Wisconsin Supreme Court reverses course, now says Catholic is charity exempt from unemployment tax
The Wisconsin Supreme Court has ruled that a Catholic charity can be exempt from an unemployment insurance tax, affirming an earlier ruling from the United States Supreme Court.
In an order released Monday, the state high court concluded that Catholic Charities Bureau (CCB), Inc. and four sub-entities were “eligible for the religious purposes exemption to unemployment taxation.”
The Wisconsin Supreme Court ordered that the case be sent back to the circuit court level with the instruction to vacate a decision by the Labor and Industry Review Commission (LIRC) against the CCB.
The order also rejects an attempt by state officials to eliminate the religious exemption altogether, according to the religious liberty law firm Becket, which represented the CCB.
“You’d think Wisconsin would take a 9-0 Supreme Court loss as a hint to stop digging,” said Eric Rassbach, vice president and senior counsel at Becket, in a statement shared with The Christian Post. “But apparently Attorney General [Josh] Kaul and his staff are gluttons for punishment. Thankfully, the Wisconsin Supreme Court put an end to the state’s tomfoolery and confirmed that Catholic Charities is entitled to the exemption it already won.”
In 2016, the CCB asked the Wisconsin Department of Workforce Development (WDWD) for a religious exemption from paying into Wisconsin's unemployment insurance program.
WDWD declined the request, arguing that the CCB was not primarily religious in nature. The CCB subsequently appealed to an administrative law judge who reversed the earlier ruling.
WDWD then petitioned the Wisconsin LIRC, which ruled against the Catholic charity, concluding that it did not qualify for a religious exemption under state law.
The Wisconsin Supreme Court had ruled 4-3 last year that “CCB and the sub-entities” were "not operated primarily for religious purposes" and were therefore ineligible for the exemption.
In June, the U.S. Supreme Court unanimously ruled in favor of the CCB. Justice Sonia Sotomayor wrote the opinion, which concluded that the charity could not be denied the exemption because its work was considered secular.
Sotomayor noted that any "law that differentiates between religions along theological lines is textbook denominational discrimination" and that "differentiation on theological lines is fundamentally foreign to our constitutional order."
"It is fundamental to our constitutional order that the government maintain 'neutrality between religion and religion,'" wrote Sotomayor. "There may be hard calls to make in policing that rule, but this is not one."
In October, Wisconsin Attorney General Josh Kaul submitted a remedial brief to the state supreme court arguing in favor of “eliminating” the religious exemption “altogether.”
"And over the past 50 years, the Legislature has consistently expanded the universe of nonprofit employers that must participate in the unemployment system. Enlarging this exemption would reverse that trend," read the brief.
"By striking the exemption, this Court can avoid collateral damage to Wisconsin workers while still curing the discrimination the U.S. Supreme Court identified. It should so hold, thereby bringing this long-running case to a close."
