NELP Joins Amicus Brief in U.S. Supreme Court Religious Exemption from UI Case

In a case now before the U.S. Supreme Court, Catholic Charities Bureau, Inc. (CCB) wants out of the federal-state unemployment insurance (UI) system. If CCB is excluded, then CCB employees’ work for the non-profit organization will no longer be covered by the UI system. Moreover, allowing CCB to be excused from the UI system could lead to the exclusion of other religiously affiliated employers. This will have profound impacts on employees of those organizations and on the federal-state UI system as a whole.

Legal Action of Wisconsin, joined by NELP, Economic Policy Institute, the Maurice and Jane Sugar Law Center for Economic and Social Justice, Wisconsin Employment Lawyers Association, and the New York Legal Assistance Group, submitted an amicus brief in support of Wisconsin. The brief advises the Court on the history of unemployment insurance and cautions the Court about the adverse consequences of allowing a broad exemption for CCB and similar employers.

The brief advises the Court on the history of unemployment insurance and cautions the Court about the adverse consequences of allowing a broad exemption for CCB and similar employers.

CCB and four of its “sub-entities” in Wisconsin argue that it operates for a religious purpose and should be exempt under Wisconsin UI law. The sub-entities provide assistance to individuals with disabilities without direct funding from the Diocese.  However, in Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission, the Wisconsin Supreme Court disagreed. CCB subsequently petitioned for review by the U.S. Supreme Court. On December 16, 2024, the Court accepted CCB’s appeal. Oral arguments in the case are scheduled for March 31, 2025.

The Wisconsin Supreme Court found that CCB does not meet requirements for the state religious purposes exemption from the state UI system. Wisconsin’s religious purposes exemption provides that an employer can be excused from the state UI system if it: (1) Is operated and supervised by a religious entity, and (2) Is operated primarily for religious purposes. The first requirement is not in dispute; however, the Wisconsin Supreme Court found that CCB does not meet the second requirement.

According to the Wisconsin Supreme Court, the second “religious purposes” requirement is met only if both an employer’s motivations and an employer’s activities indicate a religious purpose. The Court accepted that CCB was motivated by a religious purpose, but found that CCB’s activities are secular in nature. The Court noted that CCB’s activities do not include religious services or education and are not intended to convert individuals to Catholicism. Moreover, neither employees of CCB’s sub-entities nor participants in CCB’s programs are required to be Catholic; religion is not considered. The Court also argued that the activities would be the same regardless of whether they were performed by a religiously affiliated entity or a secular one. In fact, one of the sub-entities, Barron County Developmental Services, Inc., had not been a part of CCB until 2014. That sub-entity provided the same job placement, coaching, and other services to individuals with disabilities before and after joining CCB.

The Wisconsin Supreme Court also denied of CCB’s claims that consideration of an employer’s activities for the religious purposes exemption violates the First Amendment of the U.S. Constitution. This is the sole issue now before the U.S. Supreme Court. CCB argues that the Wisconsin Supreme Court’s decision “violates the First Amendment by favoriting some religions over others, entangling courts in religious questions, and interfering with church autonomy.”

Our amicus brief highlights the history of unemployment insurance in Wisconsin, beginning in the aftermath of the Great Depression. The Wisconsin program began before the federal-state program was extended to the rest of the nation by way of the Social Security Act. Wisconsin’s initial attempts to induce employers to provide their own unemployment insurance programs had failed. The federal-state unemployment insurance program under the Social Security Act incentivized states to establish compulsory programs, which would ensure that, as with other insurance programs, risks and costs were spread across a large base of employers. This would allow the broadest economic and worker protection.

Consistent with these advantages, courts have generally liberally construed entitlement to UI benefits. Since the program was created to reduce the harm job loss inflicts on a worker who is reliant on wages, courts usually err in favor of workers being covered and hold that exemptions from the programs should be narrowly construed. If the U.S. Supreme Court allows a broad religious purposes exemption, it could undermine the purposes and functions of unemployment insurance. Many employers, both nationwide and in Wisconsin, are affiliated with some religious entity. Religious affiliation is particularly noticeable in health care and social assistance organizations. At least 16,800 workers in Wisconsin alone are employed by religiously affiliated organizations. Those workers could ultimately lose UI coverage if the Supreme Court expands the religious purposes exemption.

At least 16,800 workers in Wisconsin alone are employed by religiously affiliated organizations. Those workers could ultimately lose UI coverage if the Supreme Court expands the religious purposes exemption.

The harm of this broad exemption extends beyond the cost to individual workers. Unemployment insurance is an economic stabilizer; UI benefits help workers maintain household spending during job loss. The federal-state program is especially effective in responding to local and national economic downturns. When regular state benefits are not enough, federal emergency benefits keep both workers and the economy afloat. During the high unemployment of 2011, every dollar in additional UI benefits increased economic activity by $1.60. Likewise, expanded federal assistance during the pandemic protected 5.5 million people from poverty. Thus, broadening employer exemptions from the program could have collateral impacts on workers and the economy.