by Erik Gunn, Wisconsin Examiner
March 14, 2024
In a 4-3 opinion issued Thursday, the Wisconsin Supreme Court ruled that a Wisconsin Catholic Charities organization and four nonprofits affiliated with the agency can’t bow out of the Wisconsin unemployment insurance system on religious grounds.
The 50-page opinion rejects the argument made by Catholic Charities Bureau Inc. (CCB) for the Superior Diocese of the Catholic Church that the charity and its subsidiary nonprofits provide social services as a fundamentally religious act.
That would make their employees exempt from coverage under the Wisconsin unemployment compensation law, CCB asserted.
“An objective examination of the actual activities of CCB and the sub-entities reveals that their activities are secular in nature,” wrote Justice Ann Walsh Bradley for the four-member majority, all from the Court’s liberal wing. That evaluation, she added, results from “a neutral and secular inquiry based on objective criteria.”
Justice Rebecca Grassl Bradley wrote a 73-page dissent declaring the majority opinion a “misinterpretation of the exemption” that violates both the U.S. Constitution’s First Amendment protection of religious freedom and the Wisconsin Constitution.
“An examination of the statute’s language unencumbered by the majority’s policy agenda shows Catholic Charities are operated for religious purposes and entitled to the exemption,” Grassl Bradley wrote. Her dissent was joined by Chief Justice Annette Ziegler.
Justice Brian Hagedorn, the third member of the Court’s conservative wing, wrote a half-page dissent, largely agreeing with much of the Grassl Bradley argument while stopping short of its claims about constitutional violations.
Wisconsin’s unemployment insurance (UI) law — the nation’s first, enacted in 1935 — requires all employers to participate in the system with limited exceptions. Employers must pay an unemployment insurance premium on behalf of their employees, and when employees lose their jobs, they can apply for weekly unemployment benefits. Employers who lay off workers more frequently or in larger numbers may be charged a higher UI premium.
Under the state’s UI law, workers whose jobs aren’t considered “employment” under the law, and who therefore aren’t covered by the state system, include those who work for churches or their parent associations; work for organizations that are “operated primarily for religious purposes” and are controlled by churches or church associations; or are working as ordained, commissioned or licensed ministers or members of a religious order.
The original case was brought by Catholic Charities Bureau Inc. in the Catholic Diocese of Superior, Wisconsin, and the four nonprofit affiliates.
Catholic Charities has paid into Wisconsin’s UI system since 1972 based on a determination by the state’s labor department, then called the Department of Labor, Industry and Human Relations and now called the Department of Workforce Development (DWD).
The determination was made after Catholic Charities had submitted a form to the department describing “the nature of its operations as ‘charitable,’ ‘educational,’ and ‘rehabilitative,’ not ‘religious,’” according to Thursday’s opinion.
CCB and the four other nonprofits, which are corporately separate, work with people with developmental and mental health disabilities, providing job training, placement, coaching and health with activities of daily living. CCB provides management services for the affiliated organizations.
In 2015 a Douglas County circuit court ruling found that yet another CCB-affiliated nonprofit, not part of the current case, was exempt from state UI law because it “operated primarily for religious purposes.”
After the Douglas County decision CCB and the other four nonprofits sought the same exemption from DWD. DWD denied the exemption, and over the next six years rulings went back and forth.
The state Labor and Industry Review Commission (LIRC) agreed with DWD that the organizations did not qualify for the exemption. The Douglas County circuit court took a contrary position, ruling in 2020 that CCB and the other groups were all exempt.
In yet another reversal, in 2023 three judges for the Wisconsin Appeals Court District 3 unanimously reversed the lower court and ruled that CCB and the nonprofits were not exempt.
In the opinion Thursday, Walsh Bradley quoted an earlier Wisconsin Supreme Court opinion holding that the state’s UI law is “remedial in nature and should be liberally construed to effect unemployment compensation coverage for workers who are economically dependent upon others in respect to their wage-earning status.”
The opinion cites several reasons for not considering the services that CCB and the affiliates provide for their clients. CCB and the affiliates don’t supply religious materials to their clients and don’t attempt to “imbue program participants with the Catholic faith,” Walsh Bradley wrote. In addition, the services they provide “can be provided by organizations of either religious or secular motivations.”
It’s not enough, she wrote, to simply adopt an organization’s statement that its motivation is religious as sufficient evidence for the exemption, she wrote. Doing so “would open the exemption to a broad spectrum of organizations based entirely on a single assertion of a religious motivation. This would run counter to the direction that we construe the exemption narrowly.”
The case drew several friend-of-the court briefs from religious groups including Mormon, evangelical Christian, Islamic, Sikh and Jewish groups as well as from the Republican leaders in the Legislature. All expressed concern that denying the exemption would infringe on the religious freedom of Catholic Charities and would entangle the government in assessing the organization’s belief systems. The majority opinion asserted that its analysis avoided doing so.
A single friend-of-the-court brief in favor of denying Catholic Charities the exemption came from the Madison-based Freedom From Religion Foundation, which argues for the rights of secular people and nonbelievers from religious involvement in public policy matters.
The foundation warned that granting the Superior Diocese Catholic Charities group the religious exemption from taking part in the UI program would qualify “numerous religiously-affiliated hospitals and colleges” across Wisconsin employing thousands of people — and many of which have gone through significant rounds of layoffs.
“All of these employees would be at risk of losing their unemployment benefits overnight, if this Court accepts the employers’ argument,” the foundation brief stated. GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
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