Wisconsin Supreme Court chambers. (Photo by Baylor Spears/Wisconsin Examiner)

The Wisconsin Supreme Court declined Monday to throw out Wisconsin’s religious exemption from the state’s unemployment insurance system and affirmed that Catholic Charities organizations in Wisconsin are exempt.

The state’s highest court acted in response to the U.S. Supreme Court’s ruling in June reversing the Wisconsin Court’s decision in 2024, which found the organizations didn’t qualify for the state law’s UI religious exemption.

Monday’s unsigned order made no statements for or against any of the numerous briefs that were filed with the Wisconsin Court after the Supreme Court ruling.

In a 4-3 ruling in March 2024, the Wisconsin Supreme Court held that Catholic Charities’ work was secular rather than religious, and that the organization therefore was not entitled to an exemption in Wisconsin’s unemployment insurance law.

The religious exemption is reserved for employees of churches, their parent organizations, employees of organizations “operated primarily for religious purposes” and controlled by churches or church associations, church ministers or members of a religious order.

The U.S. Supreme Court ruled unanimously June 5, 2025, that the Wisconsin Court’s ruling “grants a denominational preference by explicitly differentiating between religions based on theological practices” and therefore violated the First Amendment of the U.S. Constitution’s religious freedom provision.

After that ruling, both Catholic Charities and the Wisconsin Department of Justice filed proposed remedies with the Wisconsin Court. The Wisconsin DOJ called on the court to throw out the state law’s religious exemption to restore “equal treatment.”

Catholic Charities rejected that proposal, declaring it showed “animus” toward the charity, and urged the court instead to affirm the exemption.

In the decision Monday, the Wisconsin Supreme Court sent the case back to Douglas County Circuit Court. The order directs the lower court to vacate earlier Labor and Industry Review Commission decisions denying the religious exemption and to direct LIRC to declare Catholic Charities “eligible for the religious purposes exemption to unemployment taxation.”

Victor Forberger, a Wisconsin unemployment lawyer who has written about the case on his blog, told the Wisconsin Examiner that the state high court’s action Monday was not a surprise in light of the U.S. Supreme Court ruling.

The federal ruling, however, did not address calls by outside groups seeking a more sweeping religious exemption, Forberger said. “How this is going to play out with other entities and their claim for religious exemptions are all to be determined,” he added.