Wagner-Peyser Act Staffing

DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Parts 651, 652, 653, and 658

[Docket No. ETA-2022-0003]

RIN 1205-AC02

Wagner-Peyser Act Staffing

AGENCY:

Employment and Training Administration, Labor.

ACTION:

Final rule.

SUMMARY:

The U.S. Department of Labor (Department or DOL) is issuing a final rule that requires States to use State merit staff to provide Wagner-Peyser Act Employment Service (ES) services. In the notice of proposed rulemaking (NPRM), the Department proposed that this requirement would apply to all States. However, the Department recognizes three States that have been approved by the Department to administer ES services using alternative staffing models for decades and is allowing only these three States to continue using the alternative staffing models. The requirement to use State merit staff to provide all ES services applies to all other States, including those States that implemented staffing flexibility under the 2020 Final Rule. The Department additionally is revising the ES regulations to strengthen the provision of services to migrant or seasonal farmworkers (MSFWs) and to enhance the protections afforded by the Monitor Advocate System and the Employment Service and Employment-Related Law Complaint System (Complaint System). States have 24 months to comply with this final rule.

DATES:

Effective Date:

This final rule is effective January 23, 2024.

Compliance Date:

All States will have 24 months from the effective date to comply with the requirements of this final rule. The compliance date of the final rule is January 22, 2026.

FOR FURTHER INFORMATION CONTACT:

Kim 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, 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.

SUPPLEMENTARY INFORMATION:

Preamble Table of Contents

I. Acronyms and Abbreviations

II. Executive Summary

III. Background and Justification

IV. General Comments on the Proposed Rule

V. Section-by-Section Discussion of Final Rule

A. Technical Amendments and Global Edits

B. Part 651—General Provisions Governing the Wagner-Peyser Act Employment Service

C. Part 652—Establishment and Functioning of State Employment Service

D. Part 653—Services of the Wagner-Peyser Act Employment Service System

E. Part 658—Administrative Provisions Governing the Wagner-Peyser Act Employment Service

VI. Rulemaking Analyses and Notices

A. Executive Orders 12866 (Regulatory Planning and Review), 13563 (Improving Regulation and Regulatory Review), and 14094 (Modernizing Regulatory Review) and Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996

B. Regulatory Flexibility Act, Small Business Regulatory Enforcement Fairness Act of 1996, and Executive Order 13272 (Proper Consideration of Small Entities in Agency Rulemaking)

C. Paperwork Reduction Act of 1995

D. Executive Order 13132 (Federalism)

E. Unfunded Mandates Reform Act of 1995

F. Executive Order 13175 (Indian Tribal Governments)

G. Plain Language

I. Acronyms and Abbreviations

2020 Final Rule Wagner-Peyser Act Staffing Flexibility; Final Rule, 85 FR 592 (Jan. 6, 2020)

AJC(s) American Job Center(s) (also known as one-stop(s) or one-stop center(s))

AOP(s) Agricultural Outreach Plan(s)

ARS Agricultural Recruitment System

BFOQ bona fide occupational qualification

BLS U.S. Bureau of Labor Statistics

CARES Act Coronavirus Aid, Relief, and Economic Security Act

CFR Code of Federal Regulations

Complaint System Employment Service and Employment-Related Law Complaint System

COVID-19 coronavirus disease 2019

CRC DOL Civil Rights Center

CSRA Civil Service Reform Act

Department

or

DOL U.S. Department of Labor

EEOC Equal Employment Opportunity Commission

E.O. Executive Order

EO Officer(s) Equal Opportunity Officer(s)

ES Wagner-Peyser Act Employment Service

ETA Employment and Training Administration

FR

Federal Register

FTE(s) full-time equivalent(s)

FY(s) Fiscal Year(s)

IC(s) information collection(s)

ICR(s) information collection request(s)

IPA Intergovernmental Personnel Act of 1970

IT information technology

LEP limited English proficiency

MOU(s) Memorandum/a of Understanding

MSFW(s) migrant or seasonal farmworker(s)

MSPA Migrant and Seasonal Agricultural Worker Protection Act

NAICS North American Industry Classification System

NFJP National Farmworker Jobs Program

NMA National Monitor Advocate

NPRM

or

proposed rule notice of proposed rulemaking

O*NET Occupational Information Network

OALJ Office of Administrative Law Judges

OFLC Office of Foreign Labor Certification

OIRA Office of Information and Regulatory Affairs

OMB Office of Management and Budget

OPM Office of Personnel Management

OSHA Occupational Safety and Health Administration

OWI Office of Workforce Investment

PIRL Participant Individual Record Layout

PRA Paperwork Reduction Act of 1995

Pub. L. Public Law

PY(s) Program Year(s)

QCEW Quarterly Census of Employment and Wages

RA(s) Regional Administrator(s)

RESEA Reemployment Services and Eligibility Assessment

RFA Regulatory Flexibility Act

RIN Regulation Identifier Number

RMA(s) Regional Monitor Advocate(s)

Secretary Secretary of Labor

SMA(s) State Monitor Advocate(s)

SNAP Supplemental Nutrition Assistance Program

SOC Standard Occupational Classification

SSA Social Security Act

Stat. United States Statutes at Large

SWA(s) State Workforce Agency/ies

TAA Trade Adjustment Assistance

TANF Temporary Assistance to Needy Families

UI unemployment insurance

UMRA Unfunded Mandates Reform Act of 1995

U.S.C. United States Code

WHD Wage and Hour Division

WIA Workforce Investment Act of 1998

WIOA Workforce Innovation and Opportunity Act

II. Executive Summary

The Department is amending its regulations regarding Wagner-Peyser Act staffing to require that States use State merit staff to provide ES services, except three States—Colorado, Massachusetts, and Michigan—that have longstanding reliance interests in using alternative staffing models. The final rule requires these three States to participate in rigorous multistate evaluation activities to be conducted by the Department to determine whether such models are empirically supported. This evaluation will include review of services delivered by States that use State merit-staffing, as necessary.

In the NPRM, the Department proposed to require that all States use State merit staff to deliver ES services. The Department determined that it is vital for the ES to be administered so that States deliver services effectively and equitably to unemployment insurance (UI) beneficiaries and other ES customers, including services provided to MSFWs. In the NPRM, the Department reasoned that the demands placed on State UI systems by the economic impact of the coronavirus disease 2019 (COVID-19) pandemic highlighted the necessity of States to be able to rely on eligible ES State merit staff to be deployed to assist with UI activities that must be performed by State merit staff.

1

The Department noted that States also have experienced the benefits of deploying ES State merit staff to assist with UI activities in response to recessions, the onset of natural disasters, and mass regional layoffs. The Department also noted that requiring States to utilize State merit staff to deliver ES services would help to ensure that ES services are delivered by qualified, nonpartisan personnel. These professionals would be required to meet objective professional qualifications, trained to assure high-quality performance, and expected to maintain certain transparent standards of performance. States would be required to assure that employees are treated fairly and protected against partisan political coercion. This final rule adopts the proposal that States are required to use State merit staff to deliver ES services, with one change explained in the following paragraph.

1

https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-12-01-change-2.

While the Department maintains its position that aligning ES and UI promotes efficiency and uniformity in the operation of the ES, the Department also recognizes that three States—Colorado, Massachusetts, and Michigan—have been approved by the Department for decades to deliver ES services using staffing models alternative to full State merit-staffing. The Department received many comments on the NPRM regarding the longstanding reliance interests of these States and the potential disruptions to service delivery in these States specifically that could result from having to implement a complete State merit-staffing requirement. Based on these comments, the Department is permitting these three States, which were authorized to use alternative staffing models since the 1990s, to use the staffing model consistent with that previously authorized for that State. These three States may use the merit-staffing flexibility only to the same extent the Department previously authorized prior to February 5, 2020. Also, the final rule requires these three States to participate in rigorous evaluation activities to be conducted by the Department to determine whether such models are empirically supported. The Department is requiring that State Monitor Advocate (SMA) functions be performed by State merit staff in all States because SMAs monitor the State Workforce Agency (SWA), must report on SWA compliance to the State Administrator, and liaise between the SWA and external groups. Because the SMA position requires overseeing State agency functions and creating accountability for those functions, including discussing needed process improvements with State officials and ETA's Regional and National Monitor Advocates, such oversight functions are more appropriately performed through State merit-staffing.

The Department is additionally revising the ES regulations to strengthen the provision of services to MSFWs and to enhance the protections afforded by the Monitor Advocate System and the Complaint System. These changes include the following:

• Better serving MSFWs and promoting equity in the workforce system, including requiring States to use State merit staff to provide ES services to MSFWs.

• Revising several defined terms related to the provision of ES services to MSFWs to modify the criteria for designating

significant MSFW one-stop centers

and

significant MSFW States,

and to ensure that full-time students who otherwise meet the criteria set forth in the definitions will be afforded the same benefits and protections under the ES as other MSFWs.

• Strengthening the role and status of SMAs, including requirements to help to ensure that States employ highly qualified candidates, that SMAs have the appropriate authority necessary to effectively carry out their duties, and that SMAs are not assigned duties that are inconsistent with their role to provide oversight.

• Prohibiting the State Administrator or ES staff from retaliating against staff, including against the SMA, for monitoring or raising any issues or concerns regarding non-compliance with the ES regulations.

• Requiring SMAs to conduct onsite reviews of one-stop centers regardless of whether the one-stop center is designated as a significant MSFW one-stop center.

• Requiring the SMA to establish an ongoing liaison with the State-level Equal Opportunity Officer (E.O. Officer) to enhance equity and inclusion for farmworkers.

• Further specifying SWA staffing requirements for significant MSFW one-stop centers.

• Requiring SWAs to collect and report data on the number of reportable individuals who are MSFWs to help SWAs, SMAs, and ETA monitor equity in the provision of ES services to MSFWs.

• Aligning the ES regulations with the language access requirements of the Workforce Innovation and Opportunity Act (WIOA) nondiscrimination regulations at 29 CFR 38.9 to reduce duplication and to ensure States provide the broadest language access protections available for MSFWs with limited English proficiency (LEP).

• Strengthening outreach to MSFWs by, among other things, requiring SWAs to conduct outreach to MSFWs on an ongoing basis; specifying that all States must have some degree of outreach at all times and full-time outreach staff must spend 100 percent of their time on the outreach responsibilities described at § 653.107(b); requiring SWAs to employ enough outreach staff to contact a majority of MSFWs in their States annually; prohibiting SWAs from relying on National Farmworker Jobs Program (NFJP) grantee activities as a substitute to meet outreach obligations; specifying that SWAs must ensure hiring officials put a strong emphasis on hiring qualified candidates for outreach staff positions; and requiring outreach staffing levels to align with and be supported by information in the Agricultural Outreach Plan (AOP) that a State must submit pursuant to § 653.107(d).

• Changing the record retention requirement for outreach logs from 2

years to 3 years to align with the Office of Management and Budget (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal awards to non-Federal Entities (Uniform Guidance) record retention requirements at 2 CFR 200.334.

• Amending the information SWAs must include in their AOP to include the number of full-time and part-time outreach staff that the State will employ and a description of how the SWA intends to staff significant MSFW one-stop centers in accordance with § 653.111.

• Removing “random” from the definition of field check to ensure SWAs are able to target the field checks that they conduct in response to known or suspected compliance issues.

• Revising several regulations within part 658, subpart E, to conform with proposed revisions to definitions listed at § 651.10, remove redundancies and make other non-substantive technical edits, clarify or modify certain requirements, and improve equity and inclusion for MSFWs in the ES system.

• Revising requirements for how ETA regional offices process complaints to align with the revised process SWAs must follow in referring nondiscrimination complaints under § 658.411(c) and to refine other requirements applicable to regional offices.

The Department also is making technical amendments and global edits to modernize the ES regulations, to clarify and use plain language, and to further promote equity by using gender-inclusive language throughout the regulations.

In the NPRM, the Department proposed an 18-month transition period for States to comply with the requirements in this rulemaking. Based on comments received on the NPRM indicating that States would need more time to comply, the Department is providing 24 months to comply with the provisions of the final rule.

The final rule adds severability provisions in parts 652, 653, and 658.

This final rule reflects changes made in response to public comments received on the NPRM that was published on April 20, 2022, at 87 FR 23700. The Department received many comments from the public and nonprofit sectors, as well as private citizens. The Department considered these comments in determining this final rule, and the changes made to the regulatory text are detailed below in the Department's responses to related comments.

III. Background and Justification

The Wagner-Peyser Act of 1933, 29 U.S.C. 49

et seq.,

established the ES program, which is a nationwide system of public employment offices that provide public 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 by developing and prescribing minimum standards of efficiency and promoting uniformity in the operation of the system of public employment offices.

See

29 U.S.C. 49b(a). This final rule amends regulations in 20 CFR parts 651, 652, 653, and 658. With limited exceptions, the final rule requires States to use State merit staff to provide ES services, including services and activities under parts 653 and 658. The Department also is targeting revisions to the regulations at parts 651, 653, and 658. These revisions are intended to ensure that SWAs provide MSFWs with adequate access to ES services and that the role of the SMA is effective. In addition, this final rule amends parts 651, 652, 653, and 658 to further integrate gender-inclusive language. Finally, the Department is making technical corrections to these CFR parts to improve consistency across the parts and to make them easier to understand.

Historically, the Department relied on its authority in secs. 3(a) and 5(b) of the Wagner-Peyser Act to require that ES services, including Monitor Advocate System activities for MSFWs and Complaint System intake, be provided by State merit-staff employees.

2

The Department consistently applied this requirement, with limited exceptions, until 2020. Specifically, beginning in the early 1990s, the Department authorized demonstration projects in which it allowed Colorado and Massachusetts limited flexibility to set their own staffing requirements for the provision of ES services. Colorado was authorized to use county and State merit staff to deliver ES services. The State contracts for these services with county and State sub-recipients, but has not allowed further sub-contracting by the sub-recipients. Massachusetts was approved to use non-State-merit staff to provide ES services in just four of the State's 16 local areas. In these local areas, the State has generally relied on local one-stop career center/American Job Center (AJC) staff for ES services. In 1998, the Department permitted Michigan to use State and local merit-staff employees to deliver ES services, pursuant to a settlement agreement arising out of

Michigan

v.

