Wagner-Peyser Act Employment Service Staffing

DEPARTMENT OF LABOR <SUBAGY>Employment and Training Administration</SUBAGY> <CFR>20 CFR Part 652</CFR> <DEPDOC>[Docket ETA-2025-0005]</DEPDOC> <RIN>RIN 1205-AC22</RIN> <SUBJECT>Wagner-Peyser Act Employment Service Staffing</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Employment and Training Administration, Labor. <HD SOURCE="HED">ACTION:</HD> Proposed rule; request for comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Labor (Department) is proposing to remove the requirement that States use State merit staff to provide Wagner-Peyser Employment Service (ES) services. This deregulatory action would allow States to use the staffing model that provides the required services with the most efficient model for their State. This summary can be found at <E T="03">www.regulations.gov</E> by searching by the RIN: 1205-AC22. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before September 2, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may send comments, identified by Docket No. ETA-2025- 0005 and Regulatory Identification Number (RIN) 1205-AC22, by the following method: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Search for the above-referenced RIN, open the proposed rule, and follow the on-screen instructions for submitting comments. <E T="03">Instructions:</E> All submissions received must include the agency name and docket number for this rulemaking or “RIN 1205-AC22.” Please be advised that the Department will post comments received that relate to this proposed rule to <E T="03">https://www.regulations.gov,</E> including any personal information provided. The <E T="03">https://www.regulations.gov</E> website is the Federal e-Rulemaking Portal and all comments posted there are available and accessible to the public. Please do not submit comments containing trade secrets, confidential or proprietary commercial or financial information, personal health information, sensitive personally identifiable information (for example, social security numbers, driver's license or state identification numbers, passport numbers, or financial account numbers), or other information that you do not want to be made available to the public. Should the agency become aware of such information, the agency reserves the right to redact or refrain from posting sensitive information, libelous, or otherwise inappropriate comments, including those that contain obscene, indecent, or profane language; that contain threats or defamatory statements; or that contain hate speech. Please note that depending on how information is submitted, the agency may not be able to redact the information, and instead reserves the right to refrain from posting the information or comment in such situations. <E T="03">Docket:</E> For access to the docket to read background documents, a plain-language summary of the proposed rule of not more than 100 words, or comments received, go to <E T="03">https://www.regulations.gov</E> (search using RIN 1205-AC22 or Docket No. ETA-2025-0005). If you need assistance to review the comments, contact the Office of Policy Development and Research at 202-693-3700 (this is not a toll-free number). <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Kimberly Vitelli, Administrator, Office of Workforce Investment, Employment and Training Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Room C-4526, Washington, DC 20210, Email: <E T="03">vitelli.kimberly@dol.gov,</E> Telephone: (202) 693-3980 (voice) (this is not a toll-free number). For persons with a hearing or speech disability who need assistance to use the telephone system, please dial 711 to access telecommunications relay services. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> The Wagner-Peyser Act of 1933  <SU>1</SU> <FTREF/> established the ES program, which is a nationwide program of labor-exchange services. The ES program seeks to improve the functioning of the nation's labor markets by matching job seekers with employers that are seeking workers. Section 3(a) of the Wagner-Peyser Act directs the Secretary of Labor (Secretary) to assist States in coordinating the State public service employment offices throughout the country by developing and prescribing minimum standards of efficiency and promoting uniformity in the operation of the system of public employment offices. The Department has historically relied on the Secretary's authority in section 3(a) and 5(b) to require States to provide labor exchange services with State “merit staff,” meaning government employees hired and managed under a merit-based personnel system described in 5 CFR 900, subpart F. <FTNT> <SU>1</SU>  29 U.S.C. 49 <E T="03">et seq.