Wagner-Peyser Act Staffing Flexibility, 592-630 [2019-27260]

Agencies

• Employment and Training Administration
• DEPARTMENT OF LABOR

[Federal Register Volume 85, Number 3 (Monday, January 6, 2020)]
[Rules and Regulations]
[Pages 592-630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27260]



[[Page 591]]

Vol. 85

Monday,

No. 3

January 6, 2020

Part III





Department of Labor





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Employment and Training Administration





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20 CFR Parts 651, 652, 653, et al.





Wagner-Peyser Act Staffing Flexibility; Final Rule

Federal Register / Vol. 85 , No. 3 / Monday, January 6, 2020 / Rules 
and Regulations

[[Page 592]]


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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Parts 651, 652, 653, and 658

[Docket No. ETA-2019-0004]
RIN 1205-AB87


Wagner-Peyser Act Staffing Flexibility

AGENCY: Employment and Training Administration (ETA), Labor.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Labor (Department or DOL) is issuing 
this final rule to give States increased flexibility in their 
administration of Employment Service (ES) activities funded under the 
Wagner-Peyser Act (the Act). This flexibility includes the grants 
allocated to the States for the traditional labor exchange and related 
services, and for the foreign labor certification program, including 
the placement of employer job orders, inspection of housing for 
agricultural workers, and the administration of prevailing wage and 
practice surveys.

DATES: This final rule is effective February 5, 2020.

FOR FURTHER INFORMATION CONTACT: Heidi Casta, Deputy Administrator, 
Office of Policy Development and Research, U.S. Department of Labor, 
200 Constitution Avenue NW, Room N-5641, Washington, DC 20210, 
Telephone: (202) 693-3700 (voice) (this is not a toll-free number) or 
1-800-326-2577 (TDD).

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    This final rule reflects changes made in response to public 
comments received on the Notice of Proposed Rulemaking (NPRM) that was 
published on June 24, 2019, at 84 FR 29433. The Department received 
many comments from the public, States, and advocates for Migrant and 
Seasonal Farmworker (MSFW) populations. The Department took into 
account these comments in reaching this final rule, and the changes 
made to the regulatory text are detailed below in the Department's 
responses to related comments.
    The regulatory changes made in this final rule modernize the 
regulations implementing the Wagner-Peyser Act \1\ to align them with 
the flexibility allowed under the Workforce Innovation and Opportunity 
Act (WIOA), and to allow States to choose the service delivery model 
that can best meet their goals for the ES program. This could include a 
focus on services for individuals with barriers to employment, improved 
employment opportunities for Unemployment Insurance (UI) recipients and 
other job seekers, better services for employers, and improved outreach 
to individuals in rural areas. The changes also give States the 
flexibility to staff employment and farmworker-outreach services in 
what each State finds is the most effective and efficient way, using a 
combination of State employees, local government employees, service 
providers, and other staffing models in a way that makes the most sense 
for them. This, in turn, may leave more resources to help employers 
find employees and to help employees find the work they need. The 
changes are also consistent with Executive Order (E.O.) 13777, which 
requires the Department to identify outdated, inefficient, unnecessary, 
or overly burdensome regulations that should be repealed, replaced, or 
modified.
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    \1\ This statute was originally titled the Act of June 6, 1933. 
Section 16 of the statute instructs that it may be called the 
Wagner-Peyser Act.
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    The modifications made in this final rule require conforming 
amendments \2\ to the specific Wagner-Peyser Act references in 20 CFR 
678.630, 34 CFR 361.630, and 34 CFR 463.630 of the U.S. Departments of 
Labor and Education's joint WIOA regulations (Workforce Innovation and 
Opportunity Act; Joint Rule for Unified and Combined State Plans, 
Performance Accountability, and the One-Stop System Joint Provisions 
Final Rule, 81 FR 55792 (Aug. 19, 2016)). Neither this conforming 
change nor any of the changes discussed in this final rule will affect 
other programs' staffing requirements, such as those for the Vocational 
Rehabilitation (VR) program, because all changes discussed in this 
final rule, including these conforming changes, apply only to the ES 
programs authorized under the Wagner-Peyser Act which includes the 
Monitor Advocate System activities.
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    \2\ Although this final rule requires that conforming amendments 
be made to 20 CFR 678.630, 34 CFR 361.630, and 34 CFR 463.630, these 
amendments are not contained in this final rule. DOL and the U.S. 
Department of Education will make these conforming amendments in a 
separate regulatory action.
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    The Wagner-Peyser Act does not mandate specific staffing 
requirements. Section 3(a) of the Wagner-Peyser Act requires the U.S. 
Secretary of Labor (Secretary) to assist in coordinating the ES offices 
by developing and prescribing minimum standards of efficiency. 
Historically, the Department has used the authority in this provision 
to require States to provide labor exchange services with State merit 
staff, i.e. State staff employed according to the merit system 
principles in 5 CFR part 900, subpart F--Standards for a Merit System 
of Personnel Administration.\3\ However, this is not the only 
reasonable interpretation of this provision and, in finalizing this 
rule, the Department is adopting an interpretation that allows States 
the flexibility to use staffing arrangements that best suit their 
needs. This flexibility will allow States to provide Wagner-Peyser Act 
services through State merit staff, other State staff, subawards to 
local governments or private entities, a combination of these 
arrangements, or other allowable staffing solutions under the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards (Uniform Guidance). Consistent with the Uniform 
Guidance, all of these staffing arrangements, other than using State-
employee staff, would be considered subawards and the entities 
providing services would be considered subrecipients. The Department 
received comments on the NPRM asserting that the Department did not 
have the authority to provide this flexibility under the Wagner-Peyser 
Act. The Department has responded to those comments, and others, below.
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    \3\ Throughout this rule the Department uses the term ``merit 
staff'' and similar phrases to refer to staff that are part of a 
merit personnel system that complies with 5 CFR part 900, subpart F.
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    This final rule is not subject to the requirements of E.O. 13771 
because this rule results in no more than de minimis costs.

II. General Comments Received on the Notice of Proposed Rulemaking

    The Wagner-Peyser Act Staffing Flexibility NPRM proposed changes to 
20 CFR parts 651, 652, 653, and 658. The Department received 126 
comments within the 30-day comment period. Of these, the Department 
received comments expressing general support for the changes proposed 
in the NPRM, as well as several comments expressing opposition to these 
changes. Additionally, the Department received one untimely comment 
that pertained to issues also raised by timely commenters. Some 
commenters requested the Department to extend the comment period, but 
after considering their requests, the Department determined that the 
original 30-day comment period provided adequate time for the public to 
comment on the proposed rule. The Department appreciates the input from 
all commenters.
    Multiple commenters, including private individuals, local workforce

[[Page 593]]

