Only a week after Catholics nationwide completed a campaign protesting the Obama administration’s violation of the religious liberty of Catholic institutions, the Supreme Court let stand a key federal ruling that upholds the rights of religious employers.

The national protest, encouraged by parish bulletin inserts from the U.S. bishops’ conference and appeals from at least 21 Catholic colleges and leading Catholic organizations, was aimed at Health and Human Services (HHS) regulations that mandate health-insurance coverage for sterilization, contraception, and abortifacients. The rules’ exemption for religious employers — which are narrowly defined as church-controlled entities that serve and hire primarily members of the sponsoring church — could have serious consequences for many Catholic organizations extending well beyond health insurance.

But there is new hope in the federal courts. Last Tuesday, the U.S. Supreme Court declined to hear an appeal to an August 2010 ruling by the Ninth Circuit Court of Appeals. The ruling upheld a religious employer’s First Amendment right to make employment decisions based on religious beliefs and defined religious organizations in a manner that sharply contrasts with the Obama administration’s health-care regulations.

All parties to the case agreed that three employees of the Christian charity World Vision had been fired for religious reasons, specifically because they disagreed with important aspects of World Vision’s “statement of faith.” Although the employees had identified themselves as Christian, World Vision discovered that they did not believe that Jesus Christ was fully God and a person of the Holy Trinity. The employees’ attorney Judith Lonnquist told Christianity Today that they are “deeply religious Christians” who simply “don’t have the same beliefs that World Vision espouses.”

Apparently they believe it appropriate to define “Christian” however they wish, even while attempting to deny a fervently Christian organization its rights as a religious organization under Title VII of the Civil Rights Act of 1964. Lonnquist tried to convince the courts that World Vision is not a religious employer and therefore not eligible for exemption from employee complaints of religious discrimination, as permitted by a 1972 amendment to the law.

“The vast majority of World Vision’s services are centered on the distribution of resources and training to the poor, not on the direct inculcation of religious doctrine or propagation of religion,” Lonnquist argued, comparing the charity’s work to that of secular organizations like the American Red Cross. World Vision, however, countered that it “promotes the Christian faith by trying to meet the profound needs” of the poor, while also teaching clients about God.

The case was dangerous to many religious nonprofits, because it suggested that certain activities are inherently secular, and therefore a religious institution that engages primarily in such activities is not “religious” under federal law. Together with the HHS regulations for health insurance and recent National Labor Relations Board (NLRB) rulings claiming jurisdiction over Catholic colleges, a federal court ruling in favor of the World Vision employees could have further eroded the status of religious charities, schools, colleges, hospitals, and other services.

But while the impact would have been similar, the approach was not. HHS has defined a religious organization according to its ownership (i.e., whether it is a church or church-controlled) and whom it serves and hires (whether clients and employees are members of the sponsoring church). The NLRB relies on similar criteria in deciding whether an employer is “sufficiently religious” to be exempt from federal oversight. But Lonnquist would define a religious institution according to what it does.

All three approaches are unconstitutional. For instance, in responding to the HHS regulations on behalf of 18 faithfully Catholic colleges and the Cardinal Newman Society, attorneys Kevin Theriot and Matt Bowman of the Alliance Defense Fund note that HHS violates the First Amendment by the very fact that it purports to know what makes an organization religious, thereby inviting entanglement with religion. Theriot and Bowman write that the HHS religious exemption gives the Obama administration “unfettered discretion” when choosing whether to identify entities as religious or secular.

Likewise, the Court of Appeals for the District of Columbia Circuit has twice told the NLRB to leave religious colleges alone, citing the Supreme Court ruling in Mitchell v. Helms “that courts should refrain from trolling through a person’s or institution’s religious beliefs.” Instead, the court proposed a three-part definition of a religious college: 1) it is nonprofit; 2) it “holds itself out to students, faculty and community as providing a religious educational environment”; and 3) it is “affiliated with, or owned, operated, or controlled, directly or indirectly, by a recognized religious organization, or with an entity, membership of which is determined, at least in part, with reference to religion.”

If there is any question about the sincerity of its religious mission, the D.C. Circuit Court ruled, the institution should be subject to public scrutiny — and, I would add, in the case of Catholic colleges, to scrutiny from the Catholic bishops. But under the Constitution, federal employees and the courts cannot question the religiosity of an organization that holds itself out to the public as religious.

Would the three-member Ninth Circuit Court, hardly known as a conservative court, take a similar position? One member did side with the World Vision employees, citing a narrow interpretation of the Civil Rights Act of 1964: “Congress used the terms ‘religious corporation, association… or society’ as they were commonly understood to describe a church or other group organized for worship, religious study, or the dissemination of religious doctrine,” argued Judge Marsha Berzon in her dissent.

But the majority refused to take the bait and declined to answer the question raised: whether humanitarian work is religious or essentially secular. To even engage in such a question, wrote Judge Diarmuid O’Scannlain in his majority opinion, would be “constitutionally troublesome.”

“Making that determination,” O’Scannlain wrote, “runs counter to the core of the constitutional guarantee against religious establishment.”

He proposed a three-part test for religious organizations that is similar to the D.C. Circuit Court test: any nonprofit entity is religious if it 1) “is organized for a self-identified religious purpose… 2) is engaged in activity consistent with, and in furtherance of, those religious purposes, and 3) holds itself out to the public as religious.” The court would not attempt to define what is authentically religious.

In his concurring opinion, Judge Andrew Kleinfeld wrote that he would even go one step further by ignoring whether an entity is organized as a nonprofit organization. He argued that small, non-incorporated groups also deserve exemption from religious discrimination claims.

The World Vision case is an important victory for Catholic organizations as they battle federal restrictions on their religious liberty. The ruling gives deference to an organization claiming a religious mission, even for activities that might be described as secular.

Catholic colleges in particular may benefit, although perhaps not to the pleasure of those college presidents who resent the Church’s call for stronger Catholic identity. Both the Vatican and the U.S. bishops have stipulated, in accordance with Ex Corde Ecclesiae, that Catholic college presidents and a majority of faculty must be Catholic. In response, some college leaders have claimed that they have no legal standing to hire based on religious belief, and few Catholic colleges even bother to document the number of faculty who are Catholic. The Ninth Circuit seems to have held open the door to religious hiring at Catholic colleges and other Catholic employers.

One additional note: Underlying interest in the World Vision case is the fact that the charity receives more than $300 million in government funds annually. Even though federal law protects the right of religious employers to impose religious tests on employees, secularists and groups like the ACLU argue that such groups should not receive federal funds. President Obama said during his 2008 campaign that federal grant recipients should not be permitted to “discriminate” against employees “on the basis of their religion.” Last year World Relief (not to be confused with World Vision), a charity affiliated with the National Association of Evangelicals, made headlines by imposing a new faith statement on employees and risking millions of taxpayer dollars. This is a dispute that continues to simmer.