DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 42-97
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	GRACE A. KILBANE Director Unemployment Insurance Service
SUBJECT	:	Supreme Court's Decision Overturning the Religious Freedom Restoration Act of 1993

1. Purpose. To advise States of the decision of the United States Supreme Court (Court) overturning, with respect to State and local laws, the Religious Freedom Restoration Act of 1993 (RFRA) and to rescind Unemployment Insurance Program Letter (UIPL) No. 28-94.

2. References. City of Boerne v. Flores (Boerne), 117 S. Ct. 2157 (1997); the Free Exercise of Religion Clause of the First Amendment to the United States Constitution; Employment Division v. Smith (Smith), 494 U.S. 872 (1990) (transmitted by UIPL No. 42-90), September 14, 1990; RFRA, Public Law No. 103-141; UIPLs No. 42-90 and 28-94.

3. Background. In Boerne, decided on June 25, 1997, the Court declared the RFRA, a Federal law intended to protect religious practices from government inter-ference, unconstitutional with respect to State and local law. Boerne involved a RFRA challenge to a denial of a building permit to the Catholic Archbishop of San Antonio to enlarge a church in Boerne, Texas, under a local historic preservation law. The Court held that the RFRA expanded the scope of Free Exercise rights beyond the limits set by the Court, thereby violating the principle of separation of powers and upsetting the balance between the Federal government and the States. Boerne will affect the administration of the UC program.

4. Discussion. Before 1990, the Court used the "compelling governmental interest" test in evaluating Free Exercise challenges to the constitutionality of a government statute or regulation. Specifically, the Court examined whether the challenged law substantially burdened a religious practice, and, if so, whether the burden was justified by a compelling governmental interest.

   However, in its 1990 decision in Smith, the Court rejected the "compelling governmental interest" test. Instead, Smith held that neutral, generally applicable laws may be applied to religious practices even when not supported by a compelling governmental interest. The Smith Court held that Oregon could deny UC to persons dismissed from their jobs because they had used peyote, even though they did so for religious purposes, where the denial was based on a violation of a neutral law of general application which criminalized use of the drug.

   Congress responded to the decision in the Smith case by enacting the RFRA three years later. The RFRA restored the pre-Smith compelling governmental interest test and applied it to all Federal, state and local governments. The RFRA prohibited the government from substantially burdening a person's exercise of religion, even if the burden results from a rule of general applicability, unless the government can demonstrate that the burden is the least restrictive means of furthering a compelling governmental interest.

   As a result of Boerne, the RFRA test no longer applies. Thus, State denials of UC to claimants under neutral, generally applicable State laws will be upheld under the Free Exercise Clause. Such denials will be sustained even though the claimant's actions are for religious purposes and even when the neutral laws are not the least restrictive means of furthering a compelling government interest. Boerne applies to any neutral law of general applicability, whether civil or criminal, which incidentally infringes on religious freedom.

   Boerne did not address whether States may impose more stringent tests than the rule of general applicability stated in Smith. However, in his concurring opinion, Justice Stevens stated that RFRA itself constituted a governmental preference for religion and thus violated the establishment clause of the First Amendment.

6. Action Required. Administrators should inform appropriate staff of the Boerne case. Now that the RFRA has been declared unconstitutional, UIPL 28-94 is rescinded. Copies should be marked accordingly.

7. Inquiries. Inquiries should be directed to your Regional Office.

8. Attachment. Copy of the Boerne case.