No Proselytization Requirement:
The U.S. Supreme Court Refines the Denominational-Neutrality Rule in Religious Employer Exemptions

Introduction

In Catholic Charities Bureau, Inc. v. Wisconsin Labor & Industry Review Commission, 605 U.S. ___ (2025), a unanimous Supreme Court struck down the Wisconsin Supreme Court’s interpretation of a state unemployment-tax exemption for religious employers. Wisconsin had demanded proof that church-controlled charities either proselytize or serve only co-religionists before granting the exemption. Writing for the Court, Justice Sotomayor declared that such theology-based line-drawing “imposes a denominational preference” and therefore triggers, and fails, strict scrutiny. The decision clarifies that:

Summary of the Judgment

• Issue: Whether Wisconsin’s application of its unemployment-tax exemption (Wis. Stat. §108.02(15)(h)(2))—which the state judiciary construed to require proselytization or exclusive service to co-religionists—violates the First Amendment.
• Holding: Yes. Requiring those theological practices establishes a denominational preference. Strict scrutiny applies, and the State failed to show narrow tailoring to a compelling interest.
• Vote: 9–0 (Opinion by Sotomayor; concurrences by Thomas and Jackson).
• Disposition: Judgment of the Wisconsin Supreme Court reversed; case remanded.

Background

Catholic Charities Bureau (CCB) is the social-ministry arm of the Roman Catholic Diocese of Superior, Wisconsin. Through four separately incorporated subsidiaries, CCB provides vocational training, daily-living support, and other services to persons with disabilities—without religious tests or proselytizing. Wisconsin exempts “organizations operated primarily for religious purposes” and “operated, supervised, controlled, or principally supported by a church” from its unemployment-insurance tax. Although the Diocese indisputably controls CCB, the Wisconsin Department of Workforce Development, the Labor & Industry Review Commission, and ultimately the Wisconsin Supreme Court held that CCB was not operated primarily for religious purposes because it did not evangelize clientele or restrict service to Catholics.

Analysis

A. Precedents Cited

1. Larson v. Valente, 456 U.S. 228 (1982) – foundation for the “denominational neutrality” principle; laws that facially prefer certain denominations must survive strict scrutiny.
2. Gillette v. United States, 401 U.S. 437 (1971) – cited by Wisconsin to argue only “invidious” discrimination triggers strict scrutiny; Court distinguishes Gillette because the conscientious-objector exemption there was open to all sects equally.
3. Fowler v. Rhode Island, 345 U.S. 67 (1953) – example of impermissible theological line-drawing (different treatment of Jehovah’s Witness worship).
4. Historic autonomy cases – Watson v. Jones (1872), Kedroff (1952), Hosanna-Tabor (2012) – referenced in concurrences to explain why civil courts may not define church structure.

B. The Court’s Legal Reasoning

1. Step 1 – Identifying Denominational Preference. By conditioning the exemption on proselytization or co-religionist service, Wisconsin made eligibility turn on theological doctrine, not neutral criteria.
2. Step 2 – Strict Scrutiny Triggered. Under Larson, such facial religious differentiation is “suspect” and must be justified by a compelling interest pursued through narrow tailoring.
3. Step 3 – State’s Interests Fail.
   • Ensuring unemployment coverage. Not narrowly tailored: petitioners already provide near-equivalent private coverage; exemption scheme underinclusive and overinclusive.
   • Avoiding entanglement. Overinclusive: statute exempts entire organizations, even employees with no doctrinal role; underinclusive because churches themselves are totally exempt.
4. Conclusion. Application of §108.02(15)(h)(2) to CCB “cannot stand.”

C. Concurring Opinions

• Thomas, J. – Adds church-autonomy dimension: civil courts erred by focusing on corporate formalities rather than canonical reality that Catholic Charities is an arm of the Diocese.
• Jackson, J. – Clarifies statutory meaning: “operated primarily for religious purposes” refers to function (e.g., ministerial formation) not motivation; thus Wisconsin misread federal analogue.

D. Impact

1. State & Federal Unemployment Laws – Over 40 states mirror FUTA’s religious-employer exemption. Those states must not embed theological tests (proselytize, co-religionist service) into eligibility.
2. Religious Accommodation Doctrine – Reaffirms that strict scrutiny applies whenever government lines turn on theology, even within ostensibly benevolent exemptions.
3. Non-profit Sector – Faith-based service providers that serve all comers remain eligible for religion-based accommodations; decisions reduces risk that charity v. ministry dichotomy will be used against them.
4. Church Autonomy – Thomas concurrence signals future cases may invalidate state reliance on corporate separateness to limit exemptions.
5. Legislative Drafting – Lawmakers must craft neutral criteria (e.g., structural control by a church, internal governance) rather than doctrinal content when tailoring exemptions.

Complex Concepts Simplified

• Denominational Neutrality: The government must treat all religious denominations equally; it cannot favor or disfavor a faith based on its teachings or practices.
• Proselytization vs. Evangelization: In Catholic theology (and many others), “evangelization” is sharing one’s faith; “proselytization” (as used here) involves coercive or aggressive conversion tactics. Wisconsin’s test forced charities to engage in proselytization to qualify—contrary to their doctrine.
• Strict Scrutiny: Highest constitutional test: State must prove the challenged rule is narrowly tailored to achieving a compelling interest. Few laws survive.
• Church Autonomy Doctrine: Courts may not resolve disputes about internal religious governance or doctrine; civil authority stays out of “purely ecclesiastical” matters.

Conclusion

Catholic Charities Bureau cements a critical boundary: Civil authorities may offer or withhold tax exemptions, but they may not pry into inherently religious choices to determine eligibility. The ruling harmonizes religious liberty with charitable outreach by ensuring that faith-based organizations need not compromise doctrine—whether by proselytizing or limiting beneficiaries—to obtain statutory accommodations. Going forward, legislatures must draft religion-related exemptions using neutral, non-doctrinal criteria, and courts must subject theological line-drawing to exacting review. The decision thus strengthens the twin pillars of the First Amendment—free exercise and establishment neutrality—while protecting the vital social services that religious charities provide to the broader community.