development boards, and several States, supported the flexibility in 
the rule because, they stated, it would allow for staffing flexibility 
and that ``privatization,'' as some commenters characterized it, at the 
State and local levels would help agencies address local needs. 
Multiple commenters also supported the allowance for what they termed 
``privatization'' as enabling the alignment of WIOA title I and ES 
staffing. One commenter agreed with the proposed rule's assessment that 
staffing flexibility could result in savings that could be reinvested 
elsewhere in ES activities. Another commenter wrote that, in the 
commenter's State, staffing flexibility could help integrate services 
and ensure that local job centers have sufficient onsite staff. Some 
commenters, including a local workforce development board, stated that 
Michigan has operated a pilot program that allocates funding to local 
workforce development boards, and that further flexibility would be 
beneficial. Some commenters supported the flexibility because, they 
wrote, the private sector would better provide employment services due 
to its adaptability to modern technologies and circumstances, including 
tracking job placements.
    The Department appreciates these comments and agrees that staffing 
flexibility puts States in the best position to determine what is the 
most effective, efficient, and cost-effective way to provide the 
services under the Wagner-Peyser Act. The Department recognizes the 
value of the three State pilot projects, which provided important 
information on the use of alternative staffing models. With the 
staffing flexibility provided to the programs covered by this final 
rule, States will now have significant discretion and flexibility to 
tailor their service-delivery models to their local needs and 
circumstances.
    Many commenters described this rule's new flexibilities for States 
as ``privatization.'' That is not an accurate term. This rule does not 
privatize Wagner-Peyser Act services. States retain responsibility to 
provide Wagner-Peyser Act services, and this rule provides flexibility 
to States to offer these services using the best staffing approach 
available to them.
    Similarly, many commenters used the term ``contractors.'' As 
explained more fully below, the word ``contractor'' is a defined term 
under the Uniform Guidance, which governs how States can expend their 
Wagner-Peyser Act grant funds. To allay confusion, the Department has 
used the term ``contractor'' only where appropriate in this preamble, 
such as when describing the content of a comment.
    Several commenters opposed the proposed staffing flexibility 
because, they wrote, the proposed rule lacks support demonstrating the 
effectiveness of non-merit-staffing alternatives for ES activities and 
claimed that available evidence indicates that merit-staffing is the 
most efficient way of staffing ES programs. In support of these views, 
several commenters referenced Jacobson et al., ``Evaluation of Labor 
Exchange Services in a One-Stop Delivery System Environment'' 
(2004),\4\ as a study showing the benefits of maintaining a merit-
staff-based ES program. According to several commenters, this study 
concludes that the demonstration States for alternative staffing models 
(Colorado, Massachusetts, and Michigan) did not improve ES operations 
compared to the merit-staffing model as studied in Oregon, North 
Carolina, and Washington. Several commenters stated that the study 
demonstrates that merit-staffing was highly cost-efficient.
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    \4\ Louis Jacobson, Ian Petta, Amy Shimshak, and Regina Yudd, 
``Evaluation of Labor Exchange Services in a One-Stop Delivery 
System Environment,'' prepared by Westat for the U.S. Department of 
Labor, Employment and Training Administration Occasional Paper 2004-
09 (Feb. 2004).
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    The Department appreciates the comments citing the Jacobson study 
related to the Wagner-Peyser Act ES. However, the Department disagrees 
with the characterization of the study's results. In particular, the 
Department does not agree that the study found a strong correlation 
between merit-staffing and the study's conclusions, as the Jacobson 
study did not focus on merit-staffing.
    The Jacobson study assessed how public labor exchanges funded under 
the Wagner-Peyser Act have evolved with the development of one-stop 
centers (also known as ``American Job Centers'' or ``AJCs''). Parts of 
the study compared the performance of ``traditional'' public labor 
exchanges, which maintained State-level control of ES programs, with 
``non-traditional'' public labor exchanges, which devolved control of 
ES programs to local or county governments. The study identified three 
States that modified their public exchange structure substantially by 
devolving State control and staffing to local areas (Jacobson et al., 
101-08). Colorado devolved responsibility for ES activity to the 
counties through workforce development boards (called workforce 
investment boards at the time), while one-stop centers in Michigan were 
run by a mix of State and local government agencies. Only one of the 
States (Massachusetts) ultimately permitted individual workforce 
development boards to opt out of the traditional State-run public labor 
exchange system and devolve service delivery to local government, non-
profit, or for-profit entities. See Jacobson et al, at 45-46. The 
limited findings--which did not specifically focus on merit-staffing--
should not be used to draw conclusions regarding merit-staffing systems 
nationwide.
    The study concluded that in the States evaluated, State-controlled 
one-stop centers helped many UI claimants rapidly return to work; 
however, one-stop centers controlled by non-State entities tended to 
focus on serving economically disadvantaged populations, tailored job 
listings to the specific skills of those in most need, and effectively 
used the case management approach to service.
    It is also important to note that this study evaluated service 
delivery under the Workforce Investment Act (WIA). Its successor, WIOA, 
made significant reforms to the federally funded workforce development 
programs and provides States greater flexibility to achieve their 
goals, making the study less relevant to the current rulemaking than 
suggested by the commenters.
    The Jacobson study can be informative when viewed holistically. One 
of the goals of providing staffing flexibility is to give States more 
options in designing their workforce development systems, including the 
ES program, to more closely align with other WIOA partner programs. The 
results of this study show that it is possible to more closely align 
services provided by the ES program with WIOA's focus on serving 
individuals with barriers to employment, which is a key goal of this 
rulemaking. While the Department acknowledges the commenters' concerns 
about whether particular staffing arrangements would be optimal in any 
individual State, the Department considers States to be in the best 
position to determine whether to implement the staffing flexibility 
provided in this regulation. States are able to determine the most 
effective, efficient, and cost-effective way to provide the services 
under the Wagner-Peyser Act.
    Several commenters referenced a 2012 study from Michaelides et al., 
``Impact of the Reemployment and Eligibility Assessment (REA) 
Initiative in Nevada,'' as an additional study showing the benefits of 
maintaining a merit-staff-

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based ES program.\5\ According to commenters, this study found that, in 
the Reemployment and Eligibility Assessment (REA) evaluation in Nevada, 
the merit-staffed REA program led to UI claimants collecting fewer 
benefits. The Department recognizes the value of evaluations and 
encourages States to consider any relevant research or to conduct their 
own evaluations or pilot projects to best determine their staffing 
approaches.
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    \5\ Marios Michaelides, Eileen Poe-Yamagata, Jacob Benus, and 
Dharmendra Tirumalasetti, ``Impact of the Reemployment and 
Eligibility Assessment (REA) Initiative in Nevada,'' prepared by 
IMPAQ for the U.S. Department of Labor (Jan. 2012).
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    The objective of the Michaelides et al. study was to address 
specific questions related to the efficacy of the Nevada REA program, 
including whether REA reduced UI benefit duration and benefit amounts 
received, whether it expedited reemployment of UI claimants, and 
whether REA led to UI Trust Fund savings exceeding REA program costs. 
The study was not measuring the efficacy of merit staff delivering the 
services. While State merit staff provided the services analyzed in the 
study, the study did not specifically look at the staffing model, but 
rather it evaluated the services provided. The study never analyzed or 
determined whether the positive results were attributable to State 
merit-staffed employees providing the services. Therefore, the study's 
findings cannot be viewed as illustrative of the relative benefits of 
merit-staffing for this rulemaking.
    The Department notes that this regulation does not require States 
to change their staffing structure for providing services under the 
Wagner-Peyser Act, but rather it provides much needed flexibility in 
developing their staffing structure to staff these services. The 
Department considers States to be in the best position to determine 
whether to implement the staffing flexibility provided in this 
regulation. States may review this and other studies in making such a 
decision. States are able to determine the most effective, efficient, 
and cost-effective way to provide the services under the Wagner-Peyser 
Act.
    Two commenters recommended the Department conduct an independent 
assessment showing the effectiveness of alternative staffing models 
before implementing the rule. The Department recognizes the value of 
evaluations in helping States determine the most effective, efficient, 
and cost-effective way to provide ES activities and encourages States 
to consider all available data in determining their staffing 
strategies.
    For example, there is no merit-staffing requirement in the WIOA 
title I Adult and Dislocated Worker programs. As explained in the NPRM, 
when crafting this flexibility, the Department considered the results 
and outcomes for WIOA title I programs, which do not have a merit-
staffing requirement, to show that career services, including labor 
exchange services, can be provided effectively through non-merit staff 
employees.
    The Department sponsored the Workforce Investment Act Adult and 
Dislocated Worker Programs Gold Standard Evaluation, which found that 
intensive services (now called individualized career services under 
WIOA) were an effective service intervention for job seekers. States 
can use their ES funds to provide individualized career services, 
similar to the ones evaluated in this study. Therefore, the Department 
has concluded that it is not necessary to have State merit-staffing to 
provide effective ES activities.
    The Department considers States to be in the best position to 
determine whether to implement the staffing flexibility provided in 
this regulation. The Department encourages States to consider any 
relevant research or to conduct their own evaluations or pilot projects 
when determining whether to implement the staffing flexibility provided 
for in this regulation. It should be noted that the Department was not 
and is not required to conduct the assessment suggested by the 
commenter.
    Several commenters stated that the NPRM failed to describe the 
contracting process and would leave ES open to potential conflicts of 
interest. The Department makes grants to the States to carry out the 
Wagner-Peyser Act requirements, making the States the Department's 
grantees. The Department and the States are subject to the Uniform 
Guidance at 2 CFR part 200, as well as the Department's implementing 
regulations at 2 CFR part 2900. If a State determines it will use the 
flexibility offered by this final rule to obtain a service provider to 
deliver the State's ES activities, this service provider will be 
characterized as a subrecipient, as defined in 2 CFR 200.93, under the 
Uniform Guidance. See 2 CFR 200.330. This makes the agreement between 
the State and the service provider to deliver Wagner-Peyser Act 
activities a subaward. See 2 CFR 200.92. While States have the 
flexibility to characterize their agreements with any ES providers as 
``contracts,'' the service provider cannot be considered a contractor 
as that term is defined and used in the Uniform Guidance, as the 
service provider does not have the characteristics of a contractor 
described in 2 CFR 200.330(b). See also 2 CFR 200.22. Because the 
Wagner-Peyser Act service provider will be a subrecipient, the service 
provider will be subject to the requirements of the Uniform Guidance, 
including the financial and program management, monitoring, and cost 
principle requirements.
    The Uniform Guidance does not impose any particular process or 
procedure States must use when making a subaward to a subrecipient. 
Therefore, to give the States the maximum flexibility in choosing the 
staffing method that is the most efficient for each State, the 
Department declines, at this time, to prescribe a particular process or 
procedure that States must use in determining who will provide ES 
activities in the State.
    The Department does not agree that the staffing flexibility would 
leave the ES open to potential conflicts of interest. 2 CFR 200.112 
requires the Department to establish conflict of interest policies for 
the use of Wagner-Peyser Act grant funds. Consistent with this 
requirement, the Department promulgated 20 CFR 683.200(c)(5)(iii), 
which governs ES activities and requires States to disclose any 
potential conflicts of interest to the Department and the State's 
subrecipients to disclose any potential conflicts of interest to the 
State. 20 CFR 683.200(c)(5)(iii) requires that States, as Federal award 
recipients, disclose in writing any potential conflict of interest to 
the Department. The Department considers potential conflicts of 
interest to include conflicts of interest that are real, apparent, or 
organizational. Therefore, whether or not a State uses the flexibility 
in this final rule to provide ES activities, the State and its 
subrecipients will be required to disclose potential conflicts of 
interest.
    The Department also notes that, consistent with 20 CFR 683.400, the 
Department will continue to conduct monitoring to ensure States are 
complying with all of the requirements of the Wagner-Peyser Act, its 
implementing regulations, and 2 CFR parts 200 and 2900. This will 
include monitoring to ensure States are complying with all applicable 
requirements on conflicts of interest.
    Some commenters opposed the rule, contending that a private entity 
would be less likely to provide assistance to rural areas and customers 
who are less comfortable with technology, noting the time and 
investment that staff need to devote to these job seekers and 
employers. One commenter stated that a

