Labor Ditches Merit Staff Rule: States Hire Smarter Now?
Published Date: 8/20/2026
Rule
Summary
The U.S. Department of Labor (DOL or the Department) is removing the requirement that States use State merit staff to provide Wagner-Peyser Employment Service (ES) services. 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.
Analyzed Economic Effects
4 provisions identified: 3 benefits, 1 costs, 0 mixed.
States Can Drop Merit-Staffing Mandate
The Department of Labor is removing the rule that required States to use State "merit" employees to run Wagner-Peyser Employment Service (ES) programs. Starting October 19, 2026, States may choose whatever lawful staffing model they think is most efficient and cost-effective to provide ES services.
States Still Must Provide All ES Services
Even with the staffing change, States must continue to provide all required Employment Service activities (for example, job search and placement help, employer recruitment services, and reemployment services for unemployment claimants). The Department keeps oversight authority to ensure States meet performance and compliance requirements regardless of the staffing model they choose.
Private Providers Eligible as Subrecipients
The rule explicitly permits States to deliver ES services through subawards to local governments or private entities, with those subrecipients subject to the Uniform Guidance at 2 CFR part 200. States may therefore contract with or fund non-State entities to perform ES activities under those federal grant rules.
MSFW and SMA Staffing Rules Unchanged
The final rule does not change existing recruitment and staffing requirements at 20 CFR secs. 653.107, 653.108, and 653.111 that relate to migrant and seasonal farmworker (MSFW) outreach staff and State Monitor Advocates (SMA). For example, the SMA must continue to be a State Workforce Agency official and a senior-level ES staff employee who reports directly to the State Administrator or designee.
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Key Dates
Department and Agencies
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