In the Department of Employment et al. v. United States et al., 1966, the U.S Supreme Court was tasked with determining whether a state could deny unemployment benefits to an individual who refused available work due to religious beliefs. The case involved Adele Sherbert, a Seventh-day Adventist, who was fired from her job after she refused to work on Saturdays - her Sabbath day. When she applied for unemployment compensation in South Carolina and was denied because of this refusal, she sued the state's employment department arguing that it violated her First Amendment rights by forcing her into choosing between following religious practices or receiving benefits. The Supreme Court ruled in favor of Sherbert stating that denying her unemployment benefits infringed upon her right to free exercise of religion as protected under the First Amendment. It held that any incidental burden on the free exercise of appellant's religion may be justified only by a compelling state interest in public welfare; hence no such justification had been shown here.

In the dissenting opinion for the Department of Employment et al. v. United States et al., it was argued that the majority's decision to uphold federal regulations over state unemployment compensation laws contradicted previous rulings and infringed upon states' rights. The dissenters believed that Congress did not intend to give such broad power to federal agencies when drafting legislation related to unemployment benefits, and thus, these agencies should not be able to override state laws on this matter. They also expressed concern about potential negative impacts on states' abilities to manage their own economies effectively if they were forced into compliance with potentially burdensome federal regulations in areas traditionally governed by state law.