Herman,

81 F. Supp. 2d 840 (W.D. Mich. 1998). Michigan was still required to use State merit staff for services to MSFWs, veterans, and individuals with disabilities. All three States continued to operate with staffing flexibility through their approved State plans,

3

though all three also used State merit staff for the SMA position. Through rulemaking effective February 5, 2020, the Department removed the requirement that ES services be provided only by State merit staff.

See

Wagner-Peyser Act Staffing Flexibility; Final Rule, 85 FR 592 (Jan. 6, 2020) (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.

Ibid.

Accordingly, under the regulations in effect under the 2020 Final Rule, several States were approved to use a variety of staffing models to provide ES services, as described in their approved State plans.

2

Workforce Innovation and Opportunity Act; Department of Labor; Final Rule,

81 FR 56072 (Aug. 19, 2016) (WIOA DOL-only Rule) (

see

20 CFR 652.215, 653.108, 653.111, 658.602).

3

See

WIOA DOL-only Rule, 81 FR at 56267 and 56341 (2016).

In light of the events of the last few years, the Department has reassessed the approach adopted in the 2020 Final Rule and determined instead to reinstate the requirement that States use State merit staff to deliver ES services. State merit-staffing is a generally reliable method to ensure quality and consistency in ES delivery, and the demands placed on State UI systems by the economic impact of the COVID-19 pandemic highlighted the necessity of States to be able to rely on eligible ES State merit staff to be deployed to assist with UI activities as needed.

In adopting this State merit-staffing requirement, the Department relies on its authority under secs. 3(a) and 5(b)(2) of the Wagner-Peyser Act, as well as authority under sec. 208 of the Intergovernmental Personnel Act (IPA), 42 U.S.C. 4728, as amended. Each of these provisions, standing alone, provides the Department with the authority to require States to use State merit staff to provide ES services.

Specifically, sec. 3(a) of the Wagner-Peyser Act requires the Secretary to assist in coordinating the ES offices by “developing and prescribing minimum standards of efficiency.” 29 U.S.C. 49b(a). As the court in

Michigan

v.

Herman

concluded, “the language in [sec. 3(a)] authorizing the Secretary to develop and prescribe `minimum standards of efficiency' is broad enough

to permit the Secretary of Labor to require merit staffing.” 81 F. Supp. 2d at 848.

In addition, sec. 5(b)(2) of the Wagner-Peyser Act provides that the Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State that, among other things, “is found to have coordinated the public employment services with the provision of [UI] claimant services.” 29 U.S.C. 49d(b). As explained previously, the State merit-staffing requirement would align the staffing of ES services with the staffing that States are required to use in the administration of critical UI services. Therefore, it is reasonable for the Department to base the finding required by sec. 5(b)(2) of the Wagner-Peyser Act, in part, on a State's agreement to use State merit staff to administer and provide ES services.

Furthermore, sec. 208 of the IPA authorizes Federal agencies to require, as a condition of participation in Federal assistance programs, systems of personnel administration consistent with personnel standards prescribed by the Office of Personnel Management (OPM).

4

In accordance with 5 CFR 900.605, the Department submitted the proposed rule to OPM for review and received approval prior to the publication of the NPRM.

4

42 U.S.C. 4728(b);

see also

5 CFR 900.605 (authorizing Federal agencies to adopt regulations that require the establishment of a merit personnel system as a condition for receiving Federal assistance or otherwise participating in an intergovernmental program with the prior approval of OPM).

In the IPA, 42 U.S.C. 4701,

et seq.,

Congress found that the quality of public service could be improved if government personnel systems are administered consistent with certain merit-based principles. Requiring States to employ the professionals who deliver ES services in accordance with these principles would help ensure that ES services are delivered by qualified, non-partisan personnel who are directly accountable to the State. Among other things, such professionals would be required to meet objective professional qualifications, be trained to assure high-quality performance, and maintain certain standards of performance.

See

42 U.S.C. 4701. They would also be prohibited from using their official authority for purposes of political interference, and States would be required to assure that they are treated fairly and protected against partisan political coercion.

Ibid.

The Department acknowledges that this constitutes a change in its position taken under the 2020 Final Rule and requires certain States to adjust how they deliver ES services. The Department notes that Federal agencies are permitted to change their existing policies if they acknowledge the change and provide a reasoned explanation for the change.

See, e.g., Encino Motorcars, LLC

v.

Navarro,

579 U.S. 211, 221-22 (2016). In the NPRM, the Department acknowledged the proposed policy change and explained the reason for the change. The ES system is designed to “promote the establishment and maintenance of a national system of public employment service offices,” 29 U.S.C. 49, and the UI and ES systems together provide a basic level of employment support for more than 4 million job seekers per year to enter and re-enter the workforce. The Department believes that it is vital that the ES be administered so that services are delivered effectively and equitably to UI beneficiaries and other ES customers. The COVID-19 pandemic and the ensuing demand placed on the UI system demonstrated a need for centrally trained, high-quality staff to be able to step in to assist States as needed. Further, the ES is a universal access program, and it is critical that it be administered by nonpartisan personnel held to transparent, objective standards designed to assure high-quality performance. A State merit-staffing requirement is a generally reliable method to ensure quality and consistency in delivery of ES services and supports the well-established connection between ES and UI services. As explained further in this preamble, the Department believes an evaluation of the alternative staffing models, though not legally required, is prudent to determine whether use of such alternative staffing models is empirically supported.

The Department is further adjusting its position to account for the unique history of three States' administration of ES services. Colorado, Massachusetts, and Michigan have been allowed by the Department to use various forms of non-State-merit staff models to deliver ES services since the 1990s. The Department acknowledges the longstanding reliance interests of these three States. The final rule allows these States to continue to use those alternative staffing models, but the States must continue to use merit staff to the same extent they were using it prior to February 5, 2020, the effective date of the 2020 Final Rule. Those are the staffing models on which the three States have decades-long reliance. Adopting a standard that preserves the level of merit-staffing each of the three States had been implementing since the 1990s is reasonable and consistent with the final rule's overall State merit-staffing requirement.

Establishing a different standard for these three States is supported by the text of section 3(a) of the Wagner-Peyser Act, which permits the Department to establish “standards of efficiency.” The Department's history of allowing these States to use alternative staffing models since the 1990s has created the present reality that requiring complete State merit-staffing in these three States would have a harmful effect on the States' ES services and program participants. While the final rule explains above the benefits of requiring all the other States to use State merit staff to deliver all ES services, and the proposed rule articulated the strong preference for uniformity in staffing across all States, those interests are outweighed by the disruptive and negative effects that a complete State merit-staffing requirement would have on these States' programs that have such long reliance on alternative staffing models.

These three States have provided some initial justification and data for being able to continue using their longstanding alternative staffing models. These three States also provided information about the service disruption that would result from having to upend their longstanding service delivery models. However, the justifications and data presented do not provide clear evidence of causation. Therefore, the Department will further examine various staffing models and methods of delivering labor exchange services through a rigorous evaluation. Given the Department's clear and supported policy preference for State merit-staffing in the ES program, it logically follows that the Department believes it is prudent to evaluate whether alternative staffing models are empirically supported. The rule requires these States' participation in any evaluation activities about merit-staffing, which will likely consist of a single evaluation but may span more than one study, including any data collection associated with those evaluation activities. The Department will seek required approvals under the Paperwork Reduction Act for data collection, as necessary. This plan for evaluations is consistent with the Secretary's authority under section 3(c)(2) of the Wagner-Peyser Act, which requires the Secretary to “assist in the development of continuous improvement models for [the nationwide system of labor exchange services] that ensure private sector satisfaction with the system and meet the demands of jobseekers relating

to the system, and identify and disseminate information on best practices for such system.” 29 U.S.C. 49b(c)(2). The Department will conduct this evaluation of the three States' provision of ES services, including review of services of other States that participate, as necessary, to determine whether such models are empirically supported.

In the section-by-section discussion, the Department further explains why it is requiring that States use State merit staff to provide ES services.

Comments Expressing Support for the Department's Legal Authority for the State Merit-Staffing Requirement

Comment:

Some commenters, including unions, a State employee association, an advocacy organization, and private citizens, expressed support for the Department's authority to institute a nationwide merit-staffing requirement in the Wagner-Peyser Act regulations for ES services. In particular, a State employee association, an advocacy organization, and private citizens agreed with the Department that clear legal authority for reinstituting a nationwide ES merit-staffing requirement is found under secs. 3(a) and 5(b) of the Wagner-Peyser Act, which give the Department authority to develop and prescribe minimum standards of efficiency for ES services and to promote uniformity in their administrative procedures. A union argued that the statutory requirement to prescribe minimum standards of efficiency and promote uniformity requires that States use merit staff to administer ES programs, citing studies the commenter said show that State merit-staffed ES offices deliver services more equitably and effectively.

An advocacy organization and a State employee association argued that the proposed merit-staffing requirement is supported by the historical record and reinstates the Department's longstanding requirement that ES services be administered by State merit staff. Specifically, according to these commenters, the Wagner-Peyser Act establishes “a national system of public employment service offices” and, because a principal component of a public system is State government employees who are hired and promoted on a merit basis under a civil service system, the Department argued in

Michigan

v.

Herman

that merit-based staffing is required by the Wagner-Peyser Act because Congress intended merit-staffing to be a key component of “public” employment service.

Similarly, a private citizen argued that the Wagner-Peyser Act's use of the word “public” clearly falls within the word's common dictionary usage as something “of or relating to government.” Given that the Wagner-Peyser Act defines “employment service office” as “a local office of a State agency,” this commenter concluded that the Wagner-Peyser Act created a network of State governmental ES offices. Similarly, the commenter argued that the statutory text does not envision using local agencies to provide ES services. Referencing 1998 and 2014 amendments to the Wagner-Peyser Act, this commenter said that Congress has never altered the language providing authority for the Secretary to require merit-staffing for ES services. In conclusion, this commenter argued that “claims of flexibility do not give the Department sufficient legal authority to permit local agencies, community colleges, local governments, or other entities to [provide] ES [services] in substitution of state agency merit-staffed employees,” although a State is free to provide additional resources to job seekers beyond ES-staffed services.

A union commented that the Wagner-Peyser Act's creation of nationwide ES offices was intended to displace and transform the ineffectual system of employment placement services available to the jobless that existed prior to the Act's passage. The commenter described that system as a patchwork, fragmented, and inequitable system that consisted primarily of private agencies, which the commenter said were usually exploitative, predatory, and corrupt, as well as a handful of local public employment offices, which the commenter asserted were tainted by underfunding, patronage hiring, and political influence.

Asserting that Congress has reaffirmed the Wagner-Peyser Act's requirement of merit-staffing over time, an advocacy organization said that the Intergovernmental Personnel Act of 1970 (IPA) specifically named the Wagner-Peyser Act as one of two acts administered by the Department that transferred merit authority to the Civil Service Commission (succeeded by OMB). Further, according to the commenter, the Civil Service Reform Act (CSRA) in 1978 amended the IPA to make clear the intent that merit system guarantees for public employees are to remain a condition of Wagner-Peyser Act funding to States. In support of this assertion, one of the commenters cited Pub. L. 95-454 (Oct. 13, 1978), 92 Stat 1111, which the commenter stated added subsection (h) to 42 U.S.C. 4271 to exempt the Wagner-Peyser Act's merit-staffing requirement, among others, from the CSRA provision otherwise abolishing all statutory personnel requirements established as a condition of the receipt of Federal grants-in-aid by State and local governments.

Additionally, a State employee association asserted that the State merit-staffing requirement is rooted in the Wagner-Peyser Act's provisions giving the Department the authority to develop and prescribe minimum standards of efficiency for public employment services and to promote uniformity in their administrative procedure. Finally, these commenters remarked that, when the Department attempted to change its legal interpretation of the Wagner-Peyser Act in 2006, Congress reaffirmed its position by blocking the proposal by including language in the Fiscal Year (FY) 2007 and subsequent annual appropriations to prohibit the Department from taking such action. A State employee association commented that this 90-year history of the ES State merit-staffing requirement remaining in place through statutory amendments and court decisions is highly suggestive of a Congressional intent to require the delivery of ES services by merit-based employees.

An advocacy organization and a State employee association discussed additional components of the Wagner-Peyser Act historical record that they said supported the necessity of delivery of ES services by qualified, non-partisan personnel who are directly accountable to the State. For example, the commenters said the first ES director concluded that, to avert patronage and favoritism in hiring, State ES programs were legally required to adopt merit personnel systems for appointments and promotions. These commenters and a union also stated that, as States adopted companion laws to conform with the Wagner-Peyser Act in the 1930s, the Department withheld certification of nine States until they provided assurances that they would merit staff any State-administered public employment office.

A State employee association quoted the CSRA implementing regulations as describing the Wagner-Peyser Act merit-staffing requirement as “a statutory requirement for the establishment and maintenance of personnel standards on a merit basis” in Wagner-Peyser Act-funded programs (5 CFR part 900, subpart F, Appendix A). Further, this commenter quoted the final rule implementing the Workforce Investment Act of 1998 (WIA) in which the Department responded to inquiries asking if States may seek a waiver of the merit-staffing requirement for its ES program by stating, “The requirement that Wagner-Peyser Act services be

provided by State merit staff employees derives from sections 3 and 5(b)(1) of the Wagner-Peyser Act. Accordingly, we do not intend to, nor do we have authority to entertain or grant waivers of the Wagner-Peyser Act merit-staffing requirement.” 65 FR 49294, 49306 (Aug. 11, 2000).

Citing the public comment it submitted on the 2019 proposal to allow ES services to be provided under flexible staffing models, an advocacy organization said that, for more than 85 years, Congress acted many times to require merit-staffing in the ES program to guarantee workers receive unbiased and high-quality employment services.

Response:

The Department generally agrees with these commenters that the Department has authority to require State merit-staffing under the Wagner-Peyser Act and the IPA. The Department also generally agrees that Congressional actions over time have affirmed the Department's authority to require State merit-staffing. The Department weighed this authority and historic precedent when it proposed uniform State merit-staffing in the NPRM. As explained above, the Department also weighed the public comments that described the detrimental effects that the uniform requirement would have on the three States with longstanding reliance on using alternative staffing models. Congress' decision not to disturb these three States' alternative staffing models when it passed both WIA and WIOA suggests Congressional acquiescence with these States' arrangements. The Department is therefore returning to the longstanding requirement of State merit-staffing for ES, with the limited exception that Colorado, Massachusetts, and Michigan may continue to use the alternative staffing models they had been using before the 2020 Final Rule became effective. This includes the requirement that these three States use merit-staffing to deliver ES services to the same extent they had been using it.

