Proselytize or Pay: Religious Exemptions in Catholic Charities v. Wisconsin

by Maria Tobergte, Associate Member, University of Cincinnati Law Review Vol. 93

I. Introduction

Critics of religious exemptions deem them a legal anomaly, as they allow individuals and organizations to opt out of laws others must obey.[1] Supporters view them as necessary to permit individuals and organizations to exercise their faith without government interference.[2] Regardless of one’s opinion, administering religious exemptions evenhandedly without running afoul of the First Amendment’s religion clauses is a delicate endeavor, often producing muddled case law, numerous tests, and conflicting rulings.[3] In a case that will hopefully resolve some of the ambiguity, the U.S. Supreme Court endeavored to decide whether charitable organizations run by religious groups may be exempt from paying into a state’s unemployment tax system.[4] The specific case at issue, Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, arose after Wisconsin denied Catholic Charities Bureau (“CCB”) a tax exemption because the organization was not operated “primarily for religious purposes” as mandated by Wisconsin law.[5]

This article will predict how the Supreme Court will rule on this case and propose a test to apply the ambiguous language at work in the religious exemption. Section II offers an overview of Wisconsin’s unemployment tax statute, the religion clauses of the First Amendment, and each party’s arguments before the Supreme Court. Sections III and IV offer a framework for how the Court should thread the needle between church and state in administering this statutory religious exemption while also assessing the implications of the Court’s predicted ruling.

II. Background

A. The Federal Unemployment Tax Act and Wisconsin’s Complementary Statute

The Federal Unemployment Tax Act (FUTA) is a cooperative federal-state program that provides benefits to unemployed workers.[6] Under the Act, employers must pay the federal government a percentage of their employees’ yearly wages.[7] These funds are used to support job service programs and state unemployment agencies, among other things.[8]

FUTA contains various religious exemptions that relieve an employer from having to pay into the program.[9] Relevant to the purposes of this article, any service performed in the employment of a “church or convention or association of churches” may opt-out.[10] Second, organizations that “operate[] primarily for religious purposes” and are “operated, supervised, controlled, or principally supported by a church or convention or association of churches” need not pay into the fund.[11] Lastly, schools operated “primarily for religious purposes” are exempt.[12]

Wisconsin, like all other states, has a complementary statute to FUTA.[13] The Secretary of Labor reviews such statutes annually and ensures they comply with FUTA’s requirements; at a minimum, they must impose the same level of coverage that FUTA prescribes.[14] Like FUTA, Wisconsin’s statute also exempts service:

1. In the employ of a church or convention or association of churches;
2. In the employ of an organization operated primarily for religious purposes and operated, supervised, controlled, or principally supported by a church or convention or association of churches; or
3. By a duly ordained, commissioned or licensed minister of a church in the exercise of his or her ministry or by a member of a religious order in the exercise of duties required by such order.[15]

B. Catholic Charities Bureau

CCB, one of the petitioners in this case, is a Wisconsin nonprofit corporation.[16] CCB is a social ministry arm of the Diocese of Superior (Diocese)—a diocese of the Roman Catholic Church—and has served the Diocese’s needs for over 100 years.[17] The Bishop of the Diocese serves as the President of CCB and oversees it and its sub-entities.[18] CCB is separately incorporated from the Diocese, but both have Section 501(c)(3) of the Internal Revenue Code status under the Roman Catholic Church’s group tax exemption.[19]

As its mission, CCB vows to “carry on the redeeming work of our Lord by reflecting gospel values and the moral teaching of the church,” meet society’s “critical needs and issues” by “mobilizing the Christian community,” and alleviate “human suffering by sponsoring direct service programs for the poor, the disadvantaged, the disabled, the elderly and children with special needs” without regard to sex, race, or religion.[20] Under CCB’s Code of Ethics, the organization vows to “reflect gospel values,” be consistent with the “mission of the Diocese of Superior,” and practice virtues of charity.[21]