[[Page 595]]

private entity would be less willing to devote that time because the 
profit incentives would dictate their service delivery strategy.
    The Department appreciates the commenter's concern regarding access 
for job seekers in rural areas and those customers with technological 
barriers. Under this regulation, States will be given the flexibility 
to select the best service delivery strategy to meet their unique needs 
and requirements, including the needs of a State's rural residents and 
residents with technological barriers. The Department does not agree 
that job seekers in rural areas and those with technological barriers 
would necessarily receive worse services if a State takes advantage of 
the staffing flexibility provided in this final rule. The ES program is 
a universal access program requiring certain services be available to 
all employers and job seekers, which includes the customers identified 
by the commenter. States, even if they take advantage of staffing 
flexibility, still must meet the universal access requirement found at 
20 CFR 652.207.
    Additionally, the Department notes there is no evidence that State 
merit staff are better suited to serving rural areas or specific 
populations than others. Notably, many local areas are wholly or partly 
located in rural areas and deliver WIOA title I-funded career services 
to a range of job seekers under a variety of staffing models; the 
Department anticipates States would adopt similar strategies for ES 
activities. Additionally, the Department notes that States have the 
flexibility to structure their agreements with their Wagner-Peyser Act 
service providers in a way that ensures all job seekers and employers 
receive effective services from the ES program.
    Regarding the commenter's concern that private entities would be 
less motivated to serve rural areas and individuals who require more 
time or assistance because of a profit motive, the Department does not 
agree that private entities necessarily will be less willing to provide 
quality services to individuals who may require more time. States have 
flexibility to create agreements with their ES service providers that 
encourage serving those who may have technological barriers, may need 
additional time or assistance, or who live in rural areas. States are 
ultimately accountable for ensuring universal access to all job 
seekers, including those in rural areas and those who require more time 
and assistance.
    States are required to oversee all operations of the Wagner-Peyser 
Act in their States, whether or not they ultimately decide to exercise 
this final rule's staffing flexibility, and States are still subject to 
Federal monitoring under 20 CFR part 683, subpart D--Oversight and 
Resolution of Findings. Consistent with 20 CFR 683.400, the Department 
will continue to conduct monitoring to ensure States are complying with 
all of the requirements of the Wagner-Peyser Act, its implementing 
regulations, and 2 CFR parts 200 and 2900.
    Some commenters stated that a uniform, federally mandated service 
delivery-staffing model helps prevent inconsistency in service 
delivery. The Department has concluded that a uniform staffing model 
does not necessarily ensure consistency of services, and the Department 
encourages States to establish policies on service delivery to improve 
quality and consistency regardless of staffing model. The Department 
notes that, regardless of how States staff their ES program, they are 
still obligated to provide all of the services the Wagner-Peyser Act 
requires and uniformity of service is still ensured by other Wagner-
Peyser Act rules found in 20 CFR parts 651, 652, 653, and 658. For 
example, 20 CFR 652.3 establishes minimum requirements for public labor 
exchange systems and 20 CFR 653.101 establishes minimum requirements 
for the provision of services to MSFWs. Additionally, the ES program is 
a mandatory one-stop partner program, and consistency across service 
locations is supported by the one-stop center certification 
requirements in the WIOA regulations at 20 CFR 678.800.
    In addition, States, as Wagner-Peyser Act grantees, are still 
required to oversee all operations of the Wagner-Peyser Act, regardless 
of whether or not they ultimately decide to take advantage of the 
staffing flexibility provided by this final rule. Consistent with 20 
CFR 683.400, the Department will continue to conduct monitoring to 
ensure States are complying with all of the requirements of the Wagner-
Peyser Act, its implementing regulations, and 2 CFR parts 200 and 2900.
    Some commenters stated that private entities would provide inferior 
service because they are motivated by profit, rather than service. A 
commenter cited instances of communications challenges with 
participants served by some contractors in non-DOL administered 
programs. Some stated that, for example, as a result of profit or 
outcome incentives, ``privatization efforts,'' as described by the 
commenter, could result in ``contractors'' referring only the most 
employable workers to employers, which could lead to poorer employment 
outcomes for individuals with the highest barriers to employment. One 
commenter added that the proposed rule would have a disproportionate, 
adverse impact on Black and Hispanic workers. Another commenter stated 
that publicly administered public services reduce inequality.
    The Department appreciates the concerns of commenters and agrees 
that the quality of services is important. This rule does not privatize 
Wagner-Peyser Act services, but rather it provides flexibility to 
States to offer Wagner-Peyser Act services using the best staffing 
approach available to them to provide these services. States, working 
with local workforce development boards as appropriate, must ensure 
that proper policies and processes are in place to deter inadequate 
communication and services and that the workforce system continues to 
provide effective and meaningful services to all participants. 
Regarding the commenter's concern about private entities being 
motivated by profit and thus not willing to provide services to those 
individuals with barriers to employment, the Department notes that 
there is flexibility in how States can structure their agreements with 
their service providers. Included is the ability to align the goals of 
the agreement with the goals of the Wagner-Peyser Act, including 
serving UI claimants, dislocated workers, MSFWs, and other individuals 
with barriers to employment.
    The Department disagrees that staffing flexibility would result in 
adverse impact on Black and Hispanic workers. Staffing flexibility may 
allow local organizations, closer to the communities in which job 
seekers live, to deliver culturally competent services to a local 
community instead of workers managed by a central State office. Rather 
than negatively affecting services to these communities, this final 
rule will permit States to provide more tailored staffing models to 
address the needs of these unique communities, as needed.
    The Department notes that States, as Wagner-Peyser Act grantees, 
are required to oversee all operations of the Wagner-Peyser Act, 
whether or not they ultimately decide to exercise this final rule's 
staffing flexibility. This includes ensuring that the State is meeting 
the universal access requirements of the Wagner-Peyser Act in 20 CFR 
652.207, which ensures services are available to all workers and not 
just the most employable ones. The Department also notes that the non-
discrimination requirements of WIOA sec. 188 apply to the services 
provided under the Wagner-Peyser Act regardless of the staffing model a 
State may choose to implement.