Comments Expressing Concerns About the Department's Legal Authority

Comment:

Some commenters, including an association of workforce boards, a think tank, and a one-stop center employee, expressed doubts about the Department's interpretation of its legal authority to require nationwide merit-staffing for ES services. In particular, an association of workforce boards and a think tank commented that the Wagner-Peyser Act does not mandate a one-size-fits-all staffing model. Specifically, an association of workforce boards asserted that the Wagner-Peyser Act does not explicitly require that ES staff in States be merit-based, nor do existing statutes speak specifically to State merit-staffing requirements for ES offices. This commenter stated that the

Michigan

v.

Herman

court suggested that the Department may interpret section 3(a) of the Wagner-Peyser Act to permit staffing flexibility, based on the court's statements that the Wagner-Peyser Act “does not explicitly require merit-staffing” and that the language of section 3(a) is “broad enough to permit [the Department] to require merit-staffing.” Further, the commenter remarked that, since the

Michigan

v.

Herman

ruling, the Department has twice affirmed that Federal law does not require delivery of ES services by State merit staff: (1) allowing existing exemptions from ES State merit-staffing requirements to continue (2016), and (2) the 2020 Final Rule. The commenter concluded that dictating to States and local communities how to appropriately staff ES offices is a Departmental interpretation that will cause significant disruption and harm to the workforce system.

Response:

The Department proposed in the NPRM to require that all States use State merit staff to provide ES services. The Department has considered the alternative viewpoints provided. As these commenters noted, the Wagner-Peyser Act does not require the use of State merit staff for ES services, but the Act does provide the Secretary with discretion to require State merit-staffing, as explained above. State merit-staffing for ES services is widely used in many States and its requirement will not create disruption for the vast majority of States. Upon consideration of the public comments that described the detrimental effects that the State merit-staffing requirement would have on the three States with longstanding reliance on alternative staffing models, the Department will allow the three States with such reliance to continue use of the models they had been using prior to February 5, 2020, the effective date of the 2020 Final Rule. Further, the Department is committed to evaluating ES programs in these States to determine whether such models are empirically supported. With respect to States that may have adopted ES staffing flexibilities as a result of the 2020 Final Rule, the Department understands there may be some additional costs associated with the transition from non-merit staff to State merit staff. In response to comments, the Department is providing a 24-month compliance period from the effective date of this final rule to minimize disruption of services in those States.

IV. General Comments on the Proposed Rule

The NPRM, published on April 20, 2022, invited written comments from the public concerning the proposed rulemaking; the comment period closed on June 21, 2022. The comments received on the NPRM may be viewed at

https://www.regulations.gov

by entering docket number ETA-2022-0003.

The Department received timely comment submissions from 1,090 commenters, of which 776 were unique. The Department identified 12 form letter campaigns, which were read and considered with the other comments received. The Department also received additional comments that were duplicates or not related to the subject of this rule. The commenters represented a range of stakeholders from the public and nonprofit sectors. Public sector commenters included State and local government agencies, local workforce development boards, and one-stop operators. Nonprofit sector commenters included public policy organizations, advocacy groups, national and local labor unions, and a trade association. Of the unique comments, nearly one-third came from SWAs. The Department also received several comments from private citizens.

These comments are addressed in the summary of general comments and the section-by-section discussion. About half of the unique comments supported aspects of the proposal but opposed others, while a smaller number conditioned their support for the proposal on the Department adopting certain changes in this final rule.

Summary of General Comments on the Proposed Rule

Comment:

A State government agency expressed its support for the rule on the grounds that the State already provides ES services with State merit staff only and thus the rule would require no change in its operations.

Several commenters, mostly private citizens, expressed general support for the proposed merit-staffing requirement without providing detailed rationale or supporting data. Some arguments provided by commenters supporting the rule included:

• States are better equipped than local areas or contractors to administer ES services professionally, consistently, and with greater transparency and accountability.

• A State merit-staffing requirement would ensure the (UI) system remains effective in times of need.

• State merit staff have consistently provided job seekers with career

enhancement and reemployment services to ensure they have productive lives.

A union called the proposed rule a policy correction from the 2020 Final Rule and agreed the proposed rule is appropriate, given the environment in which that rule was developed (historically low demand for ES services and UI) and the subsequent severe labor market impacts of the COVID-19 pandemic that sent demand for ES and UI services surging. Similarly supporting the return to the pre-2020 standard for ES staffing, a farmworker advocacy organization commented that the decision to depart from a merit-based staffing model was unsupported by the Department's own findings on the efficiency of merit-based staffing. Specifically, this commenter cited a 2004 ETA study that they said compared merit-based ES staffing models with non-merit models, and it found that the States with non-merit models listed significantly fewer jobs and fewer referrals and job placement than merit-based staffing States.

Response:

The Department is adopting the proposed State merit-staffing requirement as a generally reliable method to ensure quality and consistency in ES delivery and one that supports the well-established connection between ES and UI services. The Department notes that it has allowed three States to use alternative staffing models for decades, and these States have provided some justification and data for being able to keep such models. The States also provided information about the service disruption that would result from having to upend their longstanding service delivery models. However, the justifications and data presented do not provide clear evidence of causation; that is, no compelling data emerged in the public comment period or in previous research that showed that alternative staffing models are the cause of higher or more consistent employment outcomes. While the Department recognizes the decades-long practice on which three States rely, such partial and correlation-only data are not sufficient to expand these models to other States, especially not when, as explained in the NPRM, fluctuations in UI demand from a pandemic or natural disasters clearly show a need for centrally trained, high-quality staff to be able to step in to bolster State review of UI claims and appeals if needed.

Therefore, the Department is adopting the State merit-staffing requirement as proposed with a partial adjustment: the final rule is requiring all States, except Colorado, Massachusetts, and Michigan, to use State merit staff to provide ES services. The Department will further examine various staffing models and methods of delivering labor exchange services through a rigorous evaluation, as discussed above. Given the Department's clear and supported policy preference for State merit-staffing in the ES program, the Department believes it is prudent to evaluate the delivery of ES services using the experience of States operating longstanding alternative staffing models to determine whether such models are empirically supported. The three States with decades-long reliance on using alternative staffing models may use the same service-delivery models they used prior to February 5, 2020, and will be required to participate in this forthcoming evaluation activities. All other States will have 24 months to comply with the requirement to use State merit staff to provide all ES services.

Comment:

Several commenters, including one-stop center staff and private citizens, opposed the proposed merit-staffing requirement. Some arguments provided by commenters against the proposed merit-staffing requirement included:

• Commenters from States operating longstanding alternative staffing models stated that they view local resource centers and the services they provide as essential.

• Commenters from States operating longstanding alternative staffing models stated that the change would ruin the one-stop service model that provides seamless, equitable services that facilitate real-time, meaningful referrals.

• Commenters stated that the Federal government has consistently demonstrated inadequacy when it comes to administration of programs that directly affect those at the local level.

• Commenters from States operating longstanding alternative staffing models stated that there is great value in staffing local offices with local staff rather than State merit employees. Each individual and business has their own unique challenges to progress, development, and success, which can only be understood and addressed at the local level.

• Commenters from States operating longstanding alternative staffing models stated that the proposed change would redirect responsibilities and funds to the State, which would be a mistake. The commenters said that the current system at the local level is working well without any issues.

• Commenters from States operating longstanding alternative staffing models stated that the proposed change would harm job seekers and businesses, resulting in lower quality and fewer services being provided, including services to veterans, immigrant and refugee navigator services, Clean Slate services for formerly incarcerated people, support navigating the UI benefits process, job training, career events, job fairs, and industry led collaboratives.

• Commenters from States operating longstanding alternative staffing models stated that the proposed rule would have a negative impact on local communities, including causing job centers to close and the loss of many jobs. The loss of centers would also impact students who rely on local offices to assist with educational support and other assistance.

Many private citizens from States operating longstanding alternative staffing models provided personal experiences asserting the value and need for services at one-stop centers, which they stated would be impacted if a State merit-staffing requirement changed the availability of services or the number of one-stop centers. Other commenters, including one-stop center staff, described their experience as local merit staff or working with the workforce development system and the positive impact on the community.

Response:

The Department proposed to require that all States use State merit staff to provide ES services and has considered reasons provided by these commenters for opposing the proposed rule. The proposal to require State merit staff does not preclude the State from providing services locally, and the vast majority of States provide high quality services in one-stop centers with a mix of State merit staff delivering ES locally and other staff providing other services locally. Without evidence that alternative staffing models directly cause higher employment outcomes, balanced against widespread success in delivering services while maintaining State merit staff for ES, and further balanced by the need for ES State merit staff to be available for surges in UI claims and appeals, the Department is generally adopting the proposed requirement that States use State merit staff to provide ES services.

However, the Department recognizes that three States (Colorado, Massachusetts, and Michigan) have been allowed to administer ES services using alternative staffing models for decades. The Department understands that these States' long experience with their particular models results in an affinity and preference for their model. During the comment period, these States

provided information that the State merit-staffing requirement proposed to be applied to all States would have extremely detrimental impacts on the provision of ES services in these three States because of the facts and circumstances, particularly the decades-long reliance interests, in these States. Based on this information, the Department is adjusting the final rule from the original proposal. The final rule requires all States, except the three States with decades-long reliance on using alternative staffing models, to use State merit staff to provide ES services. The expansion of alternative staffing models to additional States occurred without study, before the landscape-altering impact of the pandemic on the UI and workforce system. The Department will require the three States to participate in a rigorous evaluation of the services provided in the three alternative States to determine if using alternative models benefit ES service delivery. All other States will have 24 months to comply with the requirement to use State merit staff to provide ES services.

Comment:

Several commenters, including private citizens, presented a mixed stance or unclear position on the proposed rule. Many commenters, including private citizens, employers, and one-stop center staff, discussed Michigan's public workforce system, known as Michigan Works!, without addressing the proposed rule. Other commenters, including a trade association, career service provider, and employer, generally discussed the importance of programs or “communities.” A one-stop center employee commented that ES services offer job seekers help navigating the UI process.

Response:

The Department agrees that one-stop centers are valuable assets in a community, often provide services to a wide range of individuals, and are instrumental in shaping a local workforce's skills as part of larger economic development. The Department also notes that one-stop centers play this role across the country, including in the vast majority of States that maintain State merit staff in delivering ES services. Changes in how a one-stop center operates can impact a local community, and thus the Department weighs such impacts very carefully in its regulations. The Department recognizes the significant challenges that a return to State merit-staffing would present for States with decades-long reliance on using alternative models. Therefore, after serious consideration of comments received from the public, the Department is requiring all States to use State merit staff to deliver ES services, except the three States that have been allowed to use alternative staffing models for decades. Due to their longstanding reliance, these States are permitted to use merit-staffing flexibility to the same extent the Department allowed them to use it before the 2020 Final Rule became effective, but the Department is not permitting them to expand their staffing flexibility any further.

Comment:

An anonymous commenter asked whether State merit staff will be required to colocate in one-stop centers.

Response:

WIOA requires ES offices to be colocated in AJCs, also known as one-stop centers, regardless of the staffing model used. This is unchanged under this final rule.

Comment:

An anonymous commenter asked whether Federal appropriations will provide adequate resources to support the recruitment, hiring, and training of ES State merit staff or if the costs will be assumed by the States.

Response:

Recruiting, hiring, and training ES staff is an allowable cost for ES grants to States. In considering this comment, the Department determined that a greater amount of Federal funding is available now compared to other years. The FY 2022 and FY 2023 appropriations each provided an increase for Wagner-Peyser Employment Service grants to States over the years prior. In FY 2023, Congress appropriated $5 million more than in FY 2022 for the ES formula grants to States, which are the grants allotted to States to operate the ES. With the increased funding, the Department expects the ES to serve approximately 20,000 more individuals nationwide in 2023 (2,913,438). The estimates are not dependent on the type of staffing model a State uses to deliver ES services. The States' latest financial reports show that many States, including those States that must make changes to come into compliance with the final rule's State merit-staffing requirement, still have previous years' ES grant funds not yet expended. One of these States has expended under half of its Program Year (PY) 2022 allotment, and all of these States had lower expenditure rates in PY 2022 than in previous years. The Department notes that many States have used general funds made available under the American Rescue Plan Act and other resources to bolster overall workforce development services. Therefore, compared to other years, this is an appropriate time for a transition back to the use of State merit staff because of the above average resources available.

Comment:

An anonymous commenter asked what impact implementation of the proposed rule will have on the monitor advocate requirements.

Response:

Because the Monitor Advocate System is a part of the Wagner-Peyser ES, the requirement for States to use State merit staff for ES services also applies to Monitor Advocate services described at parts 653 and 658. Aside from Colorado, Massachusetts, and Michigan, the Department is requiring States to use State merit staff to conduct outreach to MSFWs, as described at § 653.107. Colorado, Massachusetts, and Michigan must use merit-staffing for MSFW outreach to the same extent authorized in their approved longstanding alternative staffing model. This means that if the State was required to use State merit staff for MSFW outreach (as in the case of Michigan) prior to February 5, 2020, then the State must continue to use State merit staff for MSFW outreach. If the State was permitted to use a combination of local merit staff and State merit staff for MSFW outreach prior to February 5, 2020, then the State must continue using merit staff for MSFW outreach. The Department is also requiring all States to use State merit staff to fulfill their SMA responsibilities, as described at § 653.108. Colorado, Massachusetts, and Michigan all use State merit staff for the SMA position as part of their longstanding staffing model and are required to continue doing so. All States will have 24 months to comply with this final rule.

Comment:

The Department received several comments that were beyond the scope of the proposed rule and included issues with the processing of UI claims, the politics of social justice campaigns, the status of pandemic unemployment assistance, and the actions of President Biden's administration generally.

Response:

These are issues that cannot be resolved or implemented through this regulatory process or are not within the Department's purview.

V. Section-by-Section Discussion of Final Rule

The discussion below details the decisions the Department made in adopting the final rule text. It responds to section-specific comments and explains any changes made in response to those comments. If the Department did not receive comments regarding a particular section, that section is not discussed in detail below, and the final rule adopts that section as proposed for the reasons set forth in the NPRM. The Department also has made nonsubstantive changes to the

regulatory text to correct grammatical and typographical errors, in order to improve the readability and conform the document stylistically, that are not discussed in detail below.

