Wisconsin Supreme Court Backs Catholic Charities in Rights Battle

A Catholic charitable organization in Wisconsin must be granted a legal exemption from the state’s unemployment tax system, the Wisconsin Supreme Court ruled Monday, bringing to a close a years-long legal dispute that reached the nation’s highest court.

The ruling in Catholic Charities Bureau v. Labor and Industry Review Commission comes just over six months after a unanimous U.S. Supreme Court said Wisconsin violated the First Amendment by denying the Catholic Charities Bureau of the Diocese of Superior a religious exemption because the organization does not limit its charitable services to Catholics or seek to proselytize those it serves.

In an order issued Dec. 15, the Wisconsin Supreme Court directed state officials to grant the exemption under existing law, rejecting a request by Wisconsin Attorney General Josh Kaul to eliminate the exemption entirely rather than apply it to Catholic Charities.

Catholic Charities Bureau and its supporters have long argued that its mission flows directly from Catholic doctrine, even though the organization provides assistance to people of all faiths or none.

Catholic Charities, its supporters said, helps “the disabled, elderly, and those living in poverty—regardless of their faith” because Catholic social teaching compels this.

“At the heart of Catholic Charities’ ministry is Christ’s call to care for the least of our brothers and sisters, without condition and without exception,” Bishop James Powers, Bishop of the Diocese of Superior, said following the June high court ruling.

The U.S. Supreme Court ruled in June that Wisconsin’s interpretation of its unemployment compensation statute unlawfully discriminated among religious organizations based on theology. Writing for the court, Justice Sonya Sotomayor said Wisconsin crossed a constitutional line by favoring certain religious expressions over others.

In denying the exemption, Wisconsin “imposed a denominational preference by differentiating between religions based on theological lines,” Sotomayor wrote.

She added that “whether to express and inculcate religious doctrine through worship, proselytization, or religious education when performing charitable work are, again, fundamentally theological choices driven by the content of different religious doctrines.”

Wisconsin’s unemployment compensation system dates back more than nine decades. The state was the first in the nation to enact an employer-financed unemployment insurance program, adopting its law in 1932. Because of that history, Wisconsin’s legal interpretations often influence how similar laws are understood in other states.

Nicholas Reaves, senior counsel at the Becket Fund for Religious Liberty, which represented Catholic Charities, previously said Wisconsin’s approach had national implications.

Its pioneering legislation made the state a leader in the field and “other states look to Wisconsin as an example of how to interpret such laws,” Reaves said in 2023.

Catholic Charities sought the exemption in part because the Catholic Church operates its own unemployment insurance system, which the organization said is more efficient and less costly than participation in the state program.

Under Wisconsin law, organizations operated “primarily for religious purposes” are generally exempt from the unemployment compensation system. State officials, however, concluded that Catholic Charities did not qualify because it provides social services without religious requirements.

After losing at the U.S. Supreme Court, Kaul asked the Wisconsin Supreme Court to take a different approach—not by applying the exemption to Catholic Charities, but by striking the religious exemption from state law altogether.

Kaul argued that eliminating the exemption would avoid constitutional problems and create uniform treatment for religious and nonreligious nonprofits alike. His request would have required religious organizations across the state to participate in the unemployment system regardless of doctrine or internal insurance arrangements.

The Wisconsin Supreme Court declined to eliminate the exemption.

The decision instead enforces existing law as written, compelling state agencies to grant Catholic Charities the exemption the U.S. Supreme Court said it was constitutionally entitled to receive.

Reaves welcomed the ruling, calling it the final chapter in a dispute that he said should never have persisted after the June decision.

“We are glad the Wisconsin Supreme Court finally put this case to bed and rejected Attorney General Kaul’s last-ditch effort to defy the U.S. Supreme Court,” he told The Epoch Times in a statement. “After years of unnecessary litigation, the Wisconsin Supreme Court finally recognized the obvious: Catholic Charities is a religious ministry that qualifies for the state’s religious tax exemption.”

The Epoch Times contacted Kaul’s office Monday seeking comment on the ruling but did not receive an immediate response.

The decision reinforces the high court’s broader message that governments may not condition religious benefits or exemptions on how faith-based organizations choose to express their beliefs through service.