DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 42-90
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	DONALD J. KULICK Administrator for Regional Management
SUBJECT	:	The U.S. Supreme Court's Decision of April 17, 1990 in Employment Division, Department of Human Resources of Oregon v. Smith

1. Purpose. To advise the State agencies of the United States Supreme Court's decision in the Employment Division, Department of Human Resources of Oregon v. Smith, decided on April 17, 1990.

2. Background. Smith and Black, two drug and alcohol counselors, were discharged for using peyote, a controlled substance under Oregon criminal laws. The claimants are members of the Native American Church and used peyote during the church's religious ceremony. They applied for unemployment compensation and were disqualified for work-related misconduct for using a controlled substance. The denial of benefits was affirmed by the Oregon Employment Appeals Board. The Oregon Court of Appeals reversed the disqualifications, and the Oregon Supreme Court agreed with the Court of Appeals because it found the disqualifications conflicted with the claimants' First Amendment rights under the United States Constitution.

   On March 20, 1988, the U.S. Supreme Court granted the Oregon Employment Division its petition for writ of certiorari on this issue. In April 1988, the U.S. Supreme Court remanded the case to the Oregon Supreme Court for a determination whether the use of peyote by the claimants violated State law. On remand the State Supreme Court held that the State law prohibiting the use of peyote makes no exception for religious use; however, it determined that the denial of UI benefits would conflict with the claimants' First Amendment rights. In 1989, the Supreme Court granted for the second time the Oregon Employment Division's petition for writ of certiorari.

3. U.S. Supreme Court Decision. In its second look at the case, the U.S. Supreme Court ruled that prohibiting Native Americans from using peyote in their religious rituals does not violate their constitutional right-to the free exercise of religion. The U.S. Supreme Court stated:

   We have never held that an individual's religious beliefs excuse him from compliance with an otherwise valid law prohibiting conduct that the state is free to regulate. On the contrary, the record of more than a century of our free exercise jurisprudence contradicts that proposition.

   The Court added that the only decisions in which it has held that the First Amendment bars application of a neutral law to religiously motivated action have involved the Free Exercise Clause in conjunction with other constitutional protections, such as freedom of speech and of the press.

   The Court distinguished Oregon from three other cases in which it invalidated State unemployment compensation rules that conditioned the availability of benefits upon an applicant's willingness to work under conditions forbidden by the applicant's religion. These three cases are Sherbert v. Verner, 374 U.S. 398 (1963), Thomas v. Review Board, Indiana Employment Security Div., 450 U.S. 707 (1981), and Hobbie v. Unemployment Appeals Comm'n of Florida, 480 U.S. 136 (1987). In those cases the Court ruled that governmental actions that substantially burden a religious practice must be measured by a balancing test and justified by a compelling governmental interest. However, in Oregon, the Court said that this test is not applicable to 'an across-the-board criminal prohibition on a particular form of conduct." The Court therefore held that because the claimants' ingestion of peyote was prohibited under Oregon law, and because that prohibition is constitutional, Oregon may deny unemployment compensation when the dismissal results from use of illegal drugs. This denial would be consistent with the Free Exercise Clause.

   The full text of the Court's decision in Oregon is attached.

4. Effect on the Unemployment Insurance Program. States may deny benefits to claimants discharged from their jobs for the use of illegal drugs, even though the use is for religious purposes, without violating the First Amendment to the U.S. Constitution.

5. Action Required. State agency administrators are requested to provide the above information to appropriate staff.

6. Inquiries. Direct inquiries to the appropriate Regional Office.

7. Attachment. Court Decision, and Dissenting and Concurring Opinions in Employment Division, Department of Human Resources of Oregon v. Smith.