A Labor Department final rule takes effect Monday, Oct. 19, removing the requirement that states use state merit staff to deliver Wagner-Peyser Act Employment Service. The rule, published Aug. 20 at 91 FR 54024 (FR Doc. 2026-16982, Docket ETA-2025-0005, RIN 1205-AC22), amends 20 CFR Part 652. From Monday, each state can contract out, mix or reorganize the staff who run its labor exchange.
The timing is not subtle. The Employment Service is the public job-matching system inside American Job Centers, and it changes hands as hiring stalls: September payrolls rose just 29,000, while initial jobless claims stayed under 200,000. If layoffs do arrive, more job seekers will meet whatever staffing model their state chooses. Two other labor comment periods close three days later, on Oct. 22.
1. What the rule changes
The Wagner-Peyser Act of 1933, 29 U.S.C. 49 et seq., created the Employment Service to match job seekers with employers. For decades the department required states to staff it with “merit staff,” meaning government employees hired and managed under the merit-based personnel system in 5 CFR part 900, subpart F.
The rule’s own background section lays out the history.
| Date | Action |
|---|---|
| Early 1990s | Colorado allowed to use county and state merit staff; Massachusetts allowed non-state-merit staff in four of its 16 local areas |
| 1998 | Michigan allowed state and local merit staff, under a settlement arising from Michigan v. Herman |
| Oct. 18, 2016 | WIOA regulations take effect; Sec. 652.215 keeps the state merit-staff rule except for the three states |
| Feb. 5, 2020 | 2020 Final Rule (85 FR 592) removes the requirement; several states approved for other models |
| Nov. 24, 2023 | 2023 Final Rule (88 FR 82658) on Wagner-Peyser staffing is published |
| Oct. 19, 2026 | Current rule removes the requirement again |
After 2020, states’ alternative staffing models were spelled out in their approved WIOA state plans, which is the most likely place to look for what changes this time.
2. The department’s efficiency case
The summary states the goal in one sentence about cost.
This final rule allows States to use the staffing model that provides the required services with the most efficient and cost-effective model for their State.
EXCERPT · DOL final rule, 91 FR 54024, Summary
The legal argument rests on what Congress did not write. The department notes that the Workforce Innovation and Opportunity Act of 2014, “like the Workforce Investment Act (WIA) before it,” did not include an Employment Service merit-staffing requirement. The mandate rested on the department’s reliance on the Secretary’s authority in Sections 3(a) and 5(b) of the 1933 Act, not on WIOA. The rule devotes a full section to that statutory question.
The practical case echoes the 2020 rule, which sought to give states “maximum flexibility in staffing arrangements” so they could better align WIOA and Employment Service staffing. The rule is designated significant.
3. The strongest objection
The best argument for merit staff comes from the same statute. Section 3(a) directs the Secretary to promote “uniformity in the operation of the system of public employment offices” and to prescribe “minimum standards of efficiency.” For most of the program’s history, the department read that language as requiring public employees hired on merit.
On that reading, a national public labor exchange should look the same in every state, and the merit system is the federal guarantee that the people running it were hired on qualifications rather than contract terms. The opposing reading treats uniformity as a matter of services delivered, not who signs the paychecks.
The rule does not order any state to outsource anything. It removes the federal reason not to.
Nothing in the rule forces a change. Each state decides.
4. Two more deadlines on Oct. 22
Longshore hearing-loss testing. The Office of Workers’ Compensation Programs issued a request for information (91 FR 37364, RIN 1240-AA20) on updating standards in 20 CFR 702.441. Under Section 8(c)(13) of the Longshore Act, a qualifying audiogram is presumptive evidence of hearing loss. OWCP asks 28 questions, including whether objective tests such as ABR, ASSR and OAE are “less susceptible to invalid results due to patient effort, malingering, or exaggeration,” whether the AMA Guides’ use of 500, 1000, 2000 and 3000 Hz fits noise-induced loss, whether to adopt French contralateral masking rules, and whether over-the-counter hearing aids are appropriate compensation. It is an information request, not a proposed rule text.
DOE contractor whistleblowers. The Energy Department’s proposed rule (91 FR 60007, Docket DOE-HQ-2026-0496) would revise 10 CFR Part 708, last updated in 2019. It would extend the time to issue an investigation report from 60 to 90 days, add a new Sec. 708.10 tolling deadlines during alternative dispute resolution, change “may” to “will” so judges must allow discovery on request, and write into Sec. 708.29 the existing standard that contractors must prove “by clear and convincing evidence” they would have acted the same way without the protected conduct. DOE estimates savings of about $250,000 a year.
5. What to watch
- Oct. 19: the Wagner-Peyser staffing rule takes effect.
- Oct. 22: comments due on the longshore hearing-loss request (RIN 1240-AA20) and the DOE Part 708 proposal (DOE-HQ-2026-0496).
- Nov. 6: the October Employment Situation report from BLS, the next read on whether the hiring stall is turning into job losses.
- State WIOA plans: after the 2020 rule, states’ staffing models were described in their approved WIOA state plans, the first place to look for any changes.
- Wagner-Peyser Act Employment Service Staffing, Final Rule, FR Doc. 2026-16982 — Federal Register · federalregister.gov
- Longshore and Harbor Workers' Compensation Act: Quality Standards for Hearing Loss Testing, FR Doc. 2026-12644 — Federal Register · federalregister.gov
- Revisions to the Office of Hearings and Appeals Procedural Regulations for the DOE Contractor Employee Protection Program, FR Doc. 2026-19332 — Federal Register · federalregister.gov
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