[[Page 596]]

Consistent with 20 CFR 683.400, the Department will continue to conduct 
monitoring to ensure States and their subrecipients are complying with 
all of the requirements of the Wagner-Peyser Act, its implementing 
regulations, and 2 CFR parts 200 and 2900.
    A commenter stated that public employment offices belong in the 
public sphere because they provide employment services without fees and 
on an impartial basis, and that the proposal threatens the unbiased 
nature of ES referrals and remove public employees from the actual 
offices (especially given that UI employees often work off-site in call 
centers). The commenter expressed concern that if a ``contractor'' were 
providing ES activities, the contractor would charge a fee and may 
jeopardize unbiased referrals.
    This final rule gives States flexibility to staff ES programs in a 
manner they believe is best tailored to meet the unique needs of the 
workers who will use the services. The Department does not share the 
commenter's concerns. The Wagner-Peyser Act program is a universal 
access program requiring that labor exchange services be available to 
all employers and job seekers, per 20 CFR 652.207. Such fees would not 
be permissible and a service provider could not charge a fee for 
offering ES activities. Additionally, 20 CFR 678.440(b) prohibits 
charging a fee to employers for career services, specifically labor 
exchange activities and labor market information, which are the primary 
services under the Wagner-Peyser Act.
    The Department notes that it has been permissible for non-merit 
staff to carry out similar functions, such as reviewing compliance with 
State work search requirements, for example, as part of the REA program 
for many years. The Department recognizes the importance of the 
connection between the UI and Wagner-Peyser Act programs, and considers 
the flexibility this regulation provides to States as an opportunity 
for States to test and improve strategies for serving unemployed 
individuals.
    Some commenters opposed the staffing flexibility in the proposed 
rule because they stated that ``privatization,'' as termed by the 
commenter, is inefficient, citing Supplemental Nutrition Assistance 
Program (SNAP) efforts in Texas and Indiana. One commenter likewise 
opposed the staffing flexibility in the proposed rule, arguing that 
``privatization'' of services within Temporary Assistance for Needy 
Families (TANF) in Wisconsin resulted in poorer services for the 
public, with ``contractors'' retaining a substantial amount of their 
budget rather than using it to provide services. While the Department 
appreciates commenters' concerns over potential inefficiencies that 
could arise if States adopt the additional flexibility in this final 
rule, the Department notes that SNAP and TANF are different programs 
with different statutory and regulatory requirements. States 
considering using this final rule's staffing flexibility are encouraged 
to consider the range of experiences other programs have had, including 
those noted in relevant research, or to conduct their own evaluations 
or pilot projects. States can also use lessons learned from other 
efforts as they decide whether to use the staffing flexibility in this 
final rule.
    Regardless of how States choose to provide ES activities, they are 
still Wagner-Peyser Act grantees, so they must oversee all operations 
of the Wagner-Peyser Act activities and are still subject to 20 CFR 
part 683, subpart D--Oversight and Resolution of Findings. Consistent 
with 20 CFR 683.400, the Department will continue to conduct monitoring 
to ensure States are complying with all of the requirements of the 
Wagner-Peyser Act, its implementing regulations, and 2 CFR parts 200 
and 2900. The Department will hold States responsible for violations of 
the ES implementing regulations, the statute, and the Uniform Guidance.
    Some commenters were concerned that allowing the flexibility in 
staffing provided under this final rule, which they characterized as 
privatization, would result in overall cost increases, as UI programs 
require merit-staffing and often rely on ES staff in performing their 
functions. A commenter likewise stated that providing services through 
the use of what they termed private contracts would harm Trade 
Adjustment Assistance (TAA) and veterans' programs that currently 
require merit-staffing and benefit from being able to draw on ES 
resources. Some commenters also stated that merit-staffing allows for 
the efficient management and protection of a claimant's UI information, 
benefit delivery, and job search. Some commenters stated that changing 
ES staff would change the ``public face'' of UI programs, undermining 
public trust in the organization. The Department has determined States 
are in the best position to determine what funding and staffing 
structure is the most efficient and effective for their programs, as 
States are most familiar with their own particular needs. The 
Department encourages States to consider costs when determining whether 
they will use the staffing flexibility provided in this final rule.
    The Department notes that this final rule does not change the 
merit-staffing requirement in the UI program. Additionally, nothing in 
this final rule changes UI requirements related to a claimant's UI 
information, benefit delivery, and job search. States wishing to use 
this final rule's flexibility for the provision of ES activities will 
need to consider how to ensure the State remains in compliance with all 
UI requirements.
    The Department appreciates the considerations that States need to 
take into account, such as the effects on partner programs, when 
deciding whether to use this final rule's staffing flexibility. States, 
as Wagner-Peyser Act grantees, are still required to oversee all 
operations of the Wagner-Peyser Act whether or not they ultimately 
decide to use this final rule's staffing flexibility.
    One commenter stated that ``privatization introduces new data 
security issues'' because of the differing security standards at 
private companies, the risk that such companies may attempt to monetize 
confidential information, and the possibility of disgruntled 
``contractors'' misusing confidential information. Another commenter 
provided an example of a disgruntled contractor misusing confidential 
information. Similarly, a different commenter agreed that the proposal 
could reduce information security.
    The Department appreciates the considerations, such as data 
security, that States need to take into account when deciding whether 
to take advantage of this final rule's staffing flexibility. States are 
required to comply with all applicable data confidentiality 
restrictions, such as those found at 20 CFR 683.220 and 2 CFR 
200.303(e). 20 CFR 683.220(a) requires States to have an internal 
control structure and written policies that provide safeguards to 
protect personally identifiable information. In considering whether to 
use a service provider to deliver ES activities, States must consider 
any implications using a service provider will have on these policies. 
Likewise, 2 CFR 200.303(e) requires States to take reasonable measures 
to safeguard protected personally identifiable information and States 
must consider how a service provider will comply with this requirement 
when determining if it would be appropriate to take advantage of this 
final rule's staffing flexibility for providing ES activities. As 
appropriate, the Department will continue to provide guidance of the 
specific requirements

[[Page 597]]

