Rule2026-01117
Wagner-Peyser Act Staffing, Delay of Merit Staffing Compliance Date
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 21, 2026
Effective
January 21, 2026
Issuing agencies
Labor DepartmentEmployment and Training Administration
Abstract
The Department of Labor's (Department's) Employment and Training Administration (ETA) is delaying by 1 year the date by which State grantees, as a condition on their grant funds, must comply with the regulatory requirements in the 2023 Wagner-Peyser Act Staffing Final Rule regarding the grant-funded staffing models States must use to deliver services in the Wagner-Peyser Act Employment Service (ES). The 2023 Final Rule became effective on January 23, 2024, and provided that all States have until January 22, 2026, 24 months after the effective date of the rule, to comply with the staffing requirements. With this 1-year delay, the compliance date is now January 21, 2027.
Full Text
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<title>Federal Register, Volume 91 Issue 13 (Wednesday, January 21, 2026)</title>
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[Federal Register Volume 91, Number 13 (Wednesday, January 21, 2026)]
[Rules and Regulations]
[Pages 2486-2488]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01117]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 652
RIN 1205-AC23
Wagner-Peyser Act Staffing, Delay of Merit Staffing Compliance
Date
AGENCY: Employment and Training Administration, Labor.
ACTION: Final rule.
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SUMMARY: The Department of Labor's (Department's) Employment and
Training Administration (ETA) is delaying by 1 year the date by which
State grantees, as a condition on their grant funds, must comply with
the regulatory requirements in the 2023 Wagner-Peyser Act Staffing
Final Rule regarding the grant-funded staffing models States must use
to deliver services in the Wagner-Peyser Act Employment Service (ES).
The 2023 Final Rule became effective on January 23, 2024, and provided
that all States have until January 22, 2026, 24 months after the
effective date of the rule, to comply with the staffing requirements.
With this 1-year delay, the compliance date is now January 21, 2027.
DATES: This final rule is effective on January 21, 2026.
FOR FURTHER INFORMATION CONTACT: Kimberly Vitelli, Administrator,
Office of Workforce Investment, U.S. Department of Labor, Employment
and Training Administration, 200 Constitution Avenue NW, Room C-4526,
Washington, DC 20210.
SUPPLEMENTARY INFORMATION:
I. Background
The Wagner-Peyser Act of 1933, 29 U.S.C. 49 et seq., 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. The
Department had 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.
Beginning in the early 1990s, the Department provided Colorado and
Massachusetts with flexibility to set their own staffing requirements
for the provision of ES services. In 1998, the Department permitted
Michigan similar flexibility to deliver ES services, pursuant to a
settlement agreement arising out of Michigan v. Herman, 81 F. Supp. 2d
840 (W.D. Mich. 1998).
In 2014, Congress passed the Workforce Innovation and Opportunity
Act (WIOA), Public Law 113-128, which amended the Wagner-Peyser Act.
WIOA did not include an ES merit-staffing requirement. Regulations
implementing WIOA were published in the Federal Register on August 19,
2016 (81 FR 56072) and were effective on October 18, 2016. Among the
provisions codified in the 2016 WIOA regulations was 20 CFR 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.
Through rulemaking effective February 5, 2020, the Department
removed the requirement that ES services be provided only by State
merit staff (85 FR 592) (hereinafter 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.
On November 24, 2023, the Department issued the Wagner-Peyser Act
Staffing Final Rule (88 FR 82658) (hereinafter referred to as ``the
2023 Final Rule'') to reinstate a requirement for States to use State
merit staff to provide labor exchange services in the ES, with limited
exceptions, see 20 CFR 652.215 (2024). The 2023 Final Rule also made
changes to the ES Monitor Advocate System regulations in 20 CFR parts
653 and 658. This rule became effective on January 23, 2024, and
provided States until January 22, 2026, 24 months from the effective
date, to comply with the State merit-staffing requirement. The
Department is issuing this final rule amending Sec. 652.215 to
[[Page 2487]]