C. CCB Seeks an Exemption from Wisconsin’s Unemployment System

For several decades, CCB paid into Wisconsin’s unemployment system, but in 2016, CCB sought a determination from the Wisconsin Department of Workforce Development (“Department”) that its employees were exempt from paying into the fund under the statute’s religious exemption.[22] The Department denied the request, finding that CCB was not “operated primarily for religious purposes.”[23] Following a series of administrative and judicial rulings, the Wisconsin Supreme Court affirmed the denial.[24]

Wisconsin’s highest court held that to determine whether CCB operates “primarily for religious purposes,” the state must undertake an objective inquiry into both its “activities and motivations.”[25] The court provided certain objective criteria to aid in this analysis centered on “[t]ypical” forms of religious activities, such as baptism, marriage, administration of sacraments, preaching ministry, pastoral counseling, and corporate worship services.[26] However, the court espoused that these “hallmarks of a religious purpose” are not exhaustive and may differ from faith to faith.[27]

As applied to CCB, the court found CCB’s activities to be primarily “charitable and secular,” and although CCB had religious motivations, CCB’s activities could be performed by either secular or religious organizations.[28] Particularly, the court noted that CCB makes no attempt to “imbue program participants with the Catholic faith nor supply any religious materials to program participants or employees,” nor does CCB require that employment with CCB be limited to only those practicing Catholicism.[29]

The dissent warned that the majority’s approach belittles the Catholic faith by “mischaracterizing [CCB’s] religiously motivated charitable activities as ‘secular in nature’—that is, not really religious at all.”[30] The dissent also argued that asking whether a certain activity is “religious in nature” forces courts to study various  religion’s doctrines and principles and decide which practices are actually religious.[31]

D. The Case Reaches the United States Supreme Court

After the Wisconsin Supreme Court ruled against CCB, it sought review in the United States Supreme Court.[32] Each party’s primary arguments are discussed below, but a brief overview of the religion clauses of the First Amendment is necessary.[33]

1. The Religion Clauses

The First Amendment has two clauses related to religion: the Free Exercise Clause and the Establishment Clause.[34] The former protects the rights of individuals and organizations to freely practice their religion, while the latter prevents the government from establishing an official religion, unduly favoring one religion over another, or becoming excessively entangled in resolving religious questions.[35] While it is well within the government’s purview to create and enforce laws involving religion, in the process of doing so, the government must avoid taking a position on the “relative merit” of religious beliefs.[36]

2. CCB’s Arguments

In its brief, CCB primarily argued that by relying on objective criteria to decide whether activities are inherently religious in nature, “Wisconsin has taken it upon itself to decide which activities can be religious and which ones can’t.”[37] In CCB’s view, this impermissibly entangles church and state, since entanglement concerns arise most prevalently when a court is “scrutinizing whether and how a religious [entity] pursues its mission.”[38]

As a corollary to its first argument, CCB claimed that Wisconsin discriminated among religions by denying the exemption to religious groups who engage in activities that may not fit the state’s vision of typical religious behavior.[39] Catholic teaching bars CCB from imposing Catholicism on others when providing charity and demands that charity be exercised impartially towards members of other religions.[40] However, Wisconsin determined that because CCB did not attempt to proselytize the Catholic faith to others nor limit involvement with CCB to only Catholics, it was not eligible for the religious exemption.[41] In oral arguments, heard on March 31, 2025, the attorney for Wisconsin even conceded that had CCB proselytized, it would qualify for the exemption.[42] Consequently, Wisconsin “has pressed upon the Catholic Church religious requirements—like proselytizing and serving only Catholics—that directly contradict the Catholic Church’s actual religious beliefs.”[43]

CCB does recognize that for the First Amendment to be enforced, courts must be able to separate the secular from the religious.[44] To accomplish this, CCB urges courts to draw this line by “focusing on the sincerity and religiosity of a claimant’s beliefs rather than trying to decide whether particular activities are ‘inherently religious,’” an approach that has proven workable in Religion Clause cases.[45]