grantees must follow pertaining to the acquisition, handling, and 
transmission of personally identifiable information.
    One commenter opposed the staffing flexibility in the proposed rule 
because, the commenter stated, agreements for ``bureaucratic 
functions'' require such long terms that they lose the competitiveness 
necessary to drive down costs. The Department appreciates the 
considerations that States need to take into account when deciding 
whether to exercise staffing flexibility under the Wagner-Peyser Act, 
including the structure of the agreement, duration, costs, and 
services. The Department does not agree with the commenter that there 
will be no cost savings associated with staffing flexibility for 
providing ES activities. As explained in the economic analysis 
accompanying the NPRM and this final rule, the Department has concluded 
that there will be cost savings. Moreover, the Department considers 
States to be in the best position to determine the appropriateness of 
adopting the staffing flexibility for ES activities and whether the 
flexibility will drive down costs.
    One commenter opposed the flexibility in the proposed rule because 
the commenter stated that the NPRM failed to explain how 
``contractors'' could fulfill the essential functions of the Wagner-
Peyser Act's accountability, fiscal control, and operational 
responsibilities. The Department appreciates the considerations that 
States need to take into account when deciding whether to take 
advantage of the staffing flexibility under the Wagner-Peyser Act the 
Department is providing. The Department did not include in the NPRM nor 
in this final rule prescriptive requirements regarding how a service 
provider could fulfill these requirements. States are in the best 
position to determine whether a service provider could meet these 
obligations, and this rule is intended to encourage innovative and 
flexible approaches to service delivery, customized to the unique 
populations each State serves and each State knows best. Overly 
specific requirements on State-level service providers would disserve 
those important policy goals. The Department notes, however, that even 
if a State chooses to use a service provider to deliver these services, 
States, as the Wagner-Peyser Act grantees, are required to provide all 
of the services under the Wagner-Peyser Act consistent with the 
accountability, fiscal control, and operational responsibilities 
dictated by the Act, its implementing regulations, including 20 CFR 
683.200, and the Uniform Guidance. A State using a service provider to 
deliver ES activities will have to ensure as part of its obligations 
that these requirements are being met.
    One commenter stated that WIOA title I programs should not be used 
to judge the efficacy of what the commenter termed ``privatization'' of 
Wagner-Peyser Act services, as the ES serves more customers and at a 
lower cost per customer. This rule does not privatize Wagner-Peyser Act 
services, but rather it provides flexibility to States to offer Wagner-
Peyser Act services using the best staffing approach available to them 
to provide these services. The Department acknowledges that the ES has 
a lower ``cost per participant'' than the WIOA title I programs; 
however, the programs deliver a different set of services. Further, the 
Department does not consider cost per participant to be the only 
relevant factor in determining program efficacy. An important factor 
the Department considered and discussed in the NPRM is the performance 
indicators for the Wagner-Peyser Act as required under WIOA sec. 116. 
As part of its justification for proposing staffing flexibility, the 
Department noted that when isolating similar services provided by the 
Wagner-Peyser Act and the WIOA Adult and Dislocated Worker programs, 
the outcomes on those performance indicators were comparable. Cost per 
participant is one of the factors a State may use when determining 
whether it is efficacious to use different staffing models for Wagner-
Peyser Act services, but, for reasons stated in the NPRM, the 
Department reiterates that the comparison to the WIOA title I Adult and 
Dislocated Worker programs is appropriate.
    The Department received several comments recommending the 
Department consider the average cost per participant data of the 
Wagner-Peyser Act services compared to the WIOA Dislocated Worker 
program as part of its economic analysis.
    The Department recognizes the value of average cost per participant 
data and anticipates that States will consider this information when 
determining the most cost-effective approach to delivering ES 
activities. In the economic analysis, the Department did not compare 
the average cost per participant receiving Wagner-Peyser Act services 
to the average cost per participant receiving WIOA Dislocated Worker 
services due to the differences between the two programs. As part of 
its justification for merit-staffing flexibility, the Department noted 
that when isolating similar services provided by the Wagner-Peyser Act 
and the WIOA Adult and Dislocated Worker programs, the outcomes were 
similar. However, the cost of the totality of services available in the 
Dislocated Worker program cannot be usefully compared to the cost of 
the totality of services available through the Wagner-Peyser Act. The 
Dislocated Worker program provides more comprehensive services, such as 
individualized career services and training services, which cost more 
individually than Wagner-Peyser Act-funded services cost collectively. 
Therefore, the Department does not include these Dislocated Worker 
program services in its economic analysis of the rule.
    Another commenter stated that, because the allotments to States 
under the Wagner-Peyser Act are often less than their WIOA title I 
allotments and the outcomes are similar, if cost savings are the goal, 
the Department should require that WIOA title I services be provided by 
merit staff. The Department declines this suggestion because it is 
outside the scope of this rulemaking. This rulemaking is focused 
specifically on Wagner-Peyser Act services, not WIOA title I services. 
Further, as explained in the NPRM, cost savings are not the only goal 
under this rulemaking. The Department laid out several other goals in 
providing staffing flexibility, including aligning the provision of 
Wagner-Peyser Act services and activities with WIOA's service delivery 
model so the programs work better together and allowing maximum 
flexibility to States to encourage innovative and creative approaches 
to deliver employment services with limited resources.
    The Department notes that as part of the explanation for staffing 
flexibility in the NPRM, the Department explained that when isolating 
similar services provided by the Wagner-Peyser Act and the WIOA Adult 
and Dislocated Worker programs, the outcomes on the primary indicators 
of performance were comparable. However, it is not appropriate to 
compare the cost of the totality of services provided in the title I 
programs with the cost of the services available through the Wagner-
Peyser Act, in part because the WIOA title I Adult and Dislocated 
Worker programs provides more comprehensive services, such as 
individualized career services, as well as training services. 
Therefore, contrary to what the commenter suggested, this was not part 
of the justification for staffing flexibility in the ES program.
    One commenter opposed the proposed staffing flexibility because 
they stated that ``privatization,'' as termed by the commenter, would 
reduce accountability and transparency. This rule does not privatize 
Wagner-Peyser

[[Page 598]]

Act services, but rather it provides flexibility to States to offer 
Wagner-Peyser Act services using the best staffing approach available 
to them to provide these services. The Department does not agree that 
staffing flexibility necessarily would reduce accountability or 
transparency. For example, a State may find it easier to hold an 
individual service provider accountable for performance than a State 
agency. Additionally, States can design agreements with service 
providers to require accountability and information reporting resulting 
in increased accountability and transparency. The Department notes that 
States, as Wagner-Peyser Act grantees, are still required to oversee 
all operations of the Wagner-Peyser Act whether or not they ultimately 
decide to use the staffing flexibility provided by this final rule. 
States will be responsible for holding their service providers 
accountable for the delivery of services under the Wagner-Peyser Act 
consistent with their responsibilities found in 20 CFR part 683, 
subparts B (Administrative Rules, Costs, and Limitations) and D 
(Oversight and Resolution of Findings). Further, consistent with 20 CFR 
683.400, the Department will continue to conduct monitoring to ensure 
States are complying with all of the requirements of the Wagner-Peyser 
Act, its implementing regulations, and 2 CFR parts 200 and 2900.
    One commenter opposed the staffing flexibility proposed in the 
rule, stating that State employees are more efficient than their 
private counterparts and mentioning greater accountability of the 
former and costlier overhead for the latter. Other commenters opposed 
the staffing flexibility proposed in the rule because they stated that 
any possible cost-savings would be outweighed by the costs of contract 
training and oversight. The Department appreciates the considerations 
that States need to take into account when deciding whether to use the 
staffing flexibility under the Wagner-Peyser Act. The Department 
recognizes that there may be administrative costs associated with 
obtaining a service provider to deliver ES activities. However, the 
Department has determined there could be a reduction in costs due to 
the diminished need for management and oversight of State employees. 
States should consider any additional costs that may result from 
obtaining a service provider, as well as cost savings, when determining 
the appropriate staffing model for their State. Regardless of how 
States staff the ES program, the Wagner-Peyser Act requires grantee 
States to oversee all operations of the Wagner-Peyser Act.
    One commenter opposed the proposed rule because, in the commenter's 
view, it would increase the risk of conflicts of interest and 
violations of lobbying and ethical rules. Conversely, another commenter 
stated that the proposed rule could reduce conflicts of interest by 
separating the service provision functions from the oversight functions 
at the State level. This rule does not privatize Wagner-Peyser Act 
services, but rather it provides flexibility to States to offer Wagner-
Peyser Act services using the best staffing approach available to them 
to provide these services. The Department appreciates the 
considerations that States need to take into account when deciding 
whether to use the staffing flexibility this final rule provides for 
delivering services under the Wagner-Peyser Act. The Department does 
not agree that staffing flexibility necessarily increases the risk of 
conflicts of interest and violations of lobbying and ethical rules as 
States will still be bound to follow the same requirements they 
currently follow. For example, 20 CFR 683.200(e) imposes restrictions 
on lobbying using Wagner-Peyser Act funds and paragraph (c)(5) of this 
section requires disclosures of conflict of interest. The Uniform 
Guidance, which States are required to follow, also imposes 
restrictions on using Wagner-Peyser Act funds for lobbying. See 2 CFR 
200.450.
    The Department notes that States, as Wagner-Peyser Act grantees, 
are still required to oversee all operations of the Wagner-Peyser Act 
whether they ultimately decide to use a service provider to staff these 
services or not. Further, consistent with 20 CFR 683.400, the 
Department will continue to conduct monitoring to ensure States are 
complying with all of the requirements of the Wagner-Peyser Act, its 
implementing regulations, and 2 CFR parts 200 and 2900.
    Some commenters stated that non-merit-staffing would result in 
political, corrupt, and/or nepotistic employment decisions. The 
Department appreciates the commenters' concerns regarding corruption 
and/or nepotistic employment decisions, and it works to ensure such 
acts do not take place in DOL-funded grant programs, regardless of the 
staffing model in place. The Department appreciates the considerations 
that States need to take into account when deciding whether to exercise 
staffing flexibility under the Wagner-Peyser Act and how they structure 
their agreements and conduct oversight to prevent corruption or 
nepotism. The Department expects States--both those that continue to 
use merit staff and those that do not--to have policies and internal 
controls in place that prevent corruption or nepotism. Further, 
consistent with 20 CFR 683.400, the Department will continue to conduct 
monitoring to ensure States are complying with all of the requirements 
of the Wagner-Peyser Act, its implementing regulations, and 2 CFR parts 
200 and 2900. As explained above, the Department anticipates that 
conflict-of-interest disclosure requirements will help guard against 
the kind of corruption and nepotism the commenter mentioned.
    One commenter opposed the staffing flexibility proposed in the 
rule, stating that public employees tend to be more knowledgeable and 
have more experience than ``contractor'' who lack expertise and have 
additional costs associated with bidding on contracts. Likewise, other 
commenters stated that allowing the proposed staffing flexibility could 
dismantle current infrastructure and relationships between State merit 
staff currently carrying out the Wagner-Peyser Act and other service 
providers, other agencies, and employers. One commenter stated that the 
diminished competency of the ES would undermine the public's trust in 
the program.
    Commenters argued that contracting or privatizing (as they termed 
it) the ES would be inefficient because it would cause turnover and 
loss of institutional knowledge. Commenters mentioned specific areas of 
expertise that require substantial time and dedication to master, such 
as the TAA program and the State-specific case-management system. 
Another commenter added that, as a result of ``contractor'' turnover, 
service procedure can change, confusing job seekers. This rule does not 
privatize Wagner-Peyser Act services, but rather it provides 
flexibility to States to offer Wagner-Peyser Act services using the 
best staffing approach available to them to provide these services. The 
Department appreciates the considerations that States need to take into 
account when deciding whether to exercise the staffing flexibility 
under the Wagner-Peyser Act. States should consider any impacts to 
service quality, impacts on partner programs, and staffing turnover 
that may result from their decision, as well as consider establishing 
policies and oversight functions that ensure service quality and 
partner program relationships regardless of the staffing model chosen. 
States, as Wagner-Peyser Act grantees, are still required to oversee 
all

