Labor & Employment Law Daily Wrap Up, FEDERAL REGULATIONS—DOL final rule restores changes sought in first Trump administration, (Aug 19, 2026)

By WK Editorial Staff

It reverses the Biden-era rule that had reinstated a nationwide state merit-staffing requirement.

The U.S. Department of Labor has finalized a rule that removes a federal requirement that states use state merit staff to deliver Wagner-Peyser Employment Service (ES) programs, a change the agency says will give states greater flexibility to determine how best to provide job-matching and workforce services. The rule is scheduled for publication in the Federal Register on August 20 and will take effect 60 days later.

The Employment Service, established under the Wagner-Peyser Act of 1933, provides labor exchange services that connect job seekers with employers. Under the final rule, states will be allowed to choose staffing models they believe are most efficient and cost effective, including state employees, local government staff, contractors, or hybrid arrangements, provided they continue meeting federal program requirements.

The action reverses a 2023 DOL rule that reinstated a nationwide state merit-staffing requirement and directed states to comply by January 2027. Before that, a 2020 rule had similarly granted staffing flexibility to the states. By removing Section 652.215 of its regulations, DOL is once again allowing states broad discretion over how ES services are staffed.

Central to the department’s decision is its conclusion that the Wagner-Peyser Act does not provide statutory authority for DOL to require states to use only state merit staff. In the final rule, the agency argues that the law authorizes it to establish “minimum standards of efficiency” but does not explicitly mandate a particular staffing model. The department also cited the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo, which ended judicial deference to agency interpretations under the Chevron doctrine and prompted the department to reassess its legal authority.

Mixed feedback. The proposal generated significant interest. DOL received 456 comments during the rulemaking process (starting with a notice of proposed rulemaking published on July 1, 2025, in the Federal Register), including submissions from state agencies, labor unions, workforce development boards, advocacy groups, and elected officials. Many unions and worker advocates opposed the change, arguing that merit staffing promotes professionalism, accountability, consistency, and protection from political influence. Some commenters warned that allowing alternative staffing models could lead to privatization, reduced service quality, or weaker protections for vulnerable populations such as migrant farmworkers and unemployment insurance claimants.

Supporters, including some state agencies and workforce organizations, argued that staffing flexibility would allow states to better integrate Wagner-Peyser services with Workforce Innovation and Opportunity Act programs, address local labor-market needs, fill specialized positions more efficiently, and reduce administrative burdens. Several commenters pointed to the experiences of Colorado, Massachusetts, and Michigan, which have operated under alternative staffing arrangements for years.

In responding to concerns, DOL emphasized that the rule does not privatize the Employment Service and does not eliminate federal oversight. States will remain responsible for complying with all Wagner-Peyser requirements, performance standards, civil rights obligations, and accountability measures regardless of staffing model. The rule also leaves intact separate requirements governing services for migrant and seasonal farmworkers, veterans programs, unemployment insurance determinations, and other workforce initiatives.

DOL estimates the rule will impose only minimal compliance costs, primarily related to familiarization with the new regulation, while potentially allowing states to identify staffing efficiencies and redirect resources toward employment services. The department characterized the rule as a deregulatory action intended to provide states with maximum administrative flexibility while remaining consistent with the Wagner-Peyser Act.

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