3. Wisconsin’s Arguments

Wisconsin conversely contends the decision to deny CCB the exemption was constitutional.[46] Wisconsin primarily draws on the fact that the ministerial exception (a doctrine exempting religious organizations from complying with certain employment laws when their ministers are performing religious functions) focuses primarily on the activities that an employee performs.[47] Under this doctrine, when employees “inculcate[e] the faith” by conducting worship services, spreading their faith to others, or performing important religious ceremonies, they likely qualify for the exception.[48] Accordingly, Wisconsin finds it permissible to articulate a non-exhaustive list of factors describing distinctively religious activities, such as religious education, religious outreach, or worship to determine whether church-affiliated entities can obtain the religious exemption.[49] Doing so, it posits, does not decide “what is religious,” but rather reflects the ministerial exception doctrine’s search for distinctively religious activities that tie certain accommodations to their core purpose.[50]

Wisconsin also argues that CCB misinterpreted the Wisconsin Supreme Court’s decision.[51] It states that Wisconsin never held that CCB’s decision to serve non-Catholics and not to proselytize barred them from the exemption; rather, CCB was “ultimately denied the exemption because they identified no distinctively religious activities whatsoever, not just a lack of proselytization.”[52] Further, the Wisconsin Supreme Court did not declare which activities are religious and which ones are not, but simply held that “religiously motivated work, standing alone, does not suffice.”[53]

III. Discussion

To effectively administer a religious exemption, the state must separate the religious from the secular.[54] Without doing so, the First Amendment could not be enforced.[55] However, making such a distinction is an intricate task, one that inevitably threads the needle between church and state. This case offers the Supreme Court an opportunity to determine how such questions should be resolved.

A. Drawing the Line: Religious v. Secular

The parties both suggest how “operated primarily for religious purposes” should be understood.[56] CCB insists upon a test that considers the “sincerity and religiosity of a claimant’s beliefs,” which it characterizes as a person-focused approach.[57] Wisconsin alternatively proffers an activity-focused approach that looks for distinctively religious activities to qualify an organization for the exemption.[58]

Perhaps neither approach, standing alone, would be the best way to resolve the dispute. On one hand, CCB’s person-focused, sincerity test could open the door for the state to conflate the sincerity of an organization’s religious belief with the accuracy of the belief. It could also give well-established religions an advantage over religions whose beliefs are not common since the lesser-known religion would likely face greater scrutiny to resolve whether its beliefs are religious as opposed to political or philosophical.[59]

On the other hand, Wisconsin’s activity-focused approach is problematic because the relevant statute only requires the organization to be “operated primarily for religious purposes,” which seems to focus more on an organization’s motives rather than its activities.[60] Nonetheless, by evaluating CCB’s activities to deny it the exemption, Wisconsin has, perhaps inadvertently, determined which practices are inherently religious, even though “it is no business of courts to say that what is a religious practice or activity for one group is not religion under the protection of the First Amendment.”[61]

B. A Middle Path: Balancing Belief and Activity

Rather than choosing one test over the other, perhaps a blending of both CCB’s and Wisconsin’s proposed tests could better ascertain whether an organization is “operated primarily for religious purposes.”[62] Under this blended test, the state should first look at the organization’s beliefs and consider whether they adhere to the tenets of a particular faith and how sincerely held the beliefs are to the organization. This prong incorporates CCB’s suggested analysis. Second, to appropriately assess the sincerity of the religious belief, the state should consider how the organization’s activities evince its beliefs, rather than decide which activities are religious. This prong modifies but still incorporates Wisconsin’s suggested approach.