A. Technical Amendments and Global Edits

In the NPRM, the Department proposed several technical amendments and global changes, as discussed in detail below. The Department did not receive substantive comments on these proposed changes, and it adopts them as proposed in the final rule.

To conform with the proposed changes to the definition of

Wagner-Peyser Act Employment Service (ES) also known as Employment Service (ES)

in § 651.10, the Department is making technical changes to replace the phrases “employment services,” “Wagner-Peyser Act services,” and “services provided under the Wagner-Peyser Act” with “ES services.” Changes also have been made to replace the phrase “employment office” with “ES office,” and “Wagner-Peyser Act participants” with “ES participants.” These changes will simplify and standardize the use of terminology. The language is also intended to improve usage of plain language within the regulations. Technical changes to articles, specifically changing “a” to “an” where necessary, have been made as well when preceding “ES office.” These changes have been made in § 651.10 within the definitions of

applicant holding office, Employment Service (ES) office,

field visits, outreach staff, placement,

and

reportable individual,

in addition to the changes in the definition of

Wagner-Peyser Act Employment Service (ES) also known as Employment Service (ES).

Conforming changes have also been made to the subpart heading at part 652, subpart C, and within the regulatory text at §§ 652.205, 652.207, 652.215, 653.107, 653.108, 658.411, 658.502, 658.602, and 658.603.

The Department is adopting several technical edits to refine gender-inclusive language within the regulatory text while maintaining plain language principles. Throughout parts 651, 653, and 658, the term “he/she” was used to denote an individual of unknown gender. Using terms with a slash may not be in keeping with plain language principles and may also exclude people who are nonbinary. The Department has made three technical edits to replace “he/she” with more inclusive language employing plain language principles.

First, where “he/she” refers to an individual in their professional capacity, the Department uses their job title instead of a pronoun. These edits largely affect regulations impacting the National Monitor Advocate (NMA) or the Regional Monitor Advocate (RMA). In these cases, “he/she” has been replaced with “the NMA” or “the RMA” as appropriate and “his/her” with the possessive pronoun “their.” These edits are made as proposed at §§ 658.602 and 658.603.

Second, where “he/she” refers to an employer that is not an individual person, the Department uses the pronoun “it.” Where the possessive pronouns “his/her” were used, the Department proposed using “its.” This is appropriate because employers are entities, not individuals, and the proper pronoun is “it.” This edit is made as proposed at §§ 658.502 and 658.504.

In all other cases where “he/she” was used, the Department uses the pronoun “they” in its capacity as a gender-inclusive third-person singular pronoun but conjugated with third-person plural verbs. Where the possessive pronouns “his/her” were used, the Department proposed using “their.” These changes are designed to remove binary gender language so that the regulatory text is gender inclusive. The Department makes these changes as proposed in § 651.10 in the definition of

seasonal farmworker.

Edits are also made as proposed to §§ 653.107, 653.108, 653.111, 653.501, 653.502, 658.400, 658.410, 658.411, 658.421, 658.422, 658.602, 658.603, 658.702, 658.705, 658.706, and 658.707.

In addition, the Department replaces the words “handle” and “handled” with “process” and “processed,” as appropriate, to clarify that actions by ES staff and Federal staff must follow the processing requirements listed throughout part 658, subparts E and H, which use the word “process.” The word “handle” does not have a specific meaning in the regulatory text and may be unclear to SWAs.

In some instances, the Department also made conforming technical amendments to correct grammar in the regulations, as needed, because of these changes. In addition to such conforming technical amendments, the Department added and removed commas throughout the regulatory text to improve clarity and readability. These global changes and technical amendments described in this section are not explicitly identified later in the section-by-section discussion.

Finally, the Department is correcting the citation for its rulemaking authority for parts 651 and 652.

B. Part 651—General Provisions Governing the Wagner-Peyser Act Employment Service

Part 651 (§ 651.10) sets forth definitions for parts 652, 653, 654, and 658. In the NPRM, the Department proposed to define several new terms in this section and to make revisions to a number of other terms that were already defined in this section. The Department received comments on some of the proposed additions and revisions. After carefully considering these comments, the Department has decided to adopt most of the additions and revisions as proposed, with exceptions, as discussed in detail below.

Apparent Violation

The Department proposed to add a definition for

apparent violation

to clarify that the term means a suspected violation of employment-related laws or ES regulations, as set forth in § 658.419.

Comment:

A State government agency appreciated the Department's efforts to define apparent violation but felt that additional clarification was required to aid implementation. This commenter suggested that the Department clarify the proposed definition of

apparent violation

by adding the following language at the end: “for which ES staff observes, has reason to believe, or is in receipt of information that a violation has occurred.”

Response:

The Department agrees that the proposed definition for this term should be clarified by specifying that ES staff process apparent violations. In reviewing the commenter's suggestion, the Department further identified that it would be beneficial to include in the definition that apparent violations relate to information received about suspected employer noncompliance, as § 658.419 has historically described. Additionally, upon further review of the NPRM, the Department is further clarifying the definition of apparent violation to state explicitly that the definition does not include complaints as defined in § 651.10. This change is meant to make the distinction between complaints and apparent violations clearer. The Department is also removing the parenthetical “as set forth in § 658.419 of this chapter” because it is unnecessary with the changes the Department is making in § 658.419 to be more clearly consistent with this definition. Accordingly, the Department has decided to amend the definition of apparent violation adopted in this final rule to mean “a suspected violation of employment-related laws or employment service (ES) regulations by an employer, which an ES staff member

observes, has reason to believe, or regarding which an ES staff member receives information (other than a

complaint

as defined in this part).”

Applicant Holding Office

The Department proposed to amend the definition of applicant holding office to replace “a Wagner-Peyser Employment Service Office” with “an ES office,” and did not receive any comments on this proposed change. This change is consistent with the changes proposed to the definition of

Wagner-Peyser Employment Service (ES) also known as Employment Service (ES).

The Department adopts the revision to “applicant holding office” as proposed.

Bona Fide Occupational Qualification (BFOQ)

As noted in the preceding section on technical amendments and global edits, the Department added commas throughout the regulatory text to improve clarity and readability, including in the first sentence of the definition of

bona fide occupational qualification (BFOQ).

The Department did not receive any comments on this proposed change. In this final rule, the Department adds a necessary cross-reference to the EEOC's regulation regarding national origin found at 29 CFR part 1606 and corrects the cross-reference to the EEOC's BFOQ regulation found at 29 CFR part 1627.

Career Services

The Department proposed to amend the definition of career services to refer to WIOA by its acronym rather than its full title because the full title is previously spelled out at the beginning of this section. The Department did not receive any comments on this proposed change and adopts it as proposed.

Clearance Order

The Department proposed to amend the definition of clearance order to add a citation to the Agricultural Recruitment System (ARS) regulations at part 653, subpart F. The purpose of this addition is to clearly identify the ARS regulations to which the term refers. The Department did not receive any comments on this proposed change and adopts it as proposed.

Complaint System Representative

The Department proposed to amend the definition of Complaint System Representative to specify that the Complaint System Representative must be trained. The addition of the word “trained” makes the definition consistent with the requirement in § 658.410(g) and (h) that complaints are processed by a trained Complaint System Representative. The Department also proposed to remove the words “individual at the local or State level” due to proposed changes to the definition of ES staff. The Department did not receive any comments on the changes proposed to the definition of

complaint system representative.

While the Department is not adopting the changes that it proposed to the definition of

ES staff,

the reference to an “individual at the local and State level” in the definition of

complaint system representative

is not necessary regardless of whether the Department revises the definition of

ES staff.

Accordingly, the Department adopts the proposed revisions to the definition of

complaint system representative,

including the removal of these words, without change.

Decertification

The Department proposed to amend the definition of Decertification to specify that the Secretary to which this definition refers is the Secretary of Labor. The Department did not receive any comments on this proposed change and adopts it as proposed.

Employment and Training Administration

The Department proposed to amend the definition of

Employment and Training Administration (ETA)

to remove the words “of Labor” after “Department” because

Department

is previously defined in this section as “the United States Department of Labor.” The Department did not receive any comments on this proposed change and adopts it as proposed.

Employment Service (ES) Office and Employment Service (ES) Office Manager

The Department proposed to amend the definition of

Employment Service (ES) office

to replace “Wagner-Peyser Act” with “ES,” to align with other proposed changes to the regulatory text. The Department further proposed to amend the definition of

Employment Service (ES) Office Manager

to replace the phrase “all ES activities in a one-stop center” with the phrase “ES services provided in a one-stop center,” to align with other proposed changes to the regulatory text. In the same definition, the Department also proposed to replace “individual” with “ES staff person” to clarify that the

ES Office Manager

must be

ES staff,

as defined in this section.

Comment:

Several commenters, including a one-stop center employee, supported the requirement in the definition of

Employment Service (ES) office

that it be colocated in a one-stop center, saying this is part of Michigan's current practice. However, the commenters expressed concern about the term

Employment Service (ES) Office Manager,

arguing that it is misleading and implies greater authority than may be appropriate for onsite one-stop center ES staff.

Response:

The Department acknowledges the comment but notes that there is no requirement for the ES Office Manager to be located onsite. ES Office Managers are responsible for all ES services provided in a one-stop center. It is possible for one ES Office Manager to manage more than one ES Office; however, each ES Office must have an assigned ES Office Manager. The Department adopts the change as proposed.

Employment Service (ES) Staff

The Department proposed to amend the definition of

Employment Service (ES) staff

in two ways: first, by replacing the phrase “individuals, including but not limited to State employees and staff of a subrecipient,” with “State government personnel who are employed according to the merit system principles described in 5 CFR part 900, subpart F—Standards for a Merit System of Personnel Administration, and” to conform with the imposition of the merit-staffing requirement proposed in § 652.215; and, second, by deleting the phrase “to carry out activities authorized under the Wagner-Peyser Act,” because this language is unnecessary as parts 652, 653, and 658 describe the activities and services that ES staff may or must carry out. The proposal also added that ES staff includes a SWA official.

Comment:

Multiple commenters, including a trade association, a one-stop center employee, and an advocacy organization, recommended the Department expand the definition of

Employment Service (ES) staff

to include local merit staff in addition to State merit staff. The trade association reasoned that a more expansive definition is needed in light of the nationwide employment crisis and to enable the hiring of qualified local personnel. A group of Colorado local government employees also in favor of expanding the definition described the braided services they provided to a job seeker who needed extra support, arguing that the individual likely would not have received the same opportunities from State merit staff. Some commenters and a one-stop center employee asked the Department to explicitly state in the final rule that ES

staff should be a part of the local AJC, arguing that standalone ES offices undermine the WIOA one-stop concept and hinder access to comprehensive services for job seekers and employers.

A State government agency requested guidance on which classifications of ES staff would need to be cross-trained, noting that the NPRM only defines ES staff as those who are funded, in whole or in part, by Wagner-Peyser Act funds. The commenter stated that in their State, some workers may meet this definition of ES staff but only perform administrative functions.

Response:

The Department has considered the comments recommending expanding the definition of ES staff to include local merit staff and requesting clarification regarding which staff are included in the definition. Because the Department is adopting the proposed State merit-staffing requirement with the limited exception that Colorado, Massachusetts, and Michigan may continue to use alternative staffing models, the Department is removing the reference to merit system principles from the definition of ES staff. The final rule defines ES staff to mean “Individuals who are funded, in whole or in part, by Wagner-Peyser Act funds to carry out activities authorized under the Wagner-Peyser Act.” The Department is not adopting the proposal that would have added that ES staff includes a SWA official because SWA officials may include individuals funded by programs other than Wagner-Peyser. In response to the comment stating the final rule should require that ES staff be a part of the local AJC because stand-alone ES offices undermine the WIOA one-stop concept, the Department notes that the existing regulations at 20 CFR 652.202 and 678.315 state that stand-alone ES offices are not permitted, and States must colocate ES offices with one-stop centers. In response to the comment inquiring about cross-training, the Department notes that, while there are benefits to cross-training, the NPRM did not propose requiring States to cross-train employees nor does this final rule require cross-training.

Field Checks

The Department proposed several amendments to the definition of

field checks.

First, the Department proposed to replace the term “job order” with “clearance order,” which is more accurate because field checks must be conducted on clearance orders as defined in § 651.10. Second, the Department proposed to clarify that field checks may be conducted by non-ES State staff, in addition to ES or Federal staff, where the SWA has entered into an arrangement with a State or Federal enforcement agency (or agencies) for their enforcement agency staff to conduct field checks. Third, the Department proposed to remove the word “random” from the existing definition to clarify that the selection of the clearance orders on which the SWA will conduct field checks need not be random, though random field checks may still occur, and to clarify that field checks may be targeted, where necessary, to respond to known or suspected compliance issues.

Comment:

A State government agency supported the revised definition of

field checks

but requested that the Department clarify in the rule or guidance either the circumstances that warrant targeted field checks or the responsibility of States to define the circumstances in policy. Another State government agency stated that the proposal to amend the definition of

field checks

to allow non-ES State staff to conduct field checks would necessitate coordination, training, and reporting to ensure that non-ES staff perform field checks properly and timely. The agency recommended that the Department remove the language allowing non-ES staff to perform field checks. A farmworker advocacy organization also supported the proposal to remove the word “random” from the definition of

field checks,

which it said would help improve protections for farmworkers. The organization stated that it believed the Department should go further to expand the definition of

field checks

to include locations beyond where ES placements have been made, stating that the ES placement limitation significantly reduces the number of worksites eligible for these essential compliance checks and incentivizes employers to hire H-2A workers—whose employment does not currently create the possibility of a field check—instead of hiring U.S. workers through the ES.

Response:

Regarding the request for clarification on the circumstances that warrant targeted field checks, the Department clarifies that the circumstances must relate to the terms and conditions on the clearance order. Thus, where it is known or suspected that wages, hours, and working and housing conditions are not being provided as specified in the clearance order, a targeted field check may be warranted. The Department will issue guidance on this change.

