Last Friday, the Supreme Court determined that it would hear arguments in the case of Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission.[1] The Court later amended its order granting cert to specify that it was only going to address the first question presented by the petition: “[d]oes a state violate the First Amendment’s Religion Clauses by denying a religious organization an otherwise-available tax exemption because the organization does not meet the state’s criteria for religious behavior?”[2] This will be the first case dealing with religious liberty that the Court has decided in several years.
In Catholic Charities, a non-profit and several of its sub-entities, all controlled by the Catholic Diocese of Superior, sought an exemption from the state’s unemployment tax (which they had been paying since 1972) by applying for a statutory religious exemption available in Wisconsin. Initially, the applicants were denied the exemption because Department of Workforce Development determined that the Catholic Charities Bureau (CCB) and its sub-entities were not “operated primarily for religious purposes” as required by the statutory exemption.[3] After several appeals, the case made it up to the Wisconsin Supreme Court. There, the decision to deny the exemption was upheld.[4]
First, the Wisconsin Supreme Court reasoned that based on the text of the statute at issue the relevant inquiry was at the level of the non-profit organization itself and not the controlling Diocese.[5] The court then read the statute to require that an analysis of whether an organization was “operated primarily for religious purposes” required looking at both the motivations and activities of the organization.[6] While the court accepted that the CCB’s motivations were religious, it rejected the claim that its activities were religious in nature.[7]
In particular, the Wisconsin Supreme Court found it relevant that the CCB “neither attempt[s] to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees.”[8] The court reasoned further that because the services the non-profit and its related sub-entities provided to individuals with disabilities could have been provided by other secular organizations, the CCB’s activities were “primarily charitable and secular” rather than religious.[9] Consequently, the decision to reject the CCB’s application for exemption from the state’s unemployment tax was affirmed by the court 4-3.[10]
Even so, Justice Bradley’s dissenting opinion called attention to the fact that the Wisconsin Supreme Court’s analysis “puts state officials and courts in the constitutionally tenuous position of second-guessing the religious significance and character of a nonprofit’s actions.”[11]
By granting cert, the Court will be resolving a question that has divided state courts. While four state supreme courts have determined that the sincerely held beliefs of organizations are dispositive of the question of whether an organization’s activities are religious, another four state supreme courts (now including the Wisconsin Supreme Court) have engaged in an analysis of the character of organization’s activities themselves.[12]
The Court’s decision on this matter will not only significantly impact the tax consequences for incorporated entities controlled by religious groups, but may also address the perplexing question “what exactly is religion?” If the Wisconsin Supreme Court is correct, unless an organization’s activities include overt worship, prayer, religious instruction, or proselytization, then they are not “religious” and thus not capable of taking advantage of state-created religious exemptions to otherwise generally applicable laws.
But what about religious traditions who might discourage their practitioners from engaging in these kinds of demonstrations while engaged in charitable work? Are their charitable activities devoid of religious character simply because they may not be in the process of attempting to convert those they are serving?
The Court will hear arguments on these and many other related questions sometime next spring and will issue an opinion this coming summer.[13] For the sake of our clients, the dedicated attorneys at Dalton & Tomich, PLC will be tracking this case and others like it closely.
[1] Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, SCOTUSblog (last visited December 20th, 2024),
[2] Brief for Petitioner at i, Cath. Charities Bureau, Inc. v. WI Lab. Rev. Comm’n, No. 24-154, 2024 WL 5100663 (U.S. Dec. 13, 2024), amended sub nom. CATHOLIC CHARITIES BUREAU, INC. v. WI LABOR REVIEW COMM’N, ET AL., No. 24-154, 2024 WL 5112872 (U.S. Dec. 16, 2024). The other question presented was “[i]n addressing federal constitutional challenges, may state courts require proof of unconstitutionality “beyond a reasonable doubt?” Id.
[3] Cath. Charities Bureau, Inc. v. Lab. & Indus. Rev. Comm’n, 2024 WI 13, 3 N.W.3d 666, 674.
[4] Id. at 692.
[5] Id. at 678.
[6] Id. at 679.
[7] Id. at 683 (“CCB’s and the sub-entities’ activities are primarily charitable and secular. The sub-entities provide services to individuals with developmental and mental health disabilities. These activities include job training, placement, and coaching, as well as services related to activities of daily living. CCB provides background support and management services for these activities—a wholly secular endeavor. Such services can be provided by organizations of either religious or secular motivations, and the services provided would not differ in any sense.”).
[8] Id. at 682.
[9] Id. at 683.
[10] Id. at 692.
[11] Id. at 783 (J. Bradley, dissenting).
[12] Brief for Petitioner, supra note 2, at 15-16.
[13] Amy Howe, Justices take up cases on religious tax exemption and California climate change mandate, SCOTUSblog (Dec. 13, 2024), https://www.scotusblog.com/2024/12/justices-take-up-cases-on-religious-tax-exemption-and-california-climate-change-mandate/.
