Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission

FIRST AMENDMENT

Do the First Amendment’s Religion Clauses Prohibit a State from Denying an Exemption from the State’s Unemployment Compensation Program to a Religious Organization When That Organization Provides Secular Services?

Case at a Glance

Catholic Charities and four subentities that provide community services applied for an exemption from Wisconsin’s unemployment compensation program. The Wisconsin Labor & Industry Review Commission determined that they were not “operated primarily for religious purposes” under Wisconsin law and therefore denied them an exemption. The Wisconsin Supreme Court affirmed.

Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission
Docket No. 23-1039

Argument Date: March 31, 2025
From: The Supreme Court of Wisconsin

by Steven D. Schwinn, University of Illinois Chicago School of Law, Chicago, IL

Issues

Did Wisconsin violate the Religion Clauses when it denied an exemption from the state’s unemployment compensation program to Catholic Charities and four subentities because they were not “operated primarily for religious purposes” under Wisconsin law?

Facts

Catholic Charities Bureau (CCB) is a nonprofit corporation in Wisconsin that operates as the social ministry arm of the Diocese of the Superior, a diocese of the Roman Catholic Church. CCB’s mission is “[t]o carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the church.” Since 1917, CCB has fulfilled its mission by “providing services to the poor and disadvantaged as an expression of the social ministry of the Catholic Church.” CCB’s “purpose” “is to be an effective sign of the charity of Christ” by providing services without discriminating by “race, sex, or religion.” CCB pledges that it “will in its activities and actions reflect gospel values and will be consistent with its mission and the mission of the Diocese of Superior.”

CCB oversees several separately incorporated subentities that provide direct services to the community. CCB provides management services for its subentities; it establishes and coordinates their missions; and it approves all capital expenditures and investments of the subentities. CCB’s executive director supervises the subentities’ operations.

At the same time, however, CCB does not require its employees or employees of its subentities to be of any particular religious faith. CCB similarly does not require those who receive services from subentities to be of any particular religious faith. Program participants do not receive any religious instruction, and CCB and its subentities do not attempt to “inculcate the Catholic faith with program participants.”

Four of CCB’s subentities are involved in this case:

1. Barron County Developmental Services: Contracts with the Department of Vocational Rehabilitation to provide job-related services for individuals with disabilities.
2. Black River Industries, Inc.: Provides services to individuals with developmental or mental health disabilities and individuals with limited incomes.
3. Diversified Services, Inc.: Provides work opportunities for individuals with developmental disabilities.
4. Headwaters, Inc.: Provides support and training services related to daily living for individuals with disabilities.

In 1972, the Wisconsin Department of Industry, Labor and Human Relations determined that CCB was subject to the state’s unemployment compensation program and therefore required to make contributions to the program. The department made this determination after CCB self-reported that its operations were “charitable,” “educational,” and “rehabilitative,” and not “religious.” CCB has made unemployment contributions ever since.

In 2015, the Douglas County Circuit Court determined that a subentity of CCB was exempt from the unemployment compensation program on the ground that it was “operated primarily for religious purposes.”

The next year, CCB and the subentities in this case asked the Department of Workforce Development (DWD) for a similar determination. In support of their request, they cited the state unemployment-compensation law, which exempts those “[i]n the employ of an organization operated primarily for religious purposes….” Wis. Stat. § 108.02(15)(h)(2). DWD denied the request, stating that “these organizations are supervised and controlled by the Roman Catholic Church, but it has not been established that they are operated primarily for religious purposes.” After some back-and-forth rulings at the administrative level, the state Labor and Industry Review Commission (LIRC) concluded that CCB and the four subentities were not “operated primarily for religious purposes” under Wisconsin law and therefore not exempt from making payments to the state unemployment insurance program.

The circuit court reversed, and the appellate court reversed again (restoring LIRC’s conclusion). The Wisconsin Supreme Court affirmed, and CCB and its subentities brought this appeal.