The Wisconsin Supreme Court declined to strike down the state’s religious exemption from unemployment insurance and confirmed that Catholic Charities organisations in Wisconsin remain exempt from the system.
The order follows a June decision by the US Supreme Court, which overturned a 2024 Wisconsin ruling that had denied Catholic Charities access to the exemption.
After that reversal, the case returned to the state court for further action.
Monday’s unsigned order stayed narrow. The justices offered no commentary on the many briefs submitted after the federal ruling and avoided signalling broader views on the exemption itself.
In March 2024, the Wisconsin Supreme Court split 4-3 when it ruled that Catholic Charities’ activities counted as secular work rather than religious practice.
On that basis, the court said the organisation did not qualify for the unemployment insurance exemption under state law.
Wisconsin’s statute limits the exemption to employees of churches, parent church bodies, ministers, members of religious orders, and organisations operated mainly for religious purposes and controlled by churches or church associations.
The US Supreme Court took a different view. In a unanimous decision issued June 5, 2025, it said the Wisconsin ruling created a denominational preference by drawing distinctions between religions based on theology.
The justices held that approach violated the First Amendment’s protection of religious freedom, Beinsure notes.
After the federal ruling, both Catholic Charities and the Wisconsin Department of Justice proposed remedies.
The DOJ urged the state court to eliminate the religious exemption entirely, arguing that doing so would restore equal treatment under the law.
Catholic Charities pushed back, calling the proposal evidence of animus toward the organisation. It asked the court to leave the exemption intact and confirm its eligibility.
The Wisconsin Supreme Court sided with that outcome procedurally. It sent the case back to Douglas County Circuit Court with instructions to vacate earlier decisions by the Labor and Industry Review Commission that denied the exemption.
The lower court must also direct the commission to declare Catholic Charities eligible for the religious purposes exemption from unemployment taxation.
Victor Forberger, a Wisconsin unemployment lawyer who has tracked the case closely, said the result was predictable given the US Supreme Court’s ruling. Speaking to the Wisconsin Examiner, he said the federal decision settled this dispute but left wider questions unanswered.
The Supreme Court ruling did not resolve how similar claims from other organisations might fare, Forberger said. How future exemption requests will play out remains open, and state courts may see more challenges ahead.