[[Page 599]]

operations of the Wagner-Peyser Act, regardless of the staffing model 
chosen.
    Other commenters expressed concern about how the proposal could 
affect MSFWs and outreach services specifically. One commenter 
recommended that the Department consider National Farmworker Jobs 
Program (NFJP) grantees as partners for MSFW outreach. One commenter 
stated that changes in outreach staffing requirements would disrupt 
beneficial relationships and lead to a reduction in reporting on 
employment law violations. The commenter further stated that the 
proposal could harm MSFWs by diminishing the status and 
responsibilities of the Monitor Advocate System, sending a message that 
MSFW rights are not a priority. Finally, some commenters stated that 
providing ES to MSFWs is a very complicated task, and is becoming more 
so. The commenters described increasingly complicated job postings, 
requirements of matching such postings against Wagner-Peyser Act and H-
2A criteria, and migrant housing regulations. The commenters stated 
that the proposal would reduce the experience of ES staff and thus 
their ability to perform their duties. The Department acknowledges that 
there may be distinct effects of staffing flexibility on the Monitor 
Advocate System. In response to the recommendation that the Department 
consider NFJP grantees as partners for MSFW outreach, the Department 
notes the requirement at Sec.  653.108(k) for the State Monitor 
Advocate (SMA) to establish an ongoing liaison with NFJP grantees, in 
addition to the requirement at Sec.  653.108(l) to establish a 
Memorandum of Understanding (MOU) with NFJP grantees. The staffing 
flexibility does not change these requirements and States still must 
establish this relationship.
    Additionally, the NFJP grantees are a required partner of the one-
stop delivery system, which requires States to provide access to those 
services at one-stop centers in the local areas where the NFJP program 
is carried out. The Department encourages State Workforce Agencies 
(SWAs) to coordinate outreach with NFJP grantees, but notes that 
outreach to NFJP grantees alone is not a substitute for the SWAs' 
required outreach obligations pursuant to 20 CFR 653.107. However, 
under this final rule, States can consider the outreach staffing option 
that works best for them, which may include having NFJP grantees be 
subrecipients of the Wagner-Peyser Act funds and provide ES activities, 
including outreach activities.
    In response to the commenter who maintained that staffing 
flexibility could lead to disruptions in beneficial relationships and a 
decrease in reporting employment-related law violations, the Department 
notes that it is the choice of the State whether to use the staffing 
flexibility. This rule does not privatize Wagner-Peyser Act services, 
but rather it provides flexibility to States to offer Wagner-Peyser Act 
services using the best staffing approach available to them to provide 
these services. If the State chooses to adopt staffing flexibility, the 
State, as the Wagner-Peyser Act grantee, is still required to oversee 
all operations of the Wagner-Peyser Act activities, including oversight 
to avoid any disruptions in service. In regards to a potential decrease 
in reporting violations, regardless of the staffing method used, the 
new staff must be trained pursuant to 20 CFR 653.107(b)(7), which 
includes training on protections afforded to MSFWs, and training on 
sexual harassment and human trafficking awareness. These trainings are 
intended to help outreach workers identify when such issues may be 
occurring in the fields and how to document and refer the cases to the 
appropriate enforcement agencies.
    Lastly, SWAs must continue to comply with 20 CFR 653.107(b)(6), 
which requires outreach workers to be alert to observe the working and 
living conditions of MSFWs and, upon observation or upon receipt of 
information regarding a suspected violation of Federal or State 
employment-related law, to document and refer information to the ES 
Office Manager for processing. If an outreach worker observes or 
receives information about apparent violations, the outreach worker 
must document and refer the information to the appropriate ES Office 
Manager. These requirements remain in effect and nothing in this final 
rule changes these State obligations.
    In response to the statement that the rulemaking could harm MSFWs 
by diminishing the status and responsibilities of the Monitor Advocate 
System, sending a message that MSFW rights are not a priority, the 
Department makes clear in this preamble that the Monitor Advocate 
System continues to be a priority for the Department to ensure 
farmworkers receive equal access to resources and protections. 
Similarly, across all titles, WIOA focuses on serving individuals with 
barriers to employment, which includes eligible MSFWs as defined in 
WIOA sec. 167(i)(1) through (3). Staffing flexibility is an option 
afforded to States; however, States will continue to be required to 
carry out the duties set forth in the ES regulations and to provide 
services to farmworkers on a basis that is qualitatively equivalent and 
quantitatively proportionate to the services provided to non-MSFWs. As 
part of the Monitor Advocate System, the States will continue to 
provide an SMA to ensure MSFWs are being provided the full range of 
employment and training services through the one-stop delivery system, 
as well as outreach staff to provide information to MSFWs on this 
system.
    In response to the concerns that staffing flexibility would reduce 
the experience of ES staff and thus their ability to perform their 
duties, the Department reiterates that States may choose to maintain 
merit staff, and notes that turnover can and has occurred among merit 
staff. All staff, regardless of whether they are State employees or 
employees of a service provider, must be trained to carry out the 
duties set forth in the ES regulations. The Department further affirms 
its commitment for the National Monitor Advocate (NMA) and Regional 
Monitor Advocates (RMAs) to continue to provide technical assistance to 
ensure services are offered to MSFWs on an equitable basis.

III. Section-by-Section Discussion of Public Comments and Final 
Regulations

    The discussion below responds to section-specific comments, as well 
as details any changes made in response to those comments. If the 
Department did not receive comments regarding a particular section, 
that section is not discussed below, and the final rule adopts that 
section as proposed. The Department also has made some non-substantive 
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 below.