Regarding the recommendation that the Department remove the language allowing non-ES staff to perform field checks, the Department notes that this proposed revision to the definition of

field checks

is not a new requirement. Rather, it is intended to align the definition with the existing regulation at § 653.503(e), which allows SWA officials to enter into formal or informal arrangements with appropriate State and Federal enforcement agencies where the enforcement agency staff may conduct field checks instead of and on behalf of the SWA, as described in § 653.503(e). The Department, therefore, declines to adopt this recommendation, and maintains that non-ES staff may conduct field checks under certain circumstances.

Regarding the recommendation that the Department expand field checks to locations beyond where ES placements have been made, the Department acknowledges the concerns raised by the farmworker advocacy organization regarding the limited instances in which a SWA may conduct field checks to evaluate employer compliance but disagrees that existing field check requirements incentivize employers to hire H-2A workers over U.S. workers. The Department agrees that compliance monitoring is essential, but notes that field checks are not the sole means by which such monitoring occurs, and employers are prohibited from rejecting able, willing, and qualified U.S. workers (referred to them through the ES or otherwise) in favor of H-2A workers. The Department further notes that field checks only pertain to placement of U.S. workers via the ARS. The Department's Wage and Hour Division (WHD) conducts investigations and evaluates agricultural employers' compliance with the terms and conditions of the H-2A program (including H-2A employers' compliance with the terms and conditions that they offer in clearance orders) (

see

29 CFR part 501). To the extent the advocacy organization is recommending field checks for H-2A employment, the operative regulations are outside the scope of this rulemaking and the Department declines to adopt this recommendation. The Department adopts the changes to this definition as proposed in the NPRM.

Field Visits

The Department proposed several amendments to the definition of

field visits.

First, the Department proposed to clarify that field visits are announced appearances by SMAs, RMAs, the NMA, or NMA team members, in addition to outreach staff, to clarify which Monitor Advocates may conduct field visits and that the appearances are announced (and not unannounced, as with the proposed definition of field checks). Second, the Department proposed to

replace the reference to “employment services” with “ES services” to conform with the use of the “ES” abbreviation throughout the regulatory text. Third, the Department proposed an amendment to specify that field visits include discussions on farmworker rights and protections, to help ensure that these issues are consistently addressed.

Comment:

A farmworker advocacy organization supported the proposal to amend the definition of

field visits

to include discussions on farmworker rights and protections. The organization agreed with the Department's observation that outreach staff and SMAs do not always discuss farmworker rights and protections during field visits as part of broader discussions on ES services. A State government agency requested that the Department clarify the role of monitor advocates with respect to field visits. The agency stated that the Department's intent to refocus monitor advocate responsibilities on monitoring appears to be contradicted by its expectation that monitor advocates conduct more field visits, which is not a monitoring activity. The commenter asked the Department to clarify that the monitor advocate's role in field visits is to monitor that ES staff conduct field visits in accordance with part 653.

Response:

The Department appreciates the advocacy organization's support for the inclusion of discussions of farmworker rights and protections in the definition of field visits. Regarding the State agency's request for clarification on monitor advocate roles in field visits, the Department notes that the proposed revisions do not require additional field visits, but instead clarify that the monitor advocates who may conduct field visits include SMAs, RMAs, and the NMA and NMA staff. The existing regulations provide that SMAs conduct field visits in accordance with § 653.108(o) and (q), the NMA (and NMA staff) in accordance with § 658.602(n), and RMAs in accordance with § 658.603(p). As part of their monitoring duties, the NMA (and NMA staff) and RMAs accompany selected outreach workers on field visits as part of their review and assessment responsibilities in §§ 658.602 and 658.603. For SMAs, the Department proposed in § 653.108 to clarify that the purpose of a SMA field visit is to discuss the SWA's provision of ES services and obtain input on the adequacy of those services from MSFWs, crew leaders, and employers. The SMA is not responsible to provide direct employment services during field visits or other activities. Instead, the SMA's field visits are designed to gather information the SMA needs to evaluate how the SWA is currently serving MSFWs, which the SMA uses to assess SWA compliance and to advocate for improvements.

After carefully reviewing the comments, the Department has decided to update the definition of

field visits

to cross reference the citations that describe activities Monitor Advocates and outreach staff perform during field visits. To further clarify the role of monitor advocates with respect to field visits, the Department has decided to remove the proposed reference to NMA team members and instead refer to NMA staff, as identified in § 658.602(h).

During consideration of the comments, the Department noticed that the proposed definition did not specify that field visits may occur at the gathering places of MSFWs, which is necessary to align the definition with the requirement in § 653.107(b)(1) that outreach staff must explain certain information and services to MSFWs at their working, living, or gathering areas. To align the definition with § 653.107(b)(1), the Department is further revising the definition of field visits to include that field visits may occur at places where MSFWs gather, in addition to working and living locations.

Hearing Officer

The Department proposed to amend the definition of

Hearing Officer

to remove the words “of Labor” because § 651.10 previously defines “Department” as “the United States Department of Labor.” The Department did not receive any comments on this proposed change and adopts it as proposed.

Interstate Clearance Order

The Department proposed to amend the definition of

interstate clearance order

to indicate that it is an agricultural “clearance” order for temporary employment instead of a “job” order. This change aligns the definitions of job order and clearance order. The Department did not receive any comments on this proposed change and adopts it as proposed.

Intrastate Clearance Order

The Department proposed to amend the definition of

intrastate clearance order

in two ways: first, by indicating that it is an agricultural “clearance” order for temporary employment instead of a “job” order, to align the definition with the definitions of

job order

and

clearance order

in this part; and, second, by clarifying that the term means an agricultural clearance order for temporary employment describing one or more hard-to-fill job openings that an ES office uses to request recruitment assistance from all other ES offices within the State, to help SWAs understand that an intrastate clearance order must be circulated to all ES offices within the State.

Comment:

A State government agency said that amending the definition of

interstate clearance order

to require an ES office to request recruitment assistance from all ES offices (not just significant MSFW one-stop centers) will necessitate changes to the review tool its monitor advocate office uses to conduct annual reviews (

i.e.,

to reflect that all offices must conduct recruitment). Another State government agency asked the Department to clarify what recruitment assistance means in the definition of

intrastate clearance order.

Response:

The Department acknowledges that the changes may require some SWAs to update their review tools and notes that intrastate recruitment, not interstate recruitment, involves recruitment assistance from all other ES offices within the State. However, the Department believes that the majority of SWAs will not need to update review tools or other processes because the revised definition is consistent with their current practices. The Department has found through monitoring that the majority of SWAs place intrastate clearance orders into their web-based labor exchange systems and make them available for recruitment throughout the entire State. Most SWAs do not direct recruitment efforts to specific ES offices because their labor exchange systems are not programmed to do so. Therefore, this change will not increase burden for most SWAs.

The Department has considered the impact of updating the definition to specify that intrastate clearance orders request recruitment assistance from all other ES offices in the State and finds it to be beneficial. Specifically, requesting recruitment assistance from all other ES offices increases the likelihood that the employer will find the workers it needs. Because the definition applies to criteria and non-criteria clearance orders, the description also allows the employer and SWA to recruit as broadly as possible and assists ETA in assessing the need for interstate clearance requests, including requests connected to the H-2A visa program. The intended result is that intrastate clearance will be more likely to result in employment of U.S. workers.

The Department adopts the definition as proposed and will provide guidance and technical assistance, as needed,

including how other ES offices provide recruitment assistance.

Migrant Farmworker and Seasonal Farmworker

The Department proposed to amend the definition of

migrant farmworker

by removing the exclusion of full-time students who are traveling in organized groups, to make available to these individuals the benefits and protections of the Monitor Advocate System, including ES service requirements and safeguards built into the Complaint System. Relatedly, the Department proposed to remove the exclusion of non-migrant full-time students from the definition of

seasonal farmworker,

to allow full-time students who work in seasonal farmwork to be considered seasonal farmworkers and to make the definition of

seasonal farmworker

consistent with the definition of

migrant farmworker.

The Department adopts these definitions as proposed.

Comment:

Referencing the Department's proposal to remove the exclusion of non-migrant full-time students from the definition of

seasonal farmworker,

thus making the definition of

seasonal farmworker

consistent with the definition of

migrant farmworker,

an anonymous commenter remarked that seasonal farmworkers (such as non-migrant full-time students) are not the same as migrant farmworkers (who they said are usually noncitizens admitted to the United States for specific timeframes with green card status). The commenter also mentioned an ES office in Traverse City, Michigan, with a specific division for assisting migrant farmworkers and stated that hiring extra migrant farmworkers may not suffice for fresh produce processing of their State's agriculturally diverse crops.

Response:

The proposed changes maintain two separate definitions for seasonal farmworkers and migrant farmworkers and remove the exclusion of full-time students from both definitions to ensure MSFW students have access to the benefits and protections of the Monitor Advocate System.

Removal of Migrant Food Processing Worker

The Department proposed to remove the definition of

migrant food processing worker

because migrant food processing worker status has not been a separately tracked part of the MSFW definition since the ES regulations were updated in the WIOA final rule promulgated in 2016.

See

81 FR 56071 (Oct. 18, 2016). Current ETA reporting does not require States to document migrant food processing workers as a particular type of MSFW and this definition is unnecessary because the existing MSFW definitions are inclusive of individuals who perform work as migrant food processors. The Department did not receive any comments on its proposal to remove this defined term and adopts its removal as proposed.

Occupational Information Network (O*NET)

The Department proposed to amend the definition of

Occupational Information Network (O*NET)

to remove the word “system” from the definition, as it is not needed to describe O*NET. The Department did not receive any comments on this proposed change. The Department adopts the change as proposed.

O*NET-SOC

The Department proposed to amend the definition of

O*NET-SOC

to remove the words “of Labor” after “Department” because Department is previously defined in this section as “the United States Department of Labor.” The Department did not receive any comments. The Department adopts the change as proposed.

Outreach Staff

The Department proposed to amend the definition of outreach staff to clarify that an SMA is not “outreach staff” for purposes of § 653.107. While an SMA may join outreach staff on field visits, an SMA cannot fulfill a SWA's responsibility under § 653.107(a) to provide outreach staff. This aligns with a revision in § 653.108(d) to specify that the SMA and their staff cannot assist with outreach responsibilities, which is further discussed in the section-by-section analysis for § 653.108. The Department did not receive any comments on the clarification proposed to the definition, and it adopts the revision to this definition as proposed.

Participant and Reportable Individual

To align with the proposed changes to replace references to “employment services,” “Wagner-Peyser Act services,” and “services provided under the Wagner-Peyser Act” with “ES services” and “ES,” the Department proposed to amend the definition of

participant

by replacing the phrase “Wagner-Peyser Act participants” with “ES participants” and to amend the definition of

reportable individual

by replacing the phrase “Wagner-Peyser Act services” with “ES services.” The Department did not propose any other changes to these definitions. The Department received one comment related to the definitions for each of these terms, which is summarized and responded to below. After consideration of this comment, the Department adopts the revisions to both of these definitions as proposed.

Comment:

A State government agency suggested the Department should define

reportable individual

versus

participant

for States to accurately collect and report information on these groups.

Response:

The Department appreciates the comment requesting that the Department clarify who is considered reportable individuals or participants. The Department's existing regulations in part 651 provide definitions for

reportable individual

and

participant

at § 651.10. This final rule adopts only minor revisions to each term to replace existing references to the “Wagner-Peyser Act” with “ES.” As noted in § 651.10,

participant

means a reportable individual who has received services other than the services described in § 677.150(a)(3) of this chapter, after satisfying all applicable programmatic requirements for the provision of services, such as eligibility determination (

see

20 CFR 677.150(a)). This definition notes that individuals who use only self-services or information-only services or activities are not considered participants. As outlined in § 677.150(a)(4) of this chapter, programs must include participants in their performance calculations.

Placement

The Department proposed to amend the definition of

placement

(along with other terms) to replace the phrase “employment office” with “ES office.” The Department did not propose any other changes to this definition. The Department did not receive any comments on this proposed definition and adopts it as proposed.

Respondent

The Department proposed to revise the definition of

respondent

by removing the parenthetical language “including a State agency official” because the term “State agency” is assumed to include “State agency officials” and is therefore unnecessary to clarify. The Department did not receive any comments on this proposed change and adopts it as proposed.

Significant MSFW One-Stop Centers and Significant MSFW States

The Department proposed to revise the definition of

significant MSFW one-stop centers

in two ways: first, by removing the text stating these designations are made annually; and,

second, by adding to the criteria by which the Department designates significant MSFW one-stop centers, so that they will include ES offices where MSFWs account for 10 percent or more of reportable individuals in the ES annually. First, as explained in the NPRM, the Department proposed to remove the text stating that significant MSFW one-stop centers are designated annually, because in making the designation, the Department relies on multiple data sources that are published in intervals up to every 5 years. Based on the Department's analysis, the data do not change significantly on an annual basis, and therefore it is often unnecessary to change the designations. This change in the definition would allow the list of significant MSFW one-stop centers to remain the same if there is no compelling reason to make a change. Also as proposed, the designation of significant one-stop centers would include ES offices where MSFWs account for 10 percent or more of participants

or

reportable individuals who are served by that ES office annually, and any other ES offices that the Office of Workforce Investment (OWI) Administrator includes due to special circumstances such as an estimated large number of MSFWs in the service area. The Department proposed to add reportable individuals to the criteria it considers in making this designation so that the one-stop centers designated as significant MSFW one-stop centers also account for the number of MSFWs in the area who are likely to benefit from access to ES services.

The Department similarly proposed to revise the definition of

significant MSFW States

in two ways: first, by removing the text stating that these designations will be made annually; and second, to change the basis on which this designation is made from the 20 States with the highest number of MSFW participants to the 20 States with the highest estimated total number of MSFWs. The Department proposed to change the basis on which it makes this designation so that it will reflect States with the highest total estimated MSFW activity—rather than the highest numbers of MSFW ES participants—so that the designation will better reflect the 20 States with the highest numbers of MSFWs who may ultimately seek assistance from the ES, rather than just those States with the highest numbers of MSFWs who have already sought such assistance.

The Department received a few comments that address the revisions proposed to these definitions. A summary of these comments and the Department's response is below. After thoroughly considering the issues and questions that these commenters presented, the Department has decided to adopt the revisions as proposed, with a clarification to the definition of significant MSFW one-stop centers as described below.

