U.S. Supreme Court rules Wisconsin law makes Catholic Charities exempt from unemployment system

Unemployment benefits application (photo by Getty Images)
This report has been updated.
In a unanimous decision, the U.S. Supreme Court ruled Thursday that a Catholic Charities organization in Wisconsin doesn’t have to take part in the Wisconsin unemployment insurance (UI) system.
The ruling rejected a Wisconsin Supreme Court opinion that said the agency’s purpose was essentially secular and didn’t qualify for a religious exemption in state unemployment law.
Advocates who supported Catholic Charities cheered the ruling as a blow for religious liberty and against attempts to define whether or not an organization’s motives are sufficiently rooted in faith.
“We have maintained throughout the process and in an amicus brief that Catholic Charities is in fact a religious institution and is eligible for the unemployment insurance tax exemption offered by the state law,” said David Earleywine, associate director for education and religious liberty at the Wisconsin Catholic Conference.
Organizations that represent workers, however, have raised questions about the decision’s broader implications for employees of other institutions connected to churches, including the large networks of Catholic hospitals across the U.S.
“It is crucial that employees, especially low-wage workers, have the protections of unemployment insurance, regardless of the identity of their employer,” said Larry Dupuis, director of litigation and advocacy at Legal Action of Wisconsin. The law firm joined with groups including the Economic Policy Institute, the Century Foundation and the National Employment Law Project on a friend of the court brief supporting the Wisconsin Supreme Court ruling.
“Unemployment payments help the laid off worker, and the economy as a whole, during a downturn by supporting consumer demand,” Dupuis said.
Thursday’s ruling overturns a 4-3 Wisconsin Supreme Court decision issued in March 2024 that declared the work of Catholic Charities Bureau Inc. of the Superior Diocese of the Catholic Church doesn’t get a pass from Wisconsin’s UI law on religious grounds.
The Wisconsin ruling, written by Justice Anne Walsh Bradley, declared that the Catholic Charities work is “secular in nature” and that the agency and its subsidiary organizations that took part in the case “are not operated primarily for religious purposes” as defined in the UI law’s religious exemption.

Justice Sonia Sotomayor wrote Thursday for the U.S. Supreme Court that the Wisconsin high court majority’s arguments amounted to giving preference to one religious denomination over another.
The Wisconsin ruling held that the agencies’ work was not religious in nature because they didn’t attempt to preach the Catholic faith to participants and did not serve only Catholics.
“Petitioners’ Catholic faith, however, bars them from satisfying those criteria,” Sotomayor wrote. The ruling quoted from the dissent by Justice Rebecca Bradley in the Wisconsin decision.
“Wisconsin’s exemption,” Sotomayor wrote, “as interpreted by its Supreme Court, thus grants a denominational preference by explicitly differentiating between religions based on theological practices. Indeed, petitioners’ eligibility for the exemption ultimately turns on inherently religious choices (namely, whether to proselytize or serve only co-religionists).”
Earleywine said the decision reflected the position of Catholic Charities and its supporters.
“For Catholic Charities in particular, serving the poor is part of our Catholic mission — that is something that we are called to do,” he said.
Sotomayor’s ruling noted that the church offers its own unemployment compensation program for laid-off workers and dismissed the suggestion that the organizations were “more likely to leave their employees without unemployment benefits.”
Earleywine underscored the ruling’s reference to the Catholic unemployment compensation program as “essentially equivalent” to the state UI program.
The employment lawyers’ amicus brief disputed that comparison, however, and also noted that there’s no guarantee other religious employers made exempt would have any kind of substitute benefits program. The brief also argued that in the event an individual diocesesan employer can’t afford to pay benefits for a laid-off employee, the overall program has renounced any obligation to pick up the tab.
Earleywine said the ruling enables Catholic Charities organizations to sign up with the church system, which is available to employees of Catholic dioceses, including church parishes and schools. Other Catholic-related organizations without a diocesan connection — such as Catholic hospital systems or universities — are not eligible under current rules.
Justice Clarence Thomas, while joining in the unanimous opinion, wrote a separate concurrence stating that because the Wisconsin ruling did not defer to the Bishop of Superior’s assertion that Catholic Charities and its affiliates are “an arm of the Diocese, the Wisconsin Supreme Court violated the church autonomy doctrine.”
While Thursday’s ruling was emphatic, it also appeared to suggest how Wisconsin’s UI religious exemption might be rewritten to produce a different outcome.
The Wisconsin UI law exempts all churches, church conventions or church associations “without differentiating between employees actually involved in religious works” and those who are not, Sotomayor wrote.
Dupuis of Legal Action Wisconsin pointed to another concurrence, by Justice Ketanji Brown Jackson, who wrote that state UI laws could cover nonprofit employees of religiously associated organizations by focusing on the work involved rather than its underlying motivations to determine who is and who is not exempt.
“As Justice Jackson’s concurrence shows, this ruling still gives states the ability to limit the scope of the religious exemption so large employers that provide services that are not inherently religious, like hospitals, must still cover their employees,” Dupuis said.
When the federal law was revised in 1970 to include nonprofit employees in state UI programs, Congress exempted certain church-affiliated employees. The goal, Jackson wrote, was to avoid the state getting involved in a dispute “over the sufficiency of a fired employee’s prayers or the accuracy of their scriptural teaching.”
The intent of Congress was to exempt “a narrow category of church-affiliated entities” that could produce such an entanglement “precisely because their work involves preparing individuals for religious life,” Jackson wrote.
She concluded: “It is perfectly consistent with the opinion the Court hands down today for States to align their [federally-based] religious-purposes exemptions with Congress’s true focus.”
24-154_2b82GET THE MORNING HEADLINES.