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

Sec.  651.10 Definitions of Terms Used in This Part and Parts 652, 653, 
654, and 658 of This Chapter
    Section 651.10 establishes terms and definitions used throughout 
the Wagner-Peyser Act regulations. The Department received several 
comments regarding the changes to terms and definitions proposed in the 
NPRM, which are responded to below. If no commenter addressed a 
specific term, that term is not addressed below and has been published 
in the regulatory text as proposed in the NPRM.

[[Page 600]]

Employment Service (ES) Office
    Noting that WIOA envisions an integrated workforce development 
system that provides streamlined service delivery of the WIOA core 
programs, including ES activities, one commenter questioned the 
necessity of defining an ES office separately from a one-stop center. 
The commenter suggested that the Department instead use the term ``one-
stop center'' in the regulations. While it is true that WIOA envisions 
an integrated workforce development system, including the ES as a core 
program, the Department is not removing the definition of ``Employment 
Service (ES) office,'' because the Wagner-Peyser Act, WIOA, and their 
implementing regulations use the term. Therefore, a definition of the 
term is helpful to clarify States' obligations in administering these 
programs. For example, sec. 121(e)(3) of WIOA provides that ``the 
employment service offices in each State shall be colocated with one-
stop centers.'' The Department uses and defines the term ``Employment 
Service (ES) office'' to make clear what is required to be colocated--
any site where Wagner-Peyser Act ES activities are provided. This helps 
ensure that States provide and align ES activities with WIOA services 
as part of the workforce development system.
Employment Service (ES) Office Manager
    One commenter noted the term ``Employment Service (ES) Office 
Manager'' may not be necessary if the Department removes the term ``ES 
office,'' as ES activities are provided in a one-stop center. The 
commenter suggested using the term ``One-Stop Center Manager.'' As 
explained above, the Department will retain the definition of 
``Employment Service (ES) office,'' because the term is used in WIOA 
and the Wagner-Peyser Act, and it helps clarify States' 
responsibilities in providing ES activities. Likewise, the Department 
is retaining the definition of ``Employment Service (ES) Office 
Manager,'' because this term is used in the Wagner-Peyser Act and 
WIOA's implementing regulations to describe the individual in the ES 
office who carries out key responsibilities in providing services to 
job seekers and employers. Therefore, this is a necessary term to 
include in the regulation for the effective management and oversight of 
local ES staff.
Employment Service (ES) Staff
    The Department will remove the term ``contractors'' from the 
definition of ES staff in finalizing the rule. As explained above, 
States using a service provider to deliver ES activities will be making 
a subaward to a subrecipient under the Uniform Guidance. See 2 CFR 
200.92, 200.93, and 200.330. While the State may call its agreement 
with its service provider/subrecipient a contract, the service provider 
does not meet the definition of a contractor under the Uniform 
Guidance. See 2 CFR 200.23 and 200.330. Therefore, to avoid confusion, 
the Department is removing the term ``contractors'' from the definition 
of ES staff.
    One commenter requested the Department modify its definition of 
``Wagner-Peyser Act Employment Service staff (ES staff)'' to remove the 
term ``Wagner-Peyser Act'' so the definition is alphabetically in the 
definitions and for consistency with its use in the regulation. The 
commenter noted the definition does not appear to need the lead-in 
``Wagner-Peyser Act,'' as the other definitions that contain 
``Employment Service'' do not include similar language. The commenter 
also noted that removing ``Wagner-Peyser Act'' would make all 
``Employment Service'' definitions alphabetical for ease of 
identification. The Department agrees with the commenter and has 
changed the definition of ``Wagner-Peyser Act Employment Service staff 
(ES staff)'' to ``Employment Service (ES) staff.'' The Department 
agrees that using the term ES staff is clearer and more user-friendly.
    One commenter requested the Department define the term ``staff of a 
subrecipient'' in the Department's proposed definition for ``Wagner-
Peyser Act Employment Service (ES) staff'' in this regulation, because 
it is unclear how this category is applicable to State employees or 
subrecipients. The Department clarifies that the term ``subrecipient'' 
in the definition of ES staff has the meaning given to that term in the 
Uniform Guidance at 2 CFR 200.93. As explained above, because States 
using a service provider to deliver ES activities will be making a 
subaward, the individuals providing these services will be the staff of 
a subrecipient. Therefore, the Department has chosen to leave this term 
in the definition of the term ES staff. However, because the term is 
defined in the Uniform Guidance, the Department has decided it is not 
necessary to define it here in 20 CFR 651.10.
Field Checks
    One State agency questioned if the intent of the revised definition 
of ``field checks'' was to not allow SWA personnel to conduct field 
checks, as the added reference to ``through its ES offices'' appeared 
to limit the field checks function to only local staff and, as added, 
Federal staff. The Department clarifies that it is not the intent of 
the Department to exclude SWA officials (individuals employed by the 
SWA or any of its subdivisions) from conducting field checks. The 
Department intends for all ES Staff, including the SMA and other SWA 
officials, to conduct field checks. The Department is removing the 
language providing that field checks be conducted through ES offices to 
make this clarification. The final regulatory text is, ``Field checks 
means random, unannounced appearances by ES staff and/or Federal staff 
at agricultural worksites to which ES placements have been made through 
the intrastate or interstate clearance system to ensure that conditions 
are as stated on the job order and that the employer is not violating 
an employment-related law.''
Respondent
    One commenter requested the Department define the term ``service 
provider'' as it is used in the Department's proposed definition of 
``respondent'' in this regulation. The Department does not consider a 
definition for the term ``service provider'' to be necessary. In the 
context of this regulation, the service provider is the entity or 
entities that deliver services under the Wagner-Peyser Act. The 
Department clarifies that it is adding this term to the definition of 
``respondent'' to ensure that all individuals or entities providing 
services are held accountable.

B. Part 652--Establishment and Functioning of State Employment Service

    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 Wagner-Peyser Act services; 
universal service access requirements; provision of services and work-
test requirements for UI claimants; and State planning. The changes in 
this section increase the flexibility available to States in providing 
Wagner-Peyser Act-funded services and activities by allowing them to 
use alternative staffing models.
Sec.  652.215 Can Wagner-Peyser Act-funded activities be provided 
through a variety of staffing models?
    Section 652.215 governs how States may staff the provision of 
Wagner-Peyser Act-funded services. The Department received comments 
regarding the flexibility provided in the

[[Page 601]]