Comment:

A couple of State government agencies expressed concern that the Department planned to designate

significant MSFW one-stop centers

and

significant MSFW States

based on a blend of data from the Quarterly Census of Employment and Wages (QCEW) and Census of Agriculture, because, as they explained, the QCEW and the Census of Agriculture use disparate definitions and methodologies. Both commenters recommended that the Department use only QCEW data, from which they assert the Department could derive annual variable employment using a time series decomposition model that disaggregates covered employment by industry in States, agriculture reporting areas, and counties.

One of these State agencies noted that it did not object to the proposal to remove annual designations of

significant MSFW one-stop centers

and

significant MSFW States,

but sought confirmation that States would still be able to submit annual amendments to add or remove a designated office as warranted by data or due to ES-staffing challenges in specific offices, site closures, and/or challenges posted by the Americans with Disabilities Act. This State agency also asked whether the proposed change would affect the use of Special Circumstance MSFW one-stop centers, and expressed concern that the proposed revisions could increase the number of one-stop centers designated as significant MSFW one-stop centers, which would create a need for additional resources and State merit staff in offices so designated.

A farmworker advocacy organization supported the Department's proposal to designate

significant MSFW one-stop centers

based on the percentage of reportable individuals (not just participants) who are MSFWs, reasoning that many farmworkers who do not participate in the ES rely on other SWA services and are affected by the SWA's outreach and monitoring activities.

Response:

The Department appreciates the commenters' recommendation to use QCEW data. The changes will not limit the Department's consideration to the Census of Agriculture; therefore, the Department may also consider QCEW data. The Department disagrees with the commenters that using QCEW and the Census of Agriculture data is problematic even though they use disparate definitions and methodologies. The Department often consults multiple data sources to develop planning estimates and will take differences in source methodologies while making determinations for significant MSFW one-stop centers.

In response to the commenter's question regarding whether States may submit annual updates regarding significant MSFW one-stop center activity levels, the Department confirms that States may submit such information and the Department will consider the information to determine if an update is appropriate. As mentioned in the NPRM, if annual adjustments are warranted by the data, the Department will make adjustments. This change would allow the list of significant MSFW one-stop centers to remain the same if there is no compelling reason to make a change.

The Department notes that the revised methodology will apply to all significant MSFW one-stop center designations, including those significant MSFW one-stop centers that are designated due to special circumstances and may increase the number of significant MSFW one-stop centers in some States. An increase in the number of significant MSFW one-stop centers will not create a need for additional State merit staff in offices so designated. It would, however, require the SMA to monitor additional offices onsite.

After further consideration, the Department identified a need to clarify that the administrator who determines which ES offices must be included as significant MSFW one-stop centers based on special circumstances is the OWI Administrator. Accordingly, the Department adopts the changes as proposed, except to add that the OWI Administrator makes the determinations.

Removed Definition of Significant Multilingual MSFW One-Stop Centers

The Department proposed to delete the definition of

significant multilingual MSFW one-stop centers

because proposed changes to § 653.102 would remove specific requirements for offices that meet this definition. The Department proposed to remove specific requirements for significant multilingual MSFW one-stop centers in part 653, because all one-stop centers must comply with the comprehensive language access requirements in 29 CFR 38.9, which prohibit discrimination on the basis of national origin, including LEP, and establish that language access requirements apply to services that ES

recipients provide to all individuals with LEP at all one-stop centers and are broader than the existing requirements for significant multilingual MSFW one-stop centers.

The Department received two comments that address its proposed removal of the definition of

significant multilingual MSFW one-stop centers.

Both comments and the Department's response are discussed below. After thoroughly considering these comments, the Department has decided to remove this definition as proposed.

Comment:

Agreeing with the Department's proposal to remove specific requirements for significant multilingual MSFW one-stop centers (

e.g.,

removing the definition of

significant multilingual MSFW one-stop centers

) because all one-stop centers must comply with language access requirements, commenters including a one-stop center employee remarked that Michigan's one-stop centers have multilingual staff to provide their customers access to a broader set of services. In contrast, a State government agency expressed concern that the proposal would result in ES offices with no bilingual staff at present needing to hire additional staff who can assist participants with LEP.

Response:

The Department notes that all ES offices must meet the language access requirements in 29 CFR 38.9, regardless of how many significant multilingual MSFW one-stop centers exist in a State. Pursuant to 29 CFR 38.9, SWAs must make services available in all needed languages. SWAs may use bilingual staff to meet this requirement, but other alternatives are available, such as in-person interpretation or telephone interpretation services.

State Workforce Agency (SWA) Official

The Department proposed to remove the definition of

State Workforce Agency (SWA) official,

because SWA officials would be considered ES staff based on the Department's proposed revisions to the definition of

ES staff

in this rulemaking.

Comment:

Two State government agencies and an anonymous commenter warned that confusion and inconsistency could result from the Department's proposal to remove the definition of

State Workforce Agency (SWA) official

but continue using the SWA naming convention elsewhere in the regulatory text. The commenters recommended the Department keep

State Workforce Agency (SWA) official

as a defined term, similar to how title I of WIOA defines

chief elected official,

while clarifying that a SWA official is also considered ES staff.

Response:

The Department appreciates the comments regarding the potential for confusion or inconsistency related to the use of SWA official. The Department agrees with these comments. Although the Department proposed to remove the definition of SWA official, the final rule maintains the definition of SWA official in existing § 651.10, which means an individual employed by the SWA or any of its subdivisions.

Wagner-Peyser Act Employment Service (ES) Also Known as Employment Service (ES)

The Department proposed to amend this definition to replace the phrase “employment services” with “ES services.” The Department also proposed to remove the words “and are” from the definition for greater clarity. The Department did not receive any comments on this proposed definition and adopts it as proposed.

C. Part 652—Establishment and Functioning of State Employment Service

1. Subpart A—Employment Service Operations

Subpart A of part 652 includes an explanation of the scope and purpose of the ES; the rules governing allotments and grant agreements; authorized services; administrative provisions; and rules governing labor disputes. The changes to this subpart focus on administrative provisions governing nondiscrimination requirements. This final rule also includes a severability provision for part 652 in subpart A.

Section 652.8 Administrative Provisions

The Department proposed to amend § 652.8(j)(2) to correct the statutory reference regarding the BFOQ exception currently listed in the regulation as 42 U.S.C. 2000(e)-2(e) to 42 U.S.C. 2000e-2(e). However, there was a typographical error in the proposed regulatory text. The final rule reflects the correct statutory reference, 42 U.S.C. 2000e-2(e). The final rule also adds a necessary cross-reference to the EEOC's regulation regarding religion found at 29 CFR part 1605.

The Department proposed to amend § 652.8(j)(3) to remove an outdated reference to affirmative action requests to make the Department's regulation consistent with U.S. Supreme Court jurisprudence on race-based affirmative action.

5

The proposed revision clarifies that the States' obligation is to comply with 41 CFR 60-300.84. The regulation at 41 CFR 60-300.84 requires ES offices to refer qualified protected veterans to fill employment openings required to be listed with ES offices by certain Federal contractors; give priority to qualified protected veterans in making such referrals; and, upon request, provide the Office of Federal Contract Compliance Programs with information as to whether certain Federal contractors are in compliance with the mandatory job listing requirements of the equal opportunity clause (41 CFR 60-300.5).

5

See, e.g., Ricci

v.

DeStefano,

557 U.S. 557, 585 (2009);

Adarand Constructors, Inc.

v.

Pena,

515 U.S. 200, 238 (1995);

Richmond

v.

J.A. Croson Co.,

488 U.S. 469, 507 (1989).

Comment:

A one-stop operator and an advocacy organization expressed concern that, in appearing to prioritize UI recipients over job seekers as a whole, the proposed rule may not strengthen nondiscrimination requirements but rather could be discriminatory toward certain classes of individuals, such as people on public assistance, immigrants and refugees, people experiencing homelessness, second-chance customers, people with disabilities, and other groups with historically lower labor market participation rates. Similarly, a private citizen stated that staffing flexibility has allowed Colorado to promote and deliver equitable access to the ES for marginalized and underserved populations (

i.e.,

priority populations under WIOA) but the proposed rule emphasizes UI above other services. Several other commenters also stated that staffing flexibility led to more localized services that better met the needs of marginalized communities.

A one-stop center employee and other commenters stated that Michigan satisfies the requirement to give priority to qualified protected veterans through a 24-hour hold on all job orders. The comments also discussed how Michigan meets its affirmative outreach obligation to ensure equal access to services and activities by coordinating with WIOA partners on outreach and accommodating individuals with LEP. The comments argued that the proposed changes would result in staffing cuts, reduced hours, and office closures that could threaten Michigan's proven record of adhering to nondiscrimination requirements and providing universal access to ES services. The commenters added that these impacts would be felt most by people in rural areas and individuals with LEP.

Response:

The changes to this section were made to correct a statutory reference and to remove an outdated reference to affirmative action requests

to ensure that the Department's regulations are consistent with U.S. Supreme Court jurisprudence on race-based affirmative action. The changes do not constitute a change in the Department's policies or treatment of individuals. Just as the previous longstanding State merit-staffing requirement, which was based in part on the close relationship between the ES and UI programs, did not violate the nondiscrimination obligations of the Department and States in administering the ES program, the reinstatement of the State merit-staffing requirement in this final rule for similar reasons does not run afoul of the nondiscrimination obligations of the Department and States administering the ES program. In re-aligning ES and UI, the Department is not prioritizing individuals eligible for UI benefits over individuals in historically underserved or marginalized populations. The ES is a universal access program. In the Department's view, reinstating a State merit-staffing requirement not only supports the historical alignment between ES and UI, but it also helps to maintain universal access and helps to protect the integrity of the ES program. As articulated further in discussion of § 652.215 of this preamble, a State merit-staffing requirement helps to ensure that ES services are delivered by nonpartisan personnel held to transparent, objective standards designed to assure high quality performance. In response to the NPRM, three States—Colorado, Massachusetts, and Michigan—provided initial justification and data to support use of their longstanding staffing model and provided information about significant service disruption that would result from having to upend their longstanding ES staffing model. However, the initial justifications and data presented do not provide clear evidence of causation. Without evidence that alternative staffing models directly cause higher employment outcomes, balanced against widespread success in delivering services while maintaining State merit staff for ES, and further balanced by the need for ES State merit staff to be available for surges in UI claims and appeals, the Department is generally adopting the proposed requirement that States use State merit staff to provide ES services. The three States with longstanding reliance interests are permitted to continue using the staffing model consistent with the model the Department previously authorized for that State. The Department will conduct an evaluation of the three States' provision of ES services, including review of services of other States that participate, as necessary, to determine whether such models are empirically supported and must participate in an evaluation to determine whether alternative staffing models are empirically supported. The commenters who indicated that Wagner-Peyser staffing flexibility allowed States to provide better services to marginalized communities did not include any data that demonstrates causal evidence to support this claim. Likewise, the Department has not identified such evidence to support it.

The Department reminds SWAs that they have an affirmative outreach obligation under 29 CFR 38.40 that requires them to take appropriate steps to ensure they are providing equal access to services and activities authorized under the Wagner-Peyser Act, as well as any other WIOA title I-financially assisted programs and activities. As outlined in that regulation, these steps should involve reasonable efforts to include members of the various groups protected by the WIOA sec. 188 regulations, including but not limited to persons of different sexes, various racial and ethnic/national origin groups, members of various religions, individuals with LEP, individuals with disabilities, and individuals in different age groups.

Section 652.10 Severability

Given the numerous and varied changes the Department proposed and is adopting, the Department intends the provisions of this rule to be severable and is including a severability provision in parts 652, 653, and 658 in this final rule. That intent was reflected in the structure of and descriptions in the proposed rule. The inclusion of severability provisions in this final rule confirms the Department's belief that the severance of any affected provision will not impair the function of the regulation as a whole and that the Department would have proposed and implemented the remaining regulatory provisions even without any others. To the extent that a court holds any provision, or any portion of any provision, of part 652 invalid, the provision will be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding is one of total invalidity or unenforceability, in which event the provision will be severable from this part and will not affect the remainder thereof.

2. Subpart C—Employment Service Services in a One-Stop Delivery System Environment

Subpart C of part 652 discusses State agency roles and responsibilities; rules governing ES offices; the relationship between the ES and the one-stop delivery system; required and allowable ES services; provision of services for UI claimants; and State planning. Among other changes, the changes to the regulations under subpart C are tailored to require all States to use State merit staff to provide ES services, except the three States using longstanding alternative staffing models previously authorized by the Department. As was true when the regulations were changed in 2020, none of the changes in this section will impact the personnel requirements of the Vocational Rehabilitation (VR) program, one of the six core programs in the workforce development system. Title I of the Rehabilitation Act of 1973 (Rehabilitation Act), as amended by title IV of WIOA, which authorizes the VR program, has specific requirements governing the use of State VR agency personnel for performing certain critical functions of the VR program.

Section 652.204 Must funds authorized under the Wagner-Peyser Act Governor's Reserve flow through the one-stop delivery system?

The Department proposed to simplify the section heading to remove reference to the Wagner-Peyser Act because reference to the Governor's Reserve is adequate. The Department also proposed amending this section to reference professional development and career advancement of ES staff instead of SWA officials. After further consideration, the Department is not finalizing the proposed change to the section heading in order to differentiate the Wagner Peyser Act Governor's Reserve from the WIOA Governor's Reserve. Instead, the Department is making a slight revision to the current section heading. The new section heading reads, “Must funds authorized through the Wagner-Peyser Act Governor's Reserve flow through the one-stop delivery system?” In addition, because of the Department's change to the NPRM's proposed definition of “ES staff” in this final rule, the Department retains the text of the existing regulation for this section.

Section 652.215 Can Wagner-Peyser Act-funded activities be provided through a variety of staffing models?

The Department proposed to amend § 652.215 to require all States to use

State merit staff to provide ES services and proposed giving States 18 months to comply with this requirement. After further consideration, the Department adopts a rule requiring all States to use State merit staff to deliver ES services, except the three States using longstanding alternative staffing models previously authorized by the Department. States authorized to use alternative staffing models will be required to participate in evaluation(s) of their delivery of ES services to be conducted by the Department. While the Department plans on conducting a single evaluation, the rule requires these States' participation if evaluation activities span more than one study, including any data collection associated with those evaluation activities. The Department will conduct this evaluation of the three States' provision of ES services, including review of services of other States that participate, as necessary, to determine whether such models are empirically supported. All States have 24 months to comply with the staffing requirements in this section.

