CATHOLIC CHARITIES BUREAU, INC., ET AL.,

v. WISCONSIN LABOR &

INDUSTRY REVIEW COMMISSION

[June 5, 2025]

JUSTICE SOTOMAYOR delivered the opinion of the Court.

Wisconsin, like many other States, exempts certain religious organizations from paying taxes into the State’s unemployment compensation system. One such exemption covers nonprofits “operated primarily for religious purposes” and controlled, supervised, or principally supported by a church. Petitioners, Catholic Charities Bureau, Inc., and four of the entities that it operates, claimed that they qualify for the exemption as religious organizations controlled by the Roman Catholic Diocese of Superior, Wisconsin. The Wisconsin Supreme Court disagreed, holding that petitioners are not “operated primarily for religious purposes” because they neither engage in proselytization nor serve only Catholics in their charitable work.

The question here is whether §108.02(15)(h)(2), as applied to petitioners by the Wisconsin Supreme Court, violates the First Amendment. The Court holds that it does.

The First Amendment mandates government neutrality between religions and subjects any state-sponsored denominational preference to strict scrutiny. The Wisconsin Supreme Court’s application of §108.02(15)(h)(2) imposed a denominational preference by differentiating between religions based on theological lines. Because the law’s application does not survive strict scrutiny, it cannot stand.

….

II

“The clearest command of the Establishment Clause” is that the government may not “officially prefer” one religious denomination over another. This principle of denominational neutrality bars States from passing laws that “‘aid or oppose’” particular religions, or interfere in the “competition between sects.” The Establishment Clause’s “prohibition of denominational preferences is inextricably connected with the continuing vitality of the Free Exercise Clause,” too. That is because the “‘fullest realization of true religious liberty requires that government’” refrain from “‘favoritism among sects.’” Government actions that favor certain religions, the Court has warned, convey to members of other faiths that “‘they are outsiders, not full members of the political community.’” To guard against that serious harm, this Court in Larson v. Valente, 456 U. S. 228, set a demanding standard for the government to justify differential treatment across religions on denominational lines. When a state law establishes a denominational preference, courts must “treat the law as suspect” and apply “strict scrutiny in adjudging its constitutionality.”  The government bears the burden to show that the relevant law, or application thereof, is “closely fitted to further a compelling governmental interest.”

A law that differentiates between religions along theological lines is textbook denominational discrimination. Take, for instance, a law that treats “a religious service of Jehovah’s Witnesses . . . differently than a religious service of other sects” because the former is “less ritualistic, more unorthodox, [and] less formal.” Or consider an exemption that applies only to religious organizations that perform baptisms, engage in monotheistic worship, or hold services on Sunday. Such laws establish a preference for certain religions based on the content of their religious doctrine, namely, how they worship, hold services, or initiate members and whether they engage in those practices at all. Such official differentiation on theological lines is fundamentally foreign to our constitutional order, for “[t]he law knows no heresy, and is committed to the support of no dogma.”

This case involves that paradigmatic form of denominational discrimination. In determining whether petitioners qualified for the tax exemption under §108.02(15)(h)(2), the Wisconsin Supreme Court acknowledged that petitioners are controlled by a church, the Roman Catholic Diocese of Superior, thereby satisfying one of the exemption’s two criteria. The court’s inquiry instead turned on whether petitioners are “operated primarily for religious purposes.” On that criterion, the court recognized that petitioners’ charitable works are religiously motivated. N. W. 3d, at 682. The court nevertheless deemed petitioners ineligible for the exemption under §108.02(15)(h)(2) because they do not “attempt to imbue program participants with the Catholic faith,” “supply any religious materials to program participants or employees,” or limit their charitable services to members of the Catholic Church. Put simply, petitioners could qualify for the exemption while providing their current charitable services if they engaged in proselytization or limited their services to fellow Catholics.

Petitioners’ Catholic faith, however, bars them from satisfying those criteria. Catholic teaching, petitioners say, forbids “‘misusing works of charity for purposes of proselytism.’” It also requires provision of charitable services “without making distinctions ‘by race, sex, or religion.’” Wisconsin’s exemption, as interpreted by its Supreme Court, thus grants a denominational preference by explicitly differentiating between religions based on theological practices. Indeed, petitioners’ eligibility for the exemption ultimately turns on inherently religious choices (namely, whether to proselytize or serve only co-religionists), not “‘secular criteria’” that “happen to have a ‘disparate impact’ upon different religious organizations.” Much like a law exempting only those religious organizations that perform baptisms or worship on Sundays, an exemption that requires proselytization or exclusive service of co-religionists establishes a preference for certain religions based on the commands of their religious doctrine.

In short, as applied to petitioners by the Wisconsin Supreme Court, imposes a denominational preference by differentiating between religions based on theological choices.

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III

Because §108.02(15)(h)(2) “grants denominational preferences of the sort consistently and firmly deprecated in our precedents,” it “must be invalidated unless it is justified by a compelling governmental interest” and is “closely fitted to further that interest.” The State bears the burden of clearing that high bar, and it has failed to do so here…..