SCOTUS to review whether Catholic Charities provides religion-based assistance in WI

On December 13, 2024, the Supreme Court accepted its first case involving religion in almost two years, Catholic Charities Bureau v. Wisconsin Labor & Industry Review Commission.

At issue in Catholic Charities is “[w]hether a state violates 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.”

In the underlying dispute the Supreme Court of Wisconsin affirmed an order that the aid the Diocese of Superior offered individuals with developmental and mental health disabilities through four sub-entities were not religious activities at the heart of the Church’s mission because staff members do not try to convert the needy to Catholicism. Accordingly, Catholic Charities had to pay unemployment taxes.

Catholic Charities Bureau v. Wisconsin Labor & Industry Review Commission

Catholic Charities traces its origins to 1972 when Wisconsin exempted religious organizations from paying unemployment taxes if, as Catholic Charities did, they provide coverage through their own funds. However, in the same year, Wisconsin’s Department of Industry, Labor and Human Relations denied Catholic Charities’ requested exemption from paying unemployment taxes because officials regarded “its operations as ‘charitable,’ ‘educational,’ and ‘rehabilitative,’ not ‘religious.’”

After state officials again refused to exempt Catholic Charities from paying unemployment taxes in 2016, it unsuccessfully initiated litigation which reached the Supreme Court of Wisconsin.

In its 50-page, four-to-three, majority opinion the Supreme Court of Wisconsin’ affirmed that Catholic Charities had to pay unemployment taxes even in conceding that “its statement of philosophy indicates that it has ‘since 1917 been providing services to the poor and disadvantaged as expression of the social ministry of the Catholic Church in the Diocese of Superior’ and that its ‘purpose … is to be an effective sign of the charity of Christ.’”

Moreover, the court accepted “at face value” that the services Catholic Charities and its sub-entities provide “are based on gospel values and the principles of the Catholic Social Teachings [to] carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the church.”

Nonetheless, the court thought that because the services Catholic Charities and its sub-agencies offered were “primarily charitable and secular” they were not exempt from having to pay unemployment taxes insofar as they were “not operated primarily for religious purposes.” The court reached this conclusion because agency staff “neither attempt to imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees, [adding that a]lthough not required, these would be strong indications that the activities are primarily religious in nature.”

A 73-page dissent chastised the court, opening with the reminder to “[r]ender therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.” The dissent excoriated the majority because it “rewrites the statute to deprive Catholic Charities of the tax exemption, rendering unto the state that which the law says belongs to the church,” impermissibly entangling itself in religious affairs.

A brief one paragraph dissent explained that “I would not reach the constitutional questions and do not sign onto every point in the analysis, [but] I agree with the construction of the statute in thoughtful dissent.”

Dissatisfied with the result, Catholic Charities appealed to the Supreme Court with the help of The Becket Fund for Religious Liberty, a non-profit, public-interest law firm, which agreed to hear the case.

Judicial hubris on display

One troubling aspect of Catholic Charities was the narrowness of Wisconsin’s approach in defining what constitutes religious activity that the Diocese of Superior, and by extension other church outreach services, offer the needy, denying it to an exemption from state unemployment taxes. More troubling is that secular jurists took it on themselves to interpret what qualifies as being at the heart of the Church’s mission.

In so doing the court impermissibly entangled Wisconsin’s public officials in the Catholic Church’s internal affairs, violating the First Amendment’s prohibition, applicable to states, that the government “shall make no … laws prohibiting the free exercise” of religion.

When dealing with matters of faith, it is important for courts to review judicial precedent carefully on issues beyond their expertise. For example, in interpreting the reach of Title VII’s ministerial exception in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, the Supreme Court emphasized that officials of religious institutions, rather than public agencies, alone have the authority to determine who qualifies as a minister. Applying this principle, the Supreme Court of Wisconsin should have deferred to officials of Catholic Charities as to whether the services they provide exemplify Gospel values because it was in no position to make such a decision. Consequently, the dissent described the holding as “a profound overreach of the judicial power.”

In Catholic Charities the Supreme Court of Wisconsin displayed marked judicial hubris in rejecting the testimony of religious officials that the services they offer are consistent with Gospel values to care for the needy by doing more than just talking in light of Church teaching that faith without works is dead. As noted, the court exceeded its authority in not deferring to Church leaders who explained that serving the needy involves affording them aid not premised on their converting to Catholicism.

By intruding on matters of faith it was unqualified to address, the court ignored that Catholic Church social teachings never conditioned giving aid on accepting its teaching.

The outcome in Catholic Charities is ironic at best, hypocritical at worst, in light of how critics of religion continue to rely on the failed metaphor of the “wall of separation of Church and State.” Opponents of religious freedom continue to rely on this euphemism, popularized by Thomas Jefferson’s 1802 letter to the Danbury Baptist Convention, but which actually originated in 1644 with Roger Williams who called for “a wall of Separation between the Garden of the Church and the Wilderness of the world,” when issues such as aid to faith-based schools, their students, and parents arise.

Instead of maintaining a healthy separation on a question beyond its expertise, the Supreme Court of Wisconsin intruded on the ministry of Catholic Charities as it cared for the needy.

At the heart of its misguided rationale the Supreme Court of Wisconsin went so far as to deem that because Catholic Charities and its sub-entities were not “operated primarily for religious purposes” [they were] thus not exempt from making contributions to the state unemployment insurance system.” The court thereby denied Catholic Charities the opportunity to join the program of the Catholic Churches in Wisconsin providing similar unemployment protection.

Here the court ignored the fact that the separation imbedded in the First Amendment is designed to protect religion from state interference rather than the other way around. It deferred to public officials rather than religious leaders who work with the needy as to whether they were exercising the Church’s mission.

Given how egregiously the Supreme Court of Wisconsin intruded into the internal affairs of Catholic Charities, it is highly unlikely its judgment will survive on appeal. Although the Supreme Court has yet to set a date for oral arguments, they are likely to occur in this Spring, with a ruling before the end of its term in late June or early July 2025. Stay tuned.