The experiment failed, largely because paying into the fund was optional, and employers dropped out, often to undercut their competitors. But three years later, Congress enacted a federal-state unemployment system that required all employers, including non-profits, to pay into the system so that employees who lose their jobs can pay their basic bills. The only exemptions were for religious employers who conduct programs that are “operated primarily for religious purposes.”

Monday’s case was brought by a single chapter of Catholic Charities, affiliated with the Diocese of Superior in northern Wisconsin. The chapter contends that it is entitled to be exempted from the state’s mandatory unemployment compensation system because it is a charitable organization that carries out a religious mission. At the same time, however, Catholic Charities specifically eschews indoctrination. There is no proselytizing permitted, and employees include Catholics and non-Catholics alike.