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

Under Wisconsin law, certain religious employers were exempt from paying taxes into the state’s unemployment-compensation system. One statutory exemption applied to nonprofit organizations that were (1) operated, controlled, supervised, or principally supported by a church and (2) “operated primarily for religious purposes.” Catholic Charities Bureau, Incorporated and affiliated entities (collectively, the bureau) (plaintiffs) were nonprofit organizations controlled by the Roman Catholic Diocese of Superior, Wisconsin. The bishop of Superior served as the head of the bureau and considered the bureau to be an interconnected arm of the diocese. The bureau provided charitable services including giving assistance to individuals with disabilities. In accordance with the bureau’s understanding of Catholic teaching that charitable services must be provided regardless of race, sex, or religion, the bureau did not require recipients of the bureau’s services to belong to a particular faith. Furthermore, in accordance with Catholic doctrine prohibiting proselytization in the provision of charitable services, the bureau did not seek to influence or coerce service recipients into accepting Catholicism. Several other faiths had similar rules prohibiting proselytizing or discriminating based on religion in the provision of charitable services, but some faith communities did not. In 2016, the bureau requested a statutory religious-employer tax exemption, but the Wisconsin Department of Workforce Development (the department) denied the request, and the Wisconsin Labor & Industry Review Commission (the commission) (defendant) upheld the department’s decision. The bureau challenged the commission’s decision in state court. The Wisconsin Supreme Court ultimately upheld the decision to deny the bureau’s exemption request, holding that the bureau was not “operated primarily for religious purposes” because the bureau provided services to recipients regardless of religion and did not encourage recipients to accept Catholicism. The United States Supreme Court granted certiorari to review the state court’s interpretation of the statutory exemption as applied to the bureau.