1. Prong 1: Sincerity of Belief

First, the sincerity of belief prong would prevent insincere claimants from unfairly taking advantage of a religious exemption and should be given the most weight in the inquiry.[63] When an individual or organization’s belief is insincere, the law does not burden any religious exercise.[64] As the U.S. Supreme Court held in United States v. Ballard, the government should not construe a belief as insincere merely because the religious belief appears implausible, empirically inaccurate, or atypical.[65] Should the government do so, it would be evaluating theological claims, which the Establishment Clause forbids.[66]

2. Prong 2: Activities as Evidence of the Sincerely-Held Belief

Since adjudicating sincerity is a question of fact, inquiring into the organization’s activities could help assess the sincerity of its beliefs.[67] Rather than deciding which activities are religious, the state should instead consider how the organization’s practices align with the particular faith’s tenets and beliefs, even if such activities are not what one would deem “typical,” such as actively attempting to convert others to join the faith. Evidence that an organization acts contrarily to its alleged religious beliefs could cut against a finding of sincerity.[68] Conversely, evidence of how closely an organization adheres to its religion’s beliefs would tilt the scales in favor of sincerity.[69]

Since Wisconsin’s law focuses on organizations operated primarily for religious purposes, evidence of an organization’s activities should be ancillary to the sincerity of its belief. Here, determining CCB’s sincerity of belief could involve an analysis of whether CCB is an exempt organization under Section 501(c)(3) of the Internal Revenue Code, whether Catholic doctrine impacts and influences the mission and purpose of CCB, how closely affiliated CCB is with the Catholic Church, and how involved church leaders are with the organization.

While this second prong might demand an understanding of a particular faith’s beliefs and how those beliefs manifest into actions, it avoids the issue of the state determining the religiosity of certain behaviors. In Wisconsin’s brief, the state relies on the ministerial exception to conclude that when an employee “inculcat[es]” the faith, they likely qualify for the exception.[70] Under that reasoning, although one religious group’s inculcation of the faith may be different than another’s and may not involve stereotypical, state-prescribed religious activity, the religiously motivated organization could be acting in perfect accordance with its faith’s doctrines and thus be “operating primarily for religious purposes.”[71] Therefore, the focus should be on how the services the organization performs coincide with the doctrines of its religion, not whether the services constitute typical, “distinctively religious activities.”[72]

C. Predicting the Outcome

Based on comments made during oral arguments on March 31, 2025, the Court will likely rule in favor of CCB.[73] The attorney representing Wisconsin, Colin Roth, conceded that if CCB were incorporated as part of the Catholic Church and not separately incorporated, then it would qualify for the exemption.[74] When Chief Justice John Roberts asked Roth to explain what CCB would need to do to qualify, Roth shared that CCB would just need to proselytize.[75]

Given these comments, the Court will probably side with CCB, but it is unclear how far the ruling would extend. Some are concerned that a pro-CCB decision could expand to religiously affiliated hospitals and thus allow those organizations to opt out of the unemployment tax system, even though secular hospitals provide substantially similar services.[76] Ultimately, it remains to be seen how narrow the decision will be—whether the Court will decide that church-affiliated organizations can qualify for the exemption, whether the ruling extends to other religious non-profits, or whether the Court will determine what “operated primarily for religious purposes” really means.[77]

IV. Conclusion

In resolving Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, the Supreme Court has the opportunity to clarify how courts should evaluate religious exemptions. A blended approach that weighs both the sincerity of an organization’s religious beliefs and how its activities reflect those beliefs offers a principled framework for navigating this constitutional tension. Such a test avoids state judgments on what is “religious enough” while still ensuring that genuinely faith-driven organizations are protected. A ruling in favor of CCB could have wide-reaching consequences for how states define religious purpose and how nonprofits navigate the tension between faith-driven missions and regulatory compliance.

---

[1] Stephanie H. Barclay & Mark L. Rienzi, Constitutional Anomalies or As-Applied Challenges? A Defense of Religious Exemptions, 59 B.C. L. Rev. 1595, 1597 (2018).

[2] See id. (arguing that the claim that religious exemptions create unfair favoritism is incorrect).

[3] See Note, Pandora’s Box of Religious Exemptions, 136 Harv. L. Rev. 1178, 1178 (2023).