delay implementation of the State merit-staffing requirement for an
additional year, until January 21, 2027. This final rule does not
affect States' obligations to comply with other requirements in the
2023 Final Rule, such as the changes to 20 CFR parts 653 and 658.
Reason for Compliance Date Delay
On January 31, 2025, President Trump issued Executive Order 14192,
``Unleashing Prosperity Through Deregulation'' (90 FR 9065) making it
the policy of the executive branch to ``alleviate unnecessary
regulatory burdens placed on the American people.'' On July 1, 2025,
the Department issued the proposed rule, Wagner-Peyser Act Employment
Service Staffing (90 FR 28239), proposing to remove the State merit-
staffing requirement, which would allow States to choose the staffing
model that provides the required ES services in the most efficient way
for their State. The comment period on that rulemaking closed on
September 2, 2025. The Department continues to engage in that
rulemaking process. The Department is issuing this final rule delaying
the January 22, 2026, compliance date to reduce regulatory burden on
States and to enable the Department to complete its rulemaking process.
The Department has considered any reliance interests that the
compliance date for merit staffing in the 2023 Final Rule may have
engendered. Because this rule merely extends the delay of enforcement
of staffing requirements for State grantees and does not impose any new
requirements, the rule does not implicate any serious reliance
interests on the part of the States. Further, in addition to the two
years in which States have not been required to be in compliance
following the 2023 Final Rule, States were not subject to any program-
wide staffing requirements as of February 5, 2020, the effective date
of the 2020 Final Rule, which allowed States to choose their staffing
model. This final rule therefore does not implicate serious reliance
interests on the part of other stakeholders, and, in any event, any
reliance interests are outweighed by the need to avoid regulatory
confusion and the potential burden of implementing the 2023 Final Rule
only to have the regulatory requirement potentially change soon after.
Because the delay would relieve the affected State governments of
the regulatory staffing requirement at 20 CFR 652.215 for 1 year, this
rulemaking is considered a deregulatory action under Executive Order
14192.
II. Section-by-Section Discussion of the Delay
Paragraph (a) of 20 CFR 652.215 requires that, absent authorization
prior to 2020 for a different staffing model, States must deliver ES
services using State merit staff, i.e., staff employed by the State
according to the merit-system principles in 5 CFR part 900, subpart F.
Paragraph (d) of Sec. 652.215 provides that States must comply with
this requirement no later than January 22, 2026. In this final rule,
the Department is revising the date in paragraph (d) to provide States
until January 21, 2027, to comply with the requirements of this
section. This change in paragraph (d) delays the compliance date by 1
year.
III. Procedural and Other Matters
A. Administrative Procedure Act
The Department is issuing this final rule without prior public
notice and comment or a delayed effective date, pursuant to the
applicable exemption in the Administrative Procedure Act (APA), 5
U.S.C. 553(a)(2), for grant-related matters. Section 553(a)(2) provides
that the rulemaking requirements of the APA, including prior notice and
the opportunity for public comment, do not apply to matters ``relating
to agency management or personnel or to public property, loans, grants,
benefits, or contracts.'' The plain meaning of the phrase ``relating
to'' is ``a broad one--to stand in some relation; to have bearing or
concern; to pertain; refer; to bring into association with or
connections with.'' \1\
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\1\ Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383-84
(1992).
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Delaying compliance with Sec. 652.215 in the Wagner-Peyser Act ES
regulations relates to grants because it concerns a condition on
States' receipt of grant funding from the Department. In order to
receive statutorily allotted grant funds, see 29 U.S.C. 49e, States
must first accept the provisions of the Wagner-Peyser Act, and they
must designate a State agency with the ability to carry out program
activities under the Act in cooperation with the Department, see 29
U.S.C. 49c. Each State must enter into a ``grant agreement'' with the
Department, under which it agrees to comply with the provisions of the
Act and ``all applicable rules and regulations.'' 20 CFR 652.4. The
Wagner-Peyser Act ES regulations at 20 CFR parts 651, 652, 653, 654,
and 658, promulgated pursuant to the Department's rulemaking authority
under 29 U.S.C. 49k, thus operate as terms and conditions of the grant
awards to States. Violations can result in a requirement for States to
repay grant funds or other appropriate sanctions. 20 CFR 652.8(g)-(h).