</E> </FTNT> Beginning in the early 1990s, the Department provided Colorado and Massachusetts with limited flexibility to set their own staffing requirements for the provision of ES services. In 1998, the Department permitted Michigan to use State and local merit staff to deliver ES services, pursuant to a settlement agreement arising out of <E T="03">Michigan</E> v. <E T="03">Herman.</E> <SU>2</SU> <FTREF/> <FTNT> <SU>2</SU>  81 F. Supp. 2d 840 (W.D. Mich. 1998). </FTNT> In 2014, Congress passed the Workforce Innovation and Opportunity Act (WIOA)  <SU>3</SU> <FTREF/> to modernize the nation's workforce development system. WIOA did not include an ES merit-staffing requirement. Regulations implementing WIOA were published in the <E T="04">Federal Register</E>   <SU>4</SU> <FTREF/> on August 19, 2016, and were effective on October 18, 2016. Among the provisions codified in the 2016 WIOA regulations was § 652.215, which continued to require the use of State merit-staffing for the delivery of ES services, except for the three States that were previously granted exemptions: Colorado, Massachusetts, and Michigan. <FTNT> <SU>3</SU>  Public Law 113-128  Workforce Innovation and Opportunity Act, Department of Labor, Final Rule 81 FR 56072 (Aug. 19, 2016). </FTNT> Through rulemaking effective February 5, 2020, the Department removed the requirement that ES services be provided only by State merit staff, <SU>5</SU> <FTREF/> hereafter referred to as the 2020 Final Rule. In the preamble to the 2020 Final Rule, the Department explained that it sought to allow States maximum flexibility in staffing arrangements to allow them to better align WIOA and ES staffing. Following the 2020 Final Rule, several States were approved to use a variety of staffing models to provide their ES services, as described in their approved WIOA State plans. <FTNT> <SU>5</SU>  Wagner-Peyser Staffing Flexibility, 85 FR 592. </FTNT> In 2023, the Department again changed the requirements in § 652.215 through notice-and-comment rulemaking to reinstate the requirement that States use State merit staff to deliver ES services and reinstated the exemptions for Massachusetts, Michigan, and Colorado. These regulations were published in the <E T="04">Federal Register</E> on November 24, 2023, <SU>6</SU> <FTREF/> and became effective on January 23, 2024. The Department also provided 24 months for States to comply with the State merit-staffing requirements in § 652.215. This meant that States would have to comply with the provisions in § 652.215 by January 22, 2026. <FTNT> <SU>6</SU>  Wagner-Peyser Act Staffing, 88 FR 82658. </FTNT> <HD SOURCE="HD1">II. Discussion</HD> The Department is proposing to remove the requirement that ES services must be delivered by State merit staff, and reestablish the flexibility permitted under the 2020 Final Rule, because the best reading of the Wagner-Peyser Act is that there is no statutory basis for the Department to require States to deliver ES services using only State merit staff. Instead, sec. 3(a) of the Wagner-Peyser Act requires the Department to assist in coordinating State ES offices in developing and prescribing “minimum standards of efficiency” in the provision of ES programs but notably does not explicitly require the use of State merit staff. While the Department has previously suggested that sec. 5(b) also supports a State merit-staffing requirement, that section does not impose such a requirement, but rather simply requires the Department to make certifications to the Department of the Treasury regarding the coordination of ES and Unemployment Insurance (UI). Under <E T="03">Chevron, U.S.A.</E> v. <E T="03">Natural Resources Defense Council,</E> <SU>7</SU> <FTREF/> courts previously deferred to permissible agency interpretations of statutes that were silent or ambiguous with respect to a specific issue; however, in 2024, the U.S. Supreme Court decided <E T="03">Loper Bright Enterprises</E> v. <E T="03">Raimondo,</E> <SU>8</SU> <FTREF/> which overruled <E T="03">Chevron.</E> Recognizing that for all statutes there is a single, best reading, the Court in <E T="03">Loper Bright</E> held that under the Administrative Procedure Act, 5 U.S.C. 551 <E T="03">et seq.,</E> courts must exercise independent judgment to determine if an agency has acted within its statutory authority and may not defer to the agency's interpretation simply because a statute is ambiguous. In light of the <E T="03">Loper Bright</E> decision, the Department has tentatively reassessed the State merit-staffing requirement in the ES program and has determined that the State merit-staffing requirement does not comport with the best reading of the statute. The best reading of the Wagner-Peyser Act is that the Department does not have authority to impose a State merit-staffing requirement for all State staff in the ES. Section 3(a) of the Act only authorizes the Department to establish “minimum standards of efficiency”—it strain ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 40k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━