[4] The parties each frame the issue differently. Catholic Charities Bureau posits the issue as whether a “state violate[s] the First Amendment’s Religion Clauses by denying a religious organization an otherwise-available tax exemption because the organization does not meet the state’s criteria for religious behavior.” See Brief for Petitioners, Cath. Charities Bureau, Inc. v. Wis. Lab. & Indus. Rev. Comm’n, No. 24-154 (U.S. argued Mar. 31, 2025). Conversely, Wisconsin states the issue as whether the “First Amendment allow[s] Wisconsin to tether this religious accommodation to its disentangling purpose by asking whether employers engage in distinctively religious activities like worship, ritual, teaching the faith, or spreading a religious message.” See Brief for Respondents, Cath. Charities Bureau, Inc. v. Wis. Lab. & Industry Rev. Comm’n, No. 24-154 (U.S. argued Mar. 31, 2025).

[5] Brief for Respondents, supra note 4, at 13; Wis. Stat. § 108.02(15)(h).

[6] See 26 U.S.C. § 3301.

[7] Id.

[8] Brief for Petitioners, supra note 4, at 4.

[9] 26 U.S.C. § 3309(b)(1).

[10] Id.

[11] Id.

[12] Id. The schools need also be exempt from tax under § 501(a), but the primary concern for this article is the focus on the religious aspect of the exemptions.

[13] See Wis. Stat. § 108.02.

[14] 26 U.S.C. § 3304(a).

[15] Wis. Stat. § 108.02(15)(h)1-3.

[16] Welcome to Catholic Charities Bureau, Diocese of Superior Cath. Charities Bureau, https://ccbsuperior.org/ (last visited Apr. 9, 2025) [https://perma.cc/L6D2-SL3D].

[17] See Brief for Petitioners, supra note 4, at 6.

[18] Id. at 6-8 (“The Bishop of the Diocese of Superior has plenary control over Catholic Charities.”).

[19] Id. at 7.

[20] Code of Ethics and Mission Statement, Diocese of Superior Catholic Charities Bureau, https://ccbsuperior.org/about-us/history-mission/ (last visited Apr. 9, 2025) [https://perma.cc/J8V6-Y3N4].

[21] Id. The CCB’s Code of Ethics contains a total of ten codes.

[22] Brief for Respondents, supra note 4, at 10.

[23] Id.; see Wis. Stat. § 108.02(15)(h)1-3.

[24] Brief for Respondents, supra note 4, at 10.

[25] Cath. Charities Bureau, Inc. v. State Lab. & Industries Review Comm’n, 2024 Wis.2d 1, 27, 3 N.W.3d 666, 679 (Wis. 2024), cert granted 145 S. Ct. 980.

[26] Id. at 681. The Wisconsin Supreme Court drew these typical religious activities from a Seventh Circuit decision where the court found that in determining religious purpose, the IRS must examine whether an organization’s “actual activities conform to the requirements which Congress has established as entitling them to tax exempt status.” United States v. Dykema, 666 F.2d 1096, 1101 (7th Cir. 1981).

[27] Cath. Charities, 2024 Wis.2d 1, 32, 3 N.W.3d at 681.

[28] Id. at 683.

[29] Id. at 682.

[30] Id. at 707 (Bradley, J., dissenting).

[31] Id. at 705 (Bradley, J., dissenting).

[32] See generally Brief for Petitioners, supra note 4, at 16.

[33] These arguments are drawn from each party’s briefs filed with the Court, but this article does not include all arguments or nuances presented by each side.

[34] U.S. Const. amend. I.

[35] See Brief for Petitioners, supra note 4, at 33.

[36] Nathan S. Chapman, Adjudicating Religious Sincerity, 92 Wash. L. Rev. 1185, 1201 (2017).

[37] Id. at 38. Brief for Petitioners, supra note 4, at 16-18. CCB also argued that Wisconsin violated the church autonomy doctrine by “penalizing Catholic Charities because of its structure, including the fact that it is separately incorporated from the Diocese of Superior.” Id. at 17. This argument is not heavily explored in this article, however.

[38] Id. at 39 (quoting Carson v. Makin, 596 U.S. 767, 787 (2022)).

