Supreme Court seems ready to let religious groups opt out of unemployment compensation laws

The U.S. Supreme Court appeared openly doubtful on Monday about Wisconsin’s refusal to exempt Catholic Charities from making payments into the state’s mandatory unemployment system.

Monday’s case was brought by a single chapter of Catholic Charities in northern Wisconsin, which claims that it should be able to opt out of the mandatory state unemployment compensation system and instead join an alternative church system, which is cheaper.

The state, however, refused to grant Catholic Charities a religious exemption from paying into the state system. The state said that Catholic Charities functions the same way as other non-profits, including Catholic hospitals, and is required to participate in the state unemployment tax system, as it has done for decades.

Catholic Charities counters that its mission is to carry out the gospel of the church to help people, and that it is thus entitled to a religious exemption from the mandatory state tax system. If it wins this case, the decision could—potentially at least— lead to a major exodus from the state system in Wisconsin and from similar state programs in 46 other states. And that, in turn, could destabilize the joint federal-state unemployment compensation program that has existed for decades.

Monday morning's argument started out with some hard questions for Catholic Charities. Justice Elena Kagan asked, "Are you saying … that a group that comes in and says, 'We are a religious group doing religious activities for religious purposes,' qualifies no matter what? That there's no looking behind that at all?"

Chief Justice John Roberts pressed the point with this hypothetical: What if a religion that believes it's a sin to eat meat opens a vegetarian restaurant. "Do they have a claim to be exempt from state taxes?"

If the justices seemed skeptical of the charity's opt-out position, both liberal and conservative justices seemed downright hostile to the state's assertion that Catholic Charities, which serves and employs people of all faiths, and doesn't allow proselytizing, is just like any other non-profit employer and is thus required to pay into the state's unemployment tax system.

Wisconsin assistant solicitor general Colin Roth faced constant interruptions from the bench, but managed to say that the standard imposed by the Wisconsin Supreme Court is that charities may be exempt from paying taxes if their activities involve worship, or religious proselytizing, or religious education. Catholic Charities fulfills none of those functions, he said.

Justice Neil Gorsuch interrupted at that point. "Really, there are no nuns and priests and deacons at the soup kitchen? The bishop, you know, is overseeing it. I mean, come on."

Justice Amy Coney Barrett wondered what would qualify as proselytizing. "Are they playing hymns on the radio or Christian Rock at the Evangelical soup kitchen?" she asked. "Is that proselytization or not because you're forced to sit there and listen to it?"

Justice Samuel Alito asked if proselytizing meant "you don't get the soup unless you pray first?"

And finally, Justice Kagan said that Wisconsin's system seems to to have two conflicting rules for which charities get a religious exemption. Charities that proselytize get a religious exemption, but Catholic Charities and other charities that don't proselytize, don't get an exemption.

"There are lots of hard questions in this area," Kagan, acknowledged. "But I thought it was pretty fundamental that we don't treat some religions better than other religions. And we certainly don't do it based on the content of the religious doctrine that those religions preach."

A decision in the case is expected by late June.

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