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By Jesus Mesa and Gabe Whisnant
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The Supreme Court signaled Monday that it may side with a Catholic charitable organization in a case challenging Wisconsin's refusal to grant a religious exemption from state unemployment taxes.
The dispute, which could have broad implications for religious freedom and how states define religious activity, centers on whether the Catholic Charities Bureau should be considered a religious employer under state law.
The Context
Wisconsin exempts religious organizations from paying unemployment tax if their operations are primarily religious. However, state officials argue that the Catholic Charities Bureau does not qualify because its services—such as caring for the elderly and disabled—are not overtly religious or tied to proselytizing.
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The organization, which has paid the tax since 1972, contends that its work is rooted in Catholic values and mission and that the state is unfairly judging what counts as religious activity.
What To Know
The case, Catholic Charities Bureau v. Wisconsin Department of Workforce Development, centers on whether the nonprofit's work—though not explicitly religious in its day-to-day operations—is still entitled to protection under the First Amendment's guarantee of free exercise of religion.
The high court's conservative majority, joined by some liberal justices, appeared skeptical of Wisconsin's position.
"I thought it was pretty fundamental that we don't treat some religions better than other religions, and we certainly don't do it based on the content of the religious doctrine that those religions preach," Justice Elena Kagan said during oral arguments, according to media reports.
The case carries potentially broad implications. Catholic Charities Bureau, based in the Diocese of Superior, has for decades provided services to people with disabilities, the elderly, and the disadvantaged. The group argues that these acts are a form of religious expression, even if they do not include proselytizing or require religious adherence.
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Under questioning from Justice Neil Gorsuch, Wisconsin Assistant Attorney General Colin Roth acknowledged that the state's approach could disadvantage faiths that express their religious commitments through acts of service rather than explicit teaching.
"Isn't it a fundamental principle of our First Amendment that the state shouldn't be picking and choosing between religions?" Gorsuch said, as reported by the AP.
The Catholic Charities Bureau and its four affiliated organizations have participated in Wisconsin's unemployment system without issue since 1972. Roth warned that granting the exemption could allow large religiously-affiliated employers, such as hospitals, to exit state unemployment systems, jeopardizing benefits for potentially over a million workers.
"It would leave potentially over one million employees nationwide without unemployment coverage, like nurses and janitors at religiously affiliated hospitals," Roth told the court, as reported by Reuters.
Liberal and conservative justices alike pressed Roth on how such lines are drawn. Justice Amy Coney Barrett asked how the state differentiates between religious and non-religious motivations in social services.
"One of the problems here is figuring out what the line is," Barrett said, according to the Associated Press.
The Trump administration's legal team, represented by Deputy Solicitor General Curtis Gannon, urged the justices to reverse the Wisconsin Supreme Court's ruling, arguing that the state had misinterpreted federal standards.
The Becket Fund for Religious Liberty, which represents Catholic Charities, contends the state's standard forces courts to interpret religious meaning—something they argue the government is constitutionally barred from doing.
Justice Gorsuch echoed that concern, suggesting that applying the law could require a state inspector to "go into a soup kitchen ... to see how much prayer is going on," according to CNN.
What People Are Saying
Deputy Solicitor General Curtis Gannon told the Associated Press on Monday: "I do think that the Wisconsin Supreme Court deserves to know that it was incorrect."
Luís Calderón Gómez, a tax law professor at Yeshiva University's Benjamin N. Cardozo School of Law, told CNN: "You open the doors for abuse when you just look at whether there's a sincerely held belief rather than actually looking at the activity."
What Happens Next
The decision, expected by June, could set a new precedent on the intersection of religious liberty and state regulation. If the court rules in favor of Catholic Charities, it may become harder for states to challenge religious claims to tax exemption—even where the activity itself appears secular.
Catholic Charities maintains that even if exempted, its employees would not lose unemployment protection, as they would instead be covered under the Church's internal unemployment system. The state counters that its system provides greater due process for claimants, including avenues to challenge denied benefits.
Reporting by the Associated Press contributed to this story.
Update 3/31/25, 3:50 p.m. ET: This article was updated with additional information.
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