As described above, the grant condition at Sec. 652.215 requires
almost all States to deliver program services using State staff
employed according to prescribed merit principles and provides that
States must comply by January 22, 2026. This condition on staffing
models affects how States expend their grant funds, because States use
these grant funds to pay their ES staff. It does not apply to State
staff who are not funded through grants under the Wagner-Peyser Act.
The condition also affects the manner in which States deliver all the
services that they are required to provide under their grants. See 20
CFR 652.215(a) (cross-referencing the list of required labor exchange
services in Sec. 652.3, as well as the provisions of parts 653 and
658). Delaying compliance with this grant condition therefore relates
to grants within the plain meaning of the APA, 5 U.S.C. 553(a)(2).
The Department's use of the exemption provided under sec. 553(a)(2)
is consistent with recent uses of the exemption by other Federal
agencies. See, e.g., Preserving Community and Neighborhood Choice, 85
FR 47899 (Aug. 7, 2020) (invoking the exemption to repeal Department of
Housing and Urban Development rule because it required certification
and obligations of Federal grantees).
For the foregoing reasons, the Department issues this final rule
without prior public notice and comment or a delayed effective date.
B. Regulatory Impact Analysis
The Department has examined the impacts of this rule as required by
Executive Order 12866, ``Regulatory Planning and Review''; ``Executive
Order 13563, ``Improving Regulation and Regulatory Review''; Executive
Order 14192, ``Unleashing Prosperity Through Deregulation''; Executive
Order 13132, ``Federalism''; the Regulatory Flexibility Act (RFA) (Pub.
L. 96 354); section 202 of the Unfunded Mandates Reform Act of 1995
(Pub. L. 104-4); and the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select those regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety, and other advantages; distributive impacts).
Under Executive Order 12866, OMB's Office of Information and
[[Page 2488]]
Regulatory Affairs (OIRA) determines whether a regulatory action is
significant and, therefore, subject to the requirements of the
Executive Order and review by OMB. OIRA has determined that this final
rule is a significant regulatory action and has reviewed this final
rule. This final rule is considered a deregulatory action under
Executive Order 14192.
This final rule would result in rule familiarization costs and cost
savings to States as estimated by the delayed transfers to states by
one year estimated. Rule familiarization costs represent direct costs
to States associated with reviewing this final rule. The Department
anticipates that this final rule will be reviewed by Human Resources
Managers (SOC code \2\ 11-3121) employed by State Workforce Agencies
(SWAs). The Department anticipates that it will take one Human
Resources Manager an average of 10 minutes to review this rule. The
U.S. Bureau of Labor Statistics (BLS) Occupational Employment and Wage
Statistics data show that the mean hourly wage of State government
Human Resources Managers is $51.90.\3\ The Department assumes a 62%
benefits rate \4\ and a 17% overhead rate,\5\ so the full loaded hourly
wage is $92.90 [ = $51.90 + ($51.90 x 62%) + ($51.90 x 17%)].
Therefore, the one-time rule familiarization cost for all 54
jurisdictions (the 50 States, the District of Columbia, Puerto Rico,
Guam, and the U.S. Virgin Islands) is estimated to be $836 ( = $92.90 x
10 minutes x 54 jurisdictions).
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\2\ This analysis uses codes from the Standard Occupational
Classification (SOC) system and the North American Industry
Classification System (NAICS).
\3\ BLS, ``Occupational Employment and Wage Statistics, National
Industry-Specific Occupational Employment and Wage Estimates, NAICS
999200'' SOC Code 11-3121, May 2024, <a href="https://data.bls.gov/oes/#/industry/999200">https://data.bls.gov/oes/#/industry/999200</a> (last visited January 2, 2026).
