Religious Purposes Exemption

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WI Court of Appeals – District III

Case Name: Catholic Charities Bureau, Inc. v. State of Wisconsin Labor and Industry Review Commission [Recommended for Publication]

Case No.: 2020AP002007

Officials: Stark, P.J.

Focus: Religious Purposes Exemption

This unemployment insurance case requests determination of the proper interpretation of the religious purposes exemption under WIS. STAT. § 108.02(15)(h)2. (2019-20).1 The petitioner-respondents are the Catholic Charities Bureau, Inc. (CCB) as well as four of its sub-entities. CCB asserts that it is exempt from Wisconsin’s Unemployment Compensation Act under § 108.02(15)(h)2. because it is “operated primarily for religious purposes.” In considering whether it is exempt under the statute, CCB argues that the proper consideration is whether it is operated primarily for a religious motive or reason.

The Department of Workforce Development (DWD) and the Labor and Industry Review Commission (LIRC) contend that whether CCB is operated primarily for religious purposes depends on whether its activities are primarily religious in character. The parties also dispute whether the religious purposes exemption is ambiguous and, if so, how that ambiguity should be resolved. Finally, both CCB and DWD argue, albeit for different reasons, that adopting the opposing party’s interpretation of the religious purposes exemption will violate the First Amendment.

According to the appeals court, the reviewing body must consider the nonprofit organization’s motives and activities to determine whether that organization is “operated primarily for religious purposes” under WIS. STAT. § 108.02(15)(h)2., such that the religious purposes exemption to unemployment taxation applies. The appeals court further determines that the First Amendment is not implicated in this case. Given the facts here, the court concludes that LIRC correctly determined that CCB and its sub-entities are not organizations operated primarily for religious purposes; thus, employees of the organizations do not perform their services under excluded employment as that is defined under § 108.02(15)(h)2. The court reinstates LIRC’s decision.

Reversed.

Decided 12/13/22

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