State Supreme Court Rules Catholic Charities Bureau not Exempt from Paying Unemployment Taxes

A split state Supreme Court ruled the Catholic Charities Bureau Inc. is not exempt from having to pay unemployment tax to cover their employees because the work they do providing services to those with disabilities isn’t primarily for religious reasons.

The court found in its 4-3 decision Thursday that it’s undisputed the group meets one of the requirements to be exempt from the system because it is supervised by the Superior Diocese.

The court found the four sub-entities of Catholic Charities Bureau Inc. involved in today’s decision don’t attempt to share the Catholic faith with participants, nor supply them with any religious materials. It also found the group hadn’t shown how paying unemployment taxes would prevent it from fulfilling a religious function or engaging in any religious activities. The court also rejected the argument that an analysis of the group’s activities crossed a threshold barring the courts from unnecessary entanglement in church matters.

Each Roman Catholic Diocese in Wisconsin has a social ministry arm. The case the court decided today involved the Superior Diocese’s Catholic Charities Bureau and four sub-entities. None of the four is funded by the diocese, instead receiving money primarily through government contracts, and one had no religious affiliation before it asked to be overseen by the diocese.

They provide services for people with developmental or mental health disabilities, including job coaching and placement, food services and other aid.

According to court records, the state ruled in 1972 that the CCB had to pay unemployment taxes on its employees after it self-reported the nature of its work as “charitable,” “educational,” and “rehabilitative,” not “religious.” After a Douglas County Court in 2015 ruled one of the sub-entities of the CCB was operated primarily for religious purposes, the organization asked to have the four subsidiaries involved in today’s decision removed from the state unemployment system.

The 4-3 ruling affirmed an appeals court decision that upheld a ruling by the Labor and Industry Review Commission that the four must continue paying unemployment taxes on their employees.