the International Municipal Lawyers Association, which represents local government lawyers, cautions in its own supporting brief, Catholic Charities’ “approach, if embraced by this Court, would effectively require state and local governments to allow a tax exemption to every organization that claims it is religiously motivated — regardless of the activities it performs — or be found in violation of the First Amendment.”
Faced with possible large-scale revenue losses “if forced to allow religious exemptions for all manner of organizations,” IMLA concludes, state and local governments may instead opt to “eliminate religious exemptions in a variety of contexts.”
This article was originally published at Howe on the Court.