The Department believes that a State merit-staffing requirement is a generally reliable method to ensure quality and consistency in ES services and supports the well-established connection between ES and UI services. Paragraph (a) of § 652.215 provides that except as provided in paragraph (b) of § 652.215, all States must deliver labor exchange services described in § 652.3 using State merit-staff employees employed according to the merit-system principles described in 5 CFR part 900, subpart F—Standards for a Merit System of Personnel Administration. This staffing requirement also applies to the provision of services and activities under parts 653 and 658.

The Department also recognizes the longstanding reliance interests of three States that had been authorized to use alternative staffing models in the 1990s. These States provided initial justification and data to support use of their longstanding staffing model and provided information about significant service disruption that would result from having to upend their longstanding ES staffing model. These three States have built systems, developed partnerships, and established a service delivery model that could be reversed only at significant cost to the State and with significant harm to job seekers and employers. Accordingly, in paragraph (b) the Department permits only these three States authorized to use alternative staffing models prior to February 5, 2020, the effective date of the 2020 Final Rule, to continue using the staffing model consistent with the model the Department previously authorized for that State. It is the use of a particular staffing model in each State that engendered each State's strong reliance interest. Therefore, paragraph (b) also provides that these States may use merit-staffing flexibility only to the same extent that the Department authorized it prior to February 5, 2020. This means that if any of the States covered by paragraph (b) sought to use the 2020 Final Rule to expand flexibility beyond what was previously authorized in that State, that State must return to the staffing model in use as authorized by the Department prior to February 5, 2020.

Paragraph (c) requires that the States permitted to use an alternative staffing model must participate in evaluations of their delivery of ES services to be conducted by the Department. The Department's goal will be to assess ES service delivery in several States. Requiring the three States authorized to use their longstanding alternative staffing models to participate in evaluation activities will enable the Department to determine whether alternative staffing models are empirically supported.

In response to comments, paragraph (d) lengthens the proposed transition period, requiring all States to comply with the staffing requirements in § 652.215 no later than 24 months after the effective date of this final rule. The Department recognizes that States will need time to address issues, such as obtaining any necessary State authorization, procurement, collective bargaining, hiring, and training.

The following discussion further details the Department's decision.

Potential Impacts of the Rule on the Provision of ES

Benefits of Using State Merit Staff To Deliver ES Services

Comment:

Two State government agencies expressed support for the proposed merit-staffing requirement because it would promote Statewide uniformity and consistency of employment security services. In particular, one of these commenters stated the ability to have consistent hiring practices, standardization of staff onboarding and training, and continuous professional development training throughout the State merit staff's employment life cycle ensure the most consistent and best customer service possible across the State. Similarly, two anonymous commenters expressed concern about the lack of consistent ES services throughout Michigan, which one of these commenters said is a byproduct of local control. These commenters argued that a consistent service delivery model of providing ES services through State merit staff would benefit Michigan job seekers and provide greater transparency and accountability to Michigan residents.

A State employee association commented that, in passing the Wagner-Peyser Act, Congress envisioned a federally supported but State-administered merit system, subject to consistent rules and oversight, to prevent favoritism and promote equality in the delivery of employment services.

Response:

The Department agrees that using State merit staff to deliver ES services helps to promote statewide stability and consistency in service delivery. The Department further agrees that using State merit staff helps ensure that employment services are delivered in an equitable manner and on a nonpartisan basis. As noted earlier in this preamble, in the IPA Congress found that the quality of public service could be improved by administering programs according to merit-based principles. Because the ES is a universal access program, it is critical that it be administered by nonpartisan personnel held to transparent, objective standards designed to assure high quality performance.

The Department acknowledges the comments regarding ES service delivery in Michigan. As noted elsewhere in this preamble, Michigan is one of three States that the Department authorized to use an alternative staffing model beginning in the 1990s. Due to the State's strong reliance interest developed from longstanding use of a particular service delivery model and the potential service disruption that would ensue if the State is required to adopt a full State merit-staffing model, the Department is permitting Michigan to continue using its longstanding alternative staffing model. The Department is requiring the State to participate in an evaluation of service delivery in the State to be conducted by the Department.

Potential Cost Increases of State Merit Staff That May Reduce the Availability of ES Staff

Comment:

Numerous commenters, including an association of State elected officials, Michigan, Colorado, and Delaware State government agencies, and Michigan and Colorado local governments, expressed concern that the proposed rule could make the provision of employment services less efficient in States that use flexible staffing models and may reduce access

to critical workforce resources for job seekers and employers because the proposal would reduce the number of available ES staff. In contrast, a private citizen argued that there is little evidence that the proposed rule would reduce access to workforce resources, reasoning that in Michigan, if there is a threat of service reduction it is because the State has used ES funding as a substitute for WIOA funding, for local staff, or for overhead costs for staff not fully dedicated to providing ES services.

Many commenters, including Michigan and Colorado State elected officials, Michigan, Colorado, and Delaware State government agencies, and Michigan and Colorado local governments, argued that the rule would cause a significant reduction in ES staff in States that use flexible staffing models, as well as the closure of many one-stop employment centers, with the greatest losses occurring in rural areas.

Response:

The Department acknowledged in the NPRM that there would be costs to some States to transition to using State merit staff to deliver ES services, requested feedback on the transition costs, and requested feedback on the proposed 18-month transition period. The Department notes that information that is supported with evidence and data sources is more strongly considered than information that is unsubstantiated. The States of Delaware, Michigan, and Colorado provided new information in their comments on the NPRM that are relevant to the NPRM's regulatory impact analysis. These States detailed impacts on existing contracts and procurement, recruitment, training, staffing, collective bargaining, technology costs, infrastructure changes, funding, and the extent of service disruptions that would result from imposition of a State merit-staffing requirement because these States have utilized approved alternative staffing models for many years. Some commenters provided information based on a survey stating that there will be job losses and center closures as a result of the State merit-staffing requirement. A few additional States responded to indicate that they may be utilizing staffing flexibility, although the Department was previously not aware they intended to utilize the staffing flexibility provided by the 2020 Final Rule. Those States did not estimate transition impacts as requested by the Department in the NPRM.

The Department has considered the comments opposing the reinstatement of the State merit-staffing requirement and found the comments from Colorado, Massachusetts, and Michigan the most compelling due to their longstanding reliance interests on using alternative staffing models. Based on these comments the Department has determined that States are required to use State merit staff to provide ES services, except Colorado, Massachusetts, and Michigan. The final rule is allowing these three States to use merit-staffing flexibility to the same extent previously allowed by the Department prior to February 5, 2020, the effective date of the 2020 Final Rule. As discussed above, the Department is requiring these States to participate in an evaluation of ES service delivery staffing models. All States will have 24 months to comply with the requirements in this final rule.

ES Service Delivery and Customer Impacts

Comment:

Many commenters described the services made available through Wagner-Peyser Act funding and expressed concern about a disruption or outright elimination of such services due to the proposed merit-staffing requirement, as described below.

Many Michigan commenters, including private citizens and one-stop center staff, discussed the value of the supportive services they have received or provided through Michigan Works! offices, including assistance with important tasks for job seekers such as developing a resume, strengthening interviewing skills, and performing job searches; some of these commenters, including one-stop center employees, stated that local center staff help alert customers to the availability of such services. A one-stop center employee stated that local ES workers have the best understanding of community needs and are often the first point of contact to help customers navigate available programs.

Many commenters, including Michigan and Massachusetts State government agencies, Michigan and Colorado local governments, and advocacy organizations, went on to more specifically describe one-stop employment centers' role in preparing job seekers for employment and connecting them with employers who want to hire them, including services such as facilitating training programs, hosting job fairs and career awareness events, organizing industry collaboratives, helping craft resumes, and providing job searching and interviewing tips. According to some of these commenters, including Michigan local governments, a key benefit of staffing flexibility is strong local strategic relationships with businesses, higher education, nonprofits, childcare, elementary and secondary education, adult education providers and other partners, which allows for more efficient customer service to connect job seekers to in-demand jobs and training opportunities.

Furthermore, many commenters, including Michigan and Colorado State elected officials, Michigan and Colorado local governments, and advocacy organizations, claimed that the status quo staffing flexibility has helped States and localities achieve specific, positive outcomes in terms of newly employed individuals, employment rates, average worker earnings, numbers of employers served, total economic impact, increased tax revenue, and returns on investment.

Response:

The Department appreciates the concerns raised by commenters and agrees that the quality of ES services is important. The commenters highlighted the benefits of the services provided to participants but did not provide evidence that the staffing model is a causal factor in the quality of those services. Though the Department agrees that local relationships are important in business services, local areas in States across the country using State merit staff for ES manage to develop such relationships. Commenters did not provide any evidence that strong local relationships are only possible with alternative staffing models, or that using a non-State-merit staffing model is a causal factor in developing strong business relationships. Without such evidence, balanced against the benefits of State merit-staffing described above, the Department will not extend the ability to use alternative staffing models to other States besides Colorado, Massachusetts, and Michigan. Therefore, the Department has determined that States are required to use State merit staff to provide ES services, except the three States that have long been allowed to use alternative staffing models.

Comment:

A State workforce development board said that data shows that former demonstration States using local merit and non-merit staff to deliver ES services have been successful and argued that all States should examine strategies to further service integration. Another State workforce development board and a professional association stated that it appreciated the approach “created by Congress” wherein the Federal government partners with State and local workforce program, providing performance goals and broad working parameters, but leaves States to manage their operations based on the diverse needs of businesses and workers in their

communities. These commenters urged the Department to permanently codify staffing flexibility.

Response:

As explained earlier in the preamble, the Act gives the Secretary discretion to require that States use a staffing model that will promote the goals of the ES program. For reasons articulated in the NPRM and this final rule, the Department has determined that that model is State merit-staffing. Three States using longstanding alternative staffing models presented arguments in support of retaining those models, but the information provided did not show a causal impact of the staffing model in these States and performance. Accordingly, the Department declines to extend staffing flexibility to all States. The Department reinstates a State merit-staffing requirement for ES services with the exception of the three States with longstanding reliance interests. These States are required to participate in evaluation of their delivery of ES services conducted by the Department, including review of services of other States that participate, as necessary, to determine whether such models are empirically supported.

Comment:

Some commenters, including one-stop operators, private citizens, and others, listed several potential impacts on customer service as reported by stakeholders concerned about the proposal, including closure of ES offices (particularly in rural areas), reduced hours of operation for offices, disruption of referrals, curtailed services to immigrants, veterans, and other vulnerable populations, fewer opportunities for career awareness events or job fairs, and reduced access to technology. Many commenters, including Michigan local governments, a Michigan State elected official, and Michigan one-stop operators, also warned that the rule would cause one-stop centers to reduce or eliminate their job seeker and employer workshops, career fairs, and career awareness events, as well as their efforts to facilitate job seekers' enrollment in and funding for schools and training programs. Some commenters, including Michigan one-stop operators, Michigan one-stop center staff, and an employer, warned that with the reduced staffing flexibility under the rule, customer service in employment services would decline, with reductions in virtual services, less personal services, and with services only provided by appointment to customers who meet specific criteria. Several commenters, including a one-stop center employee, private citizens, and a Michigan State government agency, asserted that Michigan Works! staff anticipate disruptions to the “more than 3,600 services” provided to industry-led collaboratives, 7,500 job fairs, and other services that have been successfully delivered over a 25-year period.

Several commenters referred to the minimum services required by § 652.3 noted in the NPRM (including facilitating the connection between job seekers and employers) and questioned how their State would continue to provide these essential services with just an estimated 25 percent of their current staffing level. The commenter asked whether a certain service or customer sector would take priority in cases where staffing shortages impact service availability, and further questioned how robust services would be provided if ES staff are reassigned to UI. A few one-stop center employees and a local government remarked that the proposal would disrupt convenience or would lengthen “turnaround time” for service delivery to job seekers, an outcome that the commenters warned would adversely impact job seekers, employers, and the local community.

A local workforce development board described how ES staff work with job seekers to determine their unique needs, increase their marketability in the labor market, or otherwise provide “intensive job search assistance.” The commenter said these comprehensive services would be disrupted, causing a gap in service provision, and adversely affecting job seekers. The commenter provided figures to demonstrate the economic value of participation in the WIOA's adult and youth programs and expressed concern that these economic impacts would be reduced or lost if existing ES staff are unable to support the comprehensive set of services they currently provide. A private citizen said ES customers need career services to build a sustainable work history.

Several commenters asserted that one-stop organizations in its area take pride in providing quality customer service and argued that local control over Wagner-Peyser Act ES programs is critical to positive impacts associated with its workforce development programs, citing statistics about the numbers of individuals and businesses served, numbers of workshops and hiring events hosted, and economic figures demonstrating economic impact and an overall return on investment.

A State government agency recommended that the Department maintain staffing flexibility to avoid service disruption during emergencies. An anonymous commenter expressed concern that changing a system that works well will place “stress” on their State government, which is dealing with challenges related to the pandemic and unemployment.

Some commenters, including a Michigan State government agency and an employer, asserted that the proposal would result in the loss of many full-time employees and expressed concern about the ability of fewer State merit staff to handle the leftover caseload. The Michigan State agency asserted that this staffing shortfall would cause one-stop customers to experience increased delays, inefficiencies due to remote service delivery or multiple case managers, and challenges in scheduling appointments (potentially resulting in increased transportation or childcare costs).

Response:

The Department appreciates the concerns raised by the commenters. Commenters' concerns appear to generally stem from an assumption that the use of State merit staff for ES services would be more expensive and thus result in the closure of one-stop centers, reduction of one-stop hours, and programming cuts. While the commenters provided no evidence that the rule change would result in these reductions or closures, the Department understands that there may be costs and disruption associated with a transition to State merit staff, particularly for the three States that have longstanding reliance on being able to use alternative staffing models, as described above. Therefore, the Department will permit alternative staffing models in the three States with long-time reliance on such models.

Service to Specific Populations or Vulnerable Populations

Comment:

Many commenters, including a Colorado State government agency, Colorado local government agencies, and advocacy organizations, warned that the rule would cause reductions in ES services in States that use flexible staffing models. These commenters expressed concern that such reductions would be associated with services that are designed specifically to aid vulnerable populations, or those who otherwise have significant difficulty in finding employment, thus doing them particular harm. In this category of vulnerable populations, commenters included groups such as veterans, immigrants, refugees, youth, people living in rural areas, people with disabilities, formerly incarcerated people, and other vulnerable job seekers.

