In Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission, 605 U.S. ____ (2025), the U.S. Supreme Court unanimously decided that the Wisconsin Supreme Court had unconstitutionally denied a request by the Catholic Charities Bureau to exempt it from paying unemployment compensation taxes.
Wisconsin law requires most employers to make regular contributions to the state’s unemployment fund through payroll taxes. But, like many other states, it exempts religious organizations from paying taxes.
Although the Wisconsin Court had recognized that the Catholic organization met the state requirement of being “operated, supervised, controlled, or principally supported by a church or convention or association of churches,” it found that its activities were not under applicable law “‘operated primarily for religious purposes’ because they neither engaged in proselytization nor limited their charitable services to Catholics.”
Justice Sotomayor stresses religious neutrality
Justice Sonia Sotomayor delivered the Supreme Court’s majority opinion in which she stressed the need for “governmental neutrality” when dealing with church/state issues under the First Amendment and the importance of applying “strict scrutiny” to any classifications that amounted to “state-sponsored denominational preference.”
Although Wisconsin regarded the activities of the Catholic Charities Bureau as “secular in nature,” that is not how the church interpreted its work. By deciding that religious work required proselytization and/or work specifically directed to church members, Wisconsin was using religious criteria, the Supreme Court said. By contrast, the Catholic Church had opposed using charitable work for purposes of proselytization and had prohibited limiting its services based on “race, sex, or religion.”
Sotomayor further thought that the Wisconsin Court had misapplied the Supreme Court’s decision on conscientious objectors in Gillette v. United States (1971) by distinguishing, as that case had not done, among religious groups based on their theological choices.
Wisconsin cited the compelling state interest in ensuring unemployment coverage for its citizens. However, it did not narrowly tailor its interest to the case at hand and permitted exemptions for religious programs that did proselytize and limit service to its members.
Justice Thomas stressed the idea of church autonomy
In a separate concurring opinion, Justice Clarence Thomas stressed that the Catholic Charities Bureau could not be distinguished from the “broader Catholic Diocese of Superior [Wisconsin] of which it is a part.” Emphasizing the need for “the autonomy of religious institutions,” Thomas derived such autonomy to the First Amendment right of association, to the close link between religious faith and doctrine and matters of church government, and to the understanding, which he traced back to Jesus and James Madison, that “church and state are ‘two rightful authorities,’ each supreme in its own sphere.”
Citing a variety of precedents, Thomas emphasized that churches used corporations to accomplish their goals, and that while corporations might represent churches, they were not themselves churches. Thomas praised a frequently emulated New York law of 1784, which allowed churches to incorporate without interfering with the church’s self-government, something Madison had objected to at the national level. Thomas observed that “the corporation is made for the church, not the church for the corporation.” He further outlined how the Roman Catholic church was hierarchically structured.
Justice Jackson’s concurrence
In a separate concurring opinion, Justice Ketanji Brown Jackson argued that the congressional Federal Unemployment Tax Act, under which Wisconsin had been operating, was intended to focus “on what an entity does, not how or why it does it.”
Eric Rassback, who had helped represent the Catholic charity, welcomed the decision, noting, "It was always absurd to claim that Catholic Charities wasn’t religious because it helps everyone, no matter their religion” (Liptak 2025).
John R. Vile is a political science professor and dean of the Honors College at Middle Tennessee State University.