\4\ BLS, ``National Compensation Survey, Employer Costs for
Employee Compensation,'' <a href="https://www.bls.gov/ecec/data.htm">https://www.bls.gov/ecec/data.htm</a> (last
visited January 2, 2026). For State and local government workers,
wages and salaries averaged $38.45 per hour worked in 2024, while
benefit costs averaged $23.81, which is a benefits rate of 62
percent.
\5\ Cody Rice, U.S. Environmental Protection Agency, ``Wage
Rates for Economic Analyses of the Toxics Release Inventory
Program,'' June 10, 2002, <a href="https://www.regulations.gov/document/EPA-HQ-OPPT-2014-0650-0005">https://www.regulations.gov/document/EPA-HQ-OPPT-2014-0650-0005</a> (last visited January 2, 2026).
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The Department anticipates that the cost savings will outweigh the
costs associated with rule familiarization. However, the Department is
unable to quantify the specific cost savings that a limited number of
States may realize due to the additional time granted for implementing
the State merit-staffing provisions outlined in the 2023 final rule.
The Regulatory Flexibility Act (RFA), 5 U.S.C. chapter 6, requires
agencies to evaluate the economic impact of certain rules on small
entities. The RFA defines small entities to include small businesses,
small organizations, including not-for-profit organizations, and small
governmental jurisdictions. No analysis under the RFA is required for
this final rule because, for the reasons discussed above, the
Department is not required to engage in notice and comment under the
APA.
Title II of UMRA, Public Law 104-4, requires each Federal agency to
prepare a written statement assessing the effects of any Federal
mandate in a final agency rule that may result in an expenditure of
$100 million or more (adjusted annually for inflation with the base
year 1995) in any one year by State, local, and tribal governments, in
the aggregate, or by the private sector. This final rule does not
impose any Federal mandates on any state, local, or tribal government,
or on the private sector, within the meaning of UMRA. Additionally, as
discussed above, this final rule is promulgated without notice and
comment. Therefore, the requirements of title II of UMRA do not apply,
and the Department has not prepared a statement under UMRA.
Executive Order 13132, ``Federalism,'' imposes certain requirements
on Federal agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. Executive Order 13132 requires agencies to examine the
constitutional and statutory authority supporting any action that would
limit the policymaking discretion of the States and to carefully assess
the necessity for such actions. Executive Order 13132 also requires
agencies to have an accountable process to ensure meaningful and timely
input by State and local officials in the development of regulatory
policies that have Federalism implications. This final rule does not
have significant federalism implications under Executive Order 13132.
Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501-
3520, we are required to provide notice in the Federal Register and
solicit public comment before a ``collection of information''
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. Collection of information is defined under 5
CFR 1320.3(c) of the PRA's implementing regulations. This final rule
will not impose additional reporting or recordkeeping requirements
under the PRA.
List of Subjects in 20 CFR Part 652
Employment, Grant programs--labor, Reporting and recordkeeping
requirements.
For the reasons discussed in the preamble, the Department of Labor
is amending 20 CFR part 652 as follows:
PART 652--ESTABLISHMENT AND FUNCTIONING OF STATE EMPLOYMENT SERVICE
0
1. The authority citation for part 652 continues to read as follows:
Authority: 29 U.S.C. chapter 4B; 38 U.S.C. chapters 41 and 42;
Secs. 189 and 503, Public Law 113-128, 128 Stat. 1425 (July 22,
2014).
Subpart C--Employment Service Services in a One-Stop Delivery
System Environment
0
2. Amend Sec. 652.215 by revising paragraph (d) to read as follows:
Sec. 652.215 What staffing models must be used to deliver services in
the Employment Service?
* * * * *
(d) All States must comply with the requirements in this section no
later than January 21, 2027.
Henry Maklakiewicz,
Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2026-01117 Filed 1-20-26; 8:45 am]
BILLING CODE 4510-FN-P
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</html>Indexed from Federal Register on January 21, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.