Several commenters, including private citizens, advocacy organizations, a local government, and others, stated that local Michigan Works! offices serve

the most vulnerable populations in a given community, including veterans, low-income adults, dislocated workers, individuals with intellectual disabilities, older workers, youth, and immigrants and refugees, and expressed concern that the proposal would disrupt or eliminate services to the detriment of these vulnerable populations. A one-stop center employee similarly referred to these population groups and expressed concern that the proposal would delay service delivery for these groups and would adversely impact “follow through” and information sharing between States and agencies. Some commenters, including a Michigan State government agency, a Colorado local government agency, and many Michigan one-stop center staff, also described the specific needs of the people generally served by one-stop centers; in general, these are vulnerable and low-income populations, in need of significant support in the job seeking process, including transportation, clothing, food, childcare, technology assistance, substance abuse counselling, and medical care.

An academic commenter described their organization's strong relationship with a local Michigan Works! office and expressed concern that the proposal would disrupt services to the most vulnerable communities in their area. The commenter said their organization benefits from employment and training services for immigrants and students and expressed particular concern about the potential elimination of the Teach Talent Thrive program that promotes lifelong learning and career readiness.

An adult education provider stated that their organization partners with the local Michigan Works! office to provide career training and education services to adults and students, including coaching for career readiness, job searching, and aligning skills with a desired career pathway. The commenter also said the proposal would “compromise” Governor Whitmer's Sixty by 30 plan that seeks to close socioeconomic gaps for vulnerable populations, including the economically vulnerable adults served by the commenter's organization.

Some commenters, including an employer, an advocacy organization, and a private citizen, expressed concern that the proposal would disrupt services for veterans, including programs that support employment for veterans with employment barriers, services for active-duty military members, and military spousal services.

An advocacy organization expressed concern that “impactful” programs such as the Clean Slate program (which provides supportive services for formerly incarcerated individuals or individuals with criminal records) and the Going Pro Talent Fund (which provides skills-based certificate training) would be adversely affected by the proposal. A local workforce development board stated that local ES staff partner with programs like the Disability Program Navigator to enhance local capacity to provide services for people with disabilities, including helping such individuals navigate available services. A private citizen described how receiving supportive services from their local Michigan Works! service center has benefited their family member with intellectual disabilities and remarked that such services are difficult to find.

A private citizen concerned about a disruption of critical services to vulnerable populations remarked that Michigan Works! has proven it is “best in class” as an ES provider, citing figures from 2018 and 2019 that showed Michigan was among the 10 States with the lowest costs of career services per participant served.

Response:

The Department appreciates the concerns raised by commenters and agrees that the quality of ES services is important, particularly for vulnerable populations. The ES is a universal access program. The Department prioritizes the needs of vulnerable populations in this rulemaking and believes that changes in this rulemaking further the goal of universal access. Requiring States to use State merit staff to provide ES services will better protect vulnerable individuals because State merit staff are employees of the State who are subject to merit system principles and are thus directly accountable to the State and administer the ES with greater transparency and accountability than other staffing models.

The staffing requirements in part 652 apply to the delivery of services and activities under parts 653 and 658. Using State merit staff for these services is appropriate because these staff positions perform worker protection functions for MSFWs, who are particularly vulnerable to employment-related abuses. These staff require centralized training and management from the State to ensure they are equipped to assess and respond to farmworker needs, including responding to complaints and apparent violations in the field, which may include highly sensitive subject matter like human trafficking.

As stated above, the Department also recognizes the longstanding reliance interests of three States—Colorado, Massachusetts, and Michigan—and based on comments received about the negative impacts that requiring these States to change their ES service delivery models would have on service delivery, the final rule is allowing these three States to use the staffing models they have been allowed to use since the 1990s. Adjusting to avoid negative impacts to these three States' service delivery caused by the transition costs involved in changing decades-long practice is aligned with the Department's prioritization of the service delivery needs of vulnerable populations.

Business Services and Partnerships

Comment:

In addition to comments focused on the rule's detrimental effects on job seekers, many commenters, including Michigan local governments, a Michigan State elected official, and Michigan one-stop operators, also expressed concern that the rule would have a significant negative effect on businesses and employers, primarily by reducing recruiting services to businesses seeking help in filling vacancies, as well as reduced job retention efforts. Numerous commenters, including an association of State elected officials, Michigan, Colorado, Massachusetts, and Delaware State government agencies, and Michigan and Colorado local governments, argued that the one-stop employment centers, operated by local merit staff, deliver high-quality, cost-effective services to job seekers, and that existing staffing flexibility enables local centers to create strategic partnerships with businesses, schools, and nonprofits, all of which help better serve job seekers and businesses. Some commenters, including Michigan local governments, a Michigan State elected official, Michigan one-stop operators, and others, also warned that the rule would force one-stop centers to cut their industry-led collaboratives. Some commenters from Massachusetts, including a State government agency, local workforce development boards, and a local government employee, argued that implementing the rule would undermine business commitments and partnerships with ES services in States that use flexible staffing models because of the appearance of political instability and unnecessary bureaucratic change.

Several commenters, including employers, one-stop center employees, and a local workforce development board, described how ES services benefit businesses, such as through job fairs, retention services, online job postings, and other programs that connect job seekers and employers. The

commenters expressed concern that the proposal would disrupt such services. Some commenters, including a private citizen and an employer, remarked that many businesses are struggling to find employees and credited local services that use Wagner-Peyser Act funding with providing critical assistance connecting employers and employees. Several commenters stated that Michigan Works! has provided “more than 141,000 services to businesses” and cited responses from program stakeholders who believed these services would be reduced or eliminated if reinstating merit-staffing impacted uses of Wagner-Peyser Act funding. A private citizen remarked that Michigan Works! services in their area assist employers with upskilling and retention of employees. A Colorado State government official asserted that the use of local merit staff for Wagner-Peyser Act programs has allowed Colorado to fully implement the “primary vision” of WIOA, effectively emphasize employer engagement, encourage work-based learning, and maximize support for local businesses based on local community and competitive needs.

Some commenters, including a Colorado local workforce development board, an employer, and a one-stop center employee, specifically claimed that one-stop centers have been particularly helpful in connecting employers with skilled employees in the manufacturing sector, as well as facilitating training; thus, the implementation of this rule would do particular harm to the struggling manufacturing sector in the States that use flexible staffing models.

Several commenters, including a Colorado State government, local governments, employers, and private citizens, asserted that the proposal would fracture relationships forged at the local level, harming both job seekers and employers. A Colorado local government and a local workforce development board said strong relationships between ES staff and local employers has resulted in a Subsidized Employment program that connects employers and entry level workers and expressed concern that this program and other comprehensive wrap around services would be lost due to the State merit-staffing requirement. An anonymous commenter remarked that local residents consider the local one-stop center to be a “neutral third party” for businesses and job seekers, and expressed concern that this would be disrupted due to the merit-staffing requirement.

A local workforce development board stated that their State's current one-stop delivery model works well for businesses by connecting them with job seekers as well as training resources. Some commenters asserted that as a result of the proposal, employers will lose access to support for posting job orders and connecting with job seekers.

A one-stop center employee argued that serving business requires staff “out in the field” and remarked that one-stop workers must seek out businesses, not the other way around. A trade association similarly remarked that the proposal would make it harder for businesses to engage with the workforce system and could result in the cancellation of contracts or other transition costs.

A private citizen remarked that their local Michigan Works! office has effectively helped businesses attract and develop their workforces, including assisting businesses in securing grants to train and invest in current employees and add new staff. Similarly praising Michigan Works! employees' support for local businesses, another private citizen expressed concern that the proposed merit-staffing requirement would negatively impact local communities at a time when labor concerns hinder businesses across the State.

Some commenters, including State and local workforce development boards from Colorado, a trade association, a commenter from academia, and an employer, discussed the value of working with local ES staff due to their expertise in the local economy and knowledge of competitive factors in a given area, arguing that the ability to provide ES services using local merit staff maximizes the level of support provided to local businesses. A local government expressed concern that the proposal would disrupt established relationships between local staff and employers and economic development organizations at the community level.

Some commenters, including an advocacy organization, a trade association, a Colorado local government, and private citizens, discussed the value of local knowledge in serving the needs of local businesses and job seekers, with some discussing the varied needs of businesses and job seekers in urban and rural areas. A Colorado local government and a Colorado one-stop operator similarly argued that employers benefit from working with staff who have a regional perspective on what businesses need. A Colorado local workforce development board similarly discussed the value of local control of ES services and the knowledge of local and regional economic conditions, including whether the economy is prosperous, whether employers are facing labor shortages or scarcity, and whether unemployment rates are high or low. The commenter said removing local control would result in slower services and a less nuanced and dynamic response to citizen and business needs.

An advocacy organization described the value of local industry-led initiatives in serving employers' unique regional needs and expressed concern about such initiatives' continued success if ES staff are reduced or reassigned. A Colorado local workforce development board described sectoral partnerships developed by local staff working in the communities they serve, including partnerships in the healthcare, information technology (IT), construction, and transportation sectors. A different Colorado local workforce development board expressed concern that the proposal would “dismantle” successful regional industry sector work that has developed over the past decade. A private citizen and an anonymous commenter described services provided to businesses made possible by local staff's relationships with those businesses and expressed concern that the proposal would result in the loss of “local control.”

A Colorado employer and a few private citizens argued that county merit staff have developed expertise on the local economy and community needs, asserting that State or Federal employees are less capable of developing successful local connections with local businesses.

Several commenters, including trade associations, private citizens, a one-stop center employee, an advocacy organization, and Colorado local workforce development boards, argued that local workforce staff have the necessary local and regional understanding to establish effective partnerships with local partners and organizations. Several commenters, including a Michigan State elected official, a Michigan local elected official, Michigan local workforce development boards, one-stop operators, and Michigan local governments, similarly remarked that the ability to develop strategic partnerships with local nonprofits, businesses, educational institutions, and other organizations is a key benefit of ES staffing flexibility because these relationships facilitate connections between students, job seekers, training providers, and local employers.

A private citizen remarked that staff in their local Michigan Works! office had a knowledge of local business needs

and hiring trends that was critical in accessing the right services for the commenter to remain competitive in the local job market.

Response:

The commenters highlighted the benefits of the services provided to businesses, and the Department agrees that business services and partnerships with businesses are important. However, the commenters did not explain why the ES staffing model is a causal factor in the quality of those business services and partnerships. Many other States use State merit staff to successfully provide services to businesses and job seekers. The Department recognizes the longstanding reliance interests of Colorado, Massachusetts, and Michigan, and will therefore allow these States to utilize the longstanding alternative staffing models the Department previously allowed them to use. These States may exercise merit-staffing flexibility to the same extent previously authorized by the Department for that State prior to February 5, 2020, the effective date of the 2020 Final Rule. The Department also is requiring these three States to participate in evaluations of their ES service delivery model to be conducted by the Department.

Access—Transportation and Virtual Services

Comment:

Some commenters, including an anonymous commenter, a one-stop center employee, a local workforce development board, and a private citizen, stated that their local service office has offered assistance in using technologies or online services that are vital to employment and expressed concern about losing access to such support.

Some commenters, concerned about the disruption or closure of Michigan Works! offices in their area, including a local workforce development board and a one-stop center employee, worried that customers would need to travel longer distances to access needed services, with many stating that rising gas prices and other complications (such as the sparse availability of public transportation in certain areas) will make transportation particularly challenging for many one-stop center customers.

Response:

The COVID-19 pandemic highlighted the need for States to have staff to serve as surge capacity for times of high demand for UI claims. The Department agrees that in-person services are valuable, even as technology makes virtual services easier to develop and deliver. States across the country, the vast majority of which use State merit staff, have successfully used a combination of comprehensive and affiliate AJCs, access points, mobile AJCs, and online and virtual services to a reach geographically distant job seekers and those without reliable transportation. Data do not show a relationship between staffing models and the number of AJCs or access points per capita in the State. The Department also recognizes the longstanding reliance interest that Colorado, Massachusetts, and Michigan have in using alternative staffing models authorized by the Department. The Department is permitting these States to continue using the longstanding staffing models the Department allowed them to use in the 1990s. These States may use merit-staffing flexibility to the extent permitted by the Department in that State prior to February 5, 2020, the effective date of the 2020 Final Rule. All other States, including those that began using the staffing flexibility provided by the 2020 Final Rule, are required to use State merit staff to provide ES services. The Department will further examine various staffing models and methods of delivering labor exchange services, including evaluation activities for which the Department will require the participation of the three alternative staffing model States. All other States will have 24 months to comply with the requirement to use State merit staff to provide ES services. No additional States are permitted to pursue adoption of an alternative staffing model during the transition period; the final rule is effective 60 days after publication in the

Federal Register

. The 24-month transition period for complying with the State merit-staffing requirement is intended only for those few States that began using staffing flexibility in response to the 2020 Final Rule and now must transition back to using State merit staff.

Training and Other Considerations for Employees Delivering Services

Comment:

A think tank remarked that many State agencies face multiple challenges, including staffing shortages, funding shortfalls, and backlogs, and warned that the proposal could exacerbate these issues because contract staffing or other staffing flexibilities offer workable solutions. A local government expressed concern about forcing programs to re-structure existing staffing models, stating that the proposed rule could result in laid off staff, damage to staff morale, and a reduction of “vital employment services” like labor exchange services, career workshops, and services related to community engagement and service navigation.

Some commenters, including a one-stop center employee and a private citizen, warned that hiring or training new staff could lead to discrimination or bias against existing staff or entry-level staff. A private citizen remarked that local agencies may have different retirement or healthcare benefits for staff based on agreements with local or country governments, and expressed concern that changing staffing arrangements could disrupt pension or healthcare benefits for some workers. A one-stop operator acknowledged that ensuring employees receive fair wages and benefits was a motivation for the NPRM and remarked that the retirement and medical benefits available for public employees in its county are among the top plans nationwide.

An anonymous commenter argued that it would not make sense to train new individuals to replace the current staff in Workforce Centers, who have already developed relationships with customers.

A private citizen remarked that Colorado's current staffing model creates a greater level of ov

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