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Catholic Charities can opt out of participating

 in a state unemployment compensation program in Wisconsin.

The opinion by Justice Sonia Sotomayor reversed a state Supreme Court decision.

"It is fundamental to our constitutional order that the government maintain 'neutrality between religion and religion,'" Justice Sonia Sotomayor, one of the court's three liberals, wrote in her opinion for the court. "There may be hard calls to make in policing that rule, but this is not one. When the government distinguishes among religions based on theological differences in their provision of services, it imposes a denominational preference that must satisfy the highest level of judicial scrutiny."

The opinion could potentially lead to a major exodus from the state system in Wisconsin and from similar programs in 46 other states. That, in turn, could destabilize the joint federal-state unemployment compensation program that has existed for decades.

brought by a single chapter of Catholic Charities in northern Wisconsin

, which claimed that it should be able to opt out of the mandatory state unemployment compensation system and instead join an alternative church system, which is cheaper.

The state, however, refused to grant Catholic Charities a religious exemption from paying into the state system. The state said that Catholic Charities functions the same way as other non-profits, including Catholic hospitals, and is required to participate in the state unemployment tax system, as it has done for decades.

Catholic Charities countered that its mission is to carry out the gospel of the church to help people, and that it is thus entitled to a religious exemption from the mandatory state tax system.

Ultimately, the court agreed with the group.

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A unanimous Supreme Court ruled that Catholic Charities can opt out of participating in a state unemployment compensation program in Wisconsin.

Unanimous Supreme Court sides with Catholic Charities in Wisconsin case

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