[39] Brief for Petitioners, supra note 4, at 47.

[40] Id. at 46.

[41] Id.

[42] Transcript of Oral Argument at 80-81, Cath. Charities Bureau, Inc. v. Wis. Lab. & Industry Rev. Comm’n, No. 24-154 (Mar. 31, 2025).

[43] Brief for Petitioners, supra note 4, at 38.

[44] Id. at 40.

[45] Id. at 41. CCB argues that a sincerity requirement is “common to almost all religion claims.” Id.; see Holt v. Hobbs, 574 U.S. 352 (2015); Cutter v. Wilkinson, 554 U.S. 709 (2005); Korte v. Sebelius, 735 F.3d 654 (7th Cir. 2013); Burwell v. Hobby Lobby Stores, Inc. 573 U.S. 682 (2014).

[46] Brief for Respondents, supra note 4, at 13-14.

[47] Id. at 18; see also Our Lady of Guadalupe Sch. v. Morrisey-Berru, 591 U.S. 732, 753-54 (“What matters, at bottom, is what an employee does. And implicit in our decision in Hosanna-Tabor was a recognition that educating young people in their faith, inculcating its teachings, and training them to live their faith are responsibilities that lie at the very core of the mission of a private religious school.”).

[48] Brief for Respondents, supra note 4, at 18, quoting Our Lady, 591 U.S. 732 at 753-754.

[49] Brief for Respondents, supra note 4, at 23, 24.

[50] Id. at 19, 29.

[51] Id. at 24.

[52] Id. at 31.

[53] Id.

[54] See Brief for Petitioners, supra note 4, at 40.

[55] Id.  

[56] Wis. Stat. § 108.02(15)(h).

[57] Brief for Petitioners, supra note 4, at 41.

[58] Brief for Respondents, supra note 4, at 31. Wisconsin claims that by “looking for distinctively religious activities (like worship services, religious outreach, ceremony, or religious education), the Wisconsin court simply aligned the exemption with its basic disentangling purpose.” Id.

[59] Kathryn Tubb, Comment, Sincerity, Subjectivity & Religion: The Evolution of RFRA from a Constitutional Shield to a Political Sword, 75 Okla. L. Rev. 318, 320-22 (2023).

[60] Wis. Stat. § 108.02(15)(h)1-3 (emphasis added).

[61] Fowler v. Rhode Island, 345 U.S. 67, 70 (1953); Brief for Petitioners, supra note 4, at 22.

[62] Wis. Stat. § 108.02(15)(h)1-3.

[63] Chapman, supra note 36, at 1185-1187.

[64] Id. at 1188.

[65] U.S. v. Ballard, 322 U.S. 78, 88-89 (1944); Chapman, supra note 36, at 1191-97 (“Courts can adjudicate religious sincerity without running afoul of the no-orthodoxy principle by declining to infer from evidence of a belief’s inaccuracy or implausibility that the claimant is insincere.”).

[66] Chapman, supra note 36, at 1188.

[67] Id. at 1223; see United States v. Seeger, 380 U.S. 163, 185 (1965).

[68] Chapman, supra note 36, at 1234 (“The most powerful evidence of religious insincerity may be evidence that claimants have stated or acted inconsistently with their alleged religious beliefs.”).

[69] Id.

[70] Brief for Respondents, supra note 4, at 18.

[71] Wis. Stat. § 108.02(15)(h)1-3.

[72] Brief for Respondents, supra note 4, at 31.

[73] Transcript of Oral Argument, supra note 42, at 1.

[74] Id. at 74.

[75] Id. at 80-81.

[76] Ian Millhiser, The Supreme Court seems poised to give religious employers a big win, Vox (Mar. 31, 2025), https://www.vox.com/scotus/406464/supreme-court-catholic-charities-wisconsin-religion [https://perma.cc/97S5-D5CC].

[77] Wis. Stat. § 108.02(15)(h)1-3.

---

Cover Photo by Kyle Dickson on Flickr.