regulation and has responded to them below. The Department is 
publishing Sec.  652.215 as proposed.
    Several commenters opposed the rule because they did not agree that 
removing the requirement that States provide Wagner-Peyser Act-funded 
activities with staff other than merit-staffing rule was a legally 
permissible policy. The commenters explained that, although the 
Department stated in the WIA and WIOA rulemakings that the imposition 
of the merit-staffing requirement was a policy choice and 
interpretation of the Wagner-Peyser Act, nothing in either of these 
rulemakings indicated (explicitly or implicitly) that the policy was 
not legally required by the statute or that the Department was free to 
choose a different interpretation of the Act. Section 3(a) of the 
Wagner-Peyser Act requires the Secretary to develop and prescribe 
``minimum standards of efficiency.'' As explained in the WIA and WIOA 
rulemakings, and acknowledged by commenters, the Department interprets 
this provision to give the Department the discretion to impose a merit-
staffing requirement.
    In the 1998 case Michigan v. Herman, the U.S. District Court for 
the Western District of Michigan found that the Wagner-Peyser Act 
``does not explicitly require merit-staffing'' and determined that the 
language of sec. 3(a) of the Act is ``broad enough to permit the 
[Secretary] to require merit-staffing.'' 81 F. Supp. 2d 840, 847-48 
(W.D. Mich. 1998). However, the court noted that ``there is ample basis 
for a conflicting interpretation of the Wagner-Peyser Act's 
requirements,'' suggesting that the Department has latitude to 
interpret sec. 3(a) to permit the flexibility afforded in this 
regulation. If the court believed that sec. 3(a) was limited to the 
Department's previous interpretation--that it required the use of merit 
staff--it would have explicitly so stated.
    In the WIA Interim final rule preamble, the Department stated that 
the ``regulations reflect[ed] the Department's interpretation of the 
Wagner-Peyser Act, affirmed in [Michigan v. Herman], to require that 
job finding, placement and reemployment services funded under the Act . 
. . be delivered by public merit-staff employees.'' 64 FR 18662, 18691 
(Apr. 15, 1999). The Department described its interpretation as that 
affirmed in Michigan v. Herman, which held that the Department could 
require merit-staffing, but not that it must. And the opinion in that 
case describes the Department's own interpretation of the statute as 
one giving ``discretion to the Secretary'' to require merit-staffing. 
Herman, 81 F. Supp. 2d at 846. The Department's statement in the WIA 
preamble, therefore, should not be construed as denying the Department 
discretion over the merit-staffing question.
    In the WIA final rule, the Department did not address whether the 
Wagner-Peyser Act obligated the Department to impose a merit-staffing 
requirement for Wagner-Peyser Act-funded services. 65 FR 49294, 49385 
(Aug. 11, 2000). Instead, the Department simply noted that the final 
WIA regulation imposed a merit-staffing requirement reflecting the 
Department's authority under the Wagner-Peyser Act, as affirmed in 
Michigan v. Herman, to require Wagner-Peyser Act-funded services be 
provided by merit staff. Thus, in the WIA final rule, the Department 
did not opine on whether sec. 3(a) mandated the imposition of a merit-
staffing requirement for Wagner-Peyser Act-funded services.\6\
---------------------------------------------------------------------------

    \6\ Here, the Department's interpretation of the Wagner-Peyser 
Act should be distinguished from its description of its own 
regulations. The Department described its regulations as ``mak[ing] 
clear that Wagner-Peyser Act services must be delivered by merit-
staff employees of a State agency.'' 65 FR 49385. But that is 
different from stating that the Act itself requires merit-staffing.
---------------------------------------------------------------------------

    Finally, in the WIOA NPRM, the Department explained that the 
Department has maintained the policy of requiring merit-staffing since 
the earliest years of the ES and that Michigan v. Herman upheld this 
policy. 80 FR 20805 (April 16, 2015). The Department explained that it 
would continue this policy from WIA to WIOA. Id. Notably, the WIOA NPRM 
did not suggest that there was a statutory requirement in the Wagner-
Peyser Act for merit staff. Id. The language in the WIA and WIOA 
rulemakings demonstrates that since the decision in the Michigan v. 
Herman case, the Department has not read the Wagner-Peyser Act to 
include a statutory requirement that Wagner-Peyser Act services be 
delivered by State merit staff. Instead, as the Department explained in 
the NPRM for this final rule, the Department has previously read this 
provision to give it the discretion to impose a merit-staffing 
requirement.
    The commenters indicated that they thought the Department had an 
obligation in prior rulemakings to state that the policy was not 
legally required in order to make the change in this final rule. The 
Department disagrees. Throughout this rule's NPRM and final rule 
preambles, the Department has amply explained its legal authority and 
its policy bases for providing new staffing flexibility under the 
Wagner-Peyser Act. That is sufficient. The Department does not agree 
with commenters that there is an additional requirement to notify the 
public in prior rulemakings (or in other ways) that it is within the 
Department's discretion to revise, through notice-and-comment 
rulemaking, its interpretation of the Wagner-Peyser Act.
    A number of commenters opposed the flexibility in the proposed rule 
that would allow States to provide Wagner-Peyser Act-funded services 
with staff other than State merit staff explaining that the proposal 
would remove a long-standing and legally required merit-staffing 
requirement. The Department acknowledges that it has had a long-
standing policy of requiring States to deliver Wagner-Peyser Act labor 
exchange services with State merit staff. However, as explained above, 
the Wagner-Peyser Act does not contain a statutory requirement to 
impose a merit-staffing requirement on States. Instead, the 
Department's imposition of a requirement that ES activities be provided 
by State merit staff was the Department's policy decision, and one that 
is permissible under the Act.
    It is within agencies' authority to change long-standing policies, 
such as the merit-staffing requirement. In making the change, agencies 
are required to ``display awareness'' that they are changing their 
position and show that there are good reasons for the new policy. 
Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117, 2125-26 (2016). The 
Department's proposal did so. In the NPRM, the Department acknowledged 
the policy change and explained the reasons for the change: (1) Allows 
States to align the provision of ES activities with WIOA's service-
delivery model so the programs work better together; (2) allows States 
to develop innovative and creative approaches to delivering ES 
activities with limited resources; and (3) frees resources to assist 
job creators and workers more effectively. In the NPRM, the Department 
also explained that it has found that services similar to those 
provided through the ES program can be delivered effectively through 
systems without the specific Federal regulatory requirements regarding 
State merit-staffing.
    Several commenters stated that the Department's analysis had not 
justified a reversal of the Department's long-standing position that 
the Wagner-Peyser Act legally requires the delivery of ES activities 
through merit staff. The policy reasons for the Department's decision 
to allow States flexibility in staffing ES programs are discussed at 
length throughout the NPRM's preamble

[[Page 602]]

and include the benefits of granting States flexibility to fit the 
unique needs of their particular workers, employers, and ES programs; 
freeing up resources to better serve job creators and job seekers; 
better integrating the ES program with services under WIOA; and the 
successful functioning of flexible staffing arrangements in the 
provision of other, comparable services. Notably, the regulatory 
changes that this final rule adopts do not require the States to change 
their staffing mandates for ES programs. Rather, States will be free to 
choose the staffing model that best fits their needs.
    Another commenter stated that the Department was not legally 
justified in making the changes proposed in the NPRM. The Department 
disagrees. First, in the NPRM, the Department explained that the 
Wagner-Peyser Act does not dictate particular staffing models. 84 FR 
29433, 29436 (June 24, 2019). Instead, sec. 3(a) of the Wagner-Peyser 
Act requires the Department to develop and prescribe ``minimum 
standards of efficiency'' in the provision of ES programs. The 
Department noted that the broad scope of sec. 3(a) has been recognized 
in court, and it explained that in Michigan v. Herman, the court 
recognized that, while this provision is broad enough to permit the 
Department to impose a merit-staffing requirement, there was more than 
enough basis for a conflicting interpretation of the Wagner-Peyser Act. 
Id.
    Second, the Department explained in the NPRM preamble that, while 
it may have previously cited sec. 5(b) as support for imposing 
mandatory merit-staffing, that section ``does not require the 
imposition of such a requirement.'' Id. Instead, the NPRM explained 
that this provision merely conditions States' Wagner-Peyser Act funds 
on merit-staffing in the administration of UI programs. Id.
    Third, the Department also explained its interpretation of the 
Wagner-Peyser Act in the WIA and WIOA rulemakings, stating that while 
the Department continued to require State merit-staffing in these 
rulemakings, this was maintained as a policy choice. Id.
    A number of commenters opposed the proposed rule, because they 
stated it is contrary to how Congress interprets the Wagner-Peyser Act. 
Some commenters stated that over the years, Congress has taken several 
actions to require merit-staffing in the ES system or that reaffirmed 
the Wagner-Peyser Act's statutory requirement to have merit-staffing. 
Commenters gave several examples of these actions: (1) The 
Intergovernmental Personnel Act of 1970 (IPA) named the Wagner-Peyser 
Act as one of the two acts administered by the Department that 
transferred merit authority to the Civil Service Commission (now the 
Office of Personnel Management); (2) the regulations implementing the 
IPA demonstrated there is a statutory requirement to have merit-
staffing in Wagner-Peyser Act-funded programs; (3) in 2006, when the 
Department attempted to change its legal interpretation of the Act, 
Congress blocked the proposal through a provision in the appropriation; 
and did so for several years afterwards until the proposed rule was 
withdrawn; and (4) the Department issuing Training and Employment 
Guidance Letter (TEGL) No. 11-12, Using Funds Authorized Under Section 
7(a) of the Wagner-Peyser Act of 1933 for Intensive Services as Defined 
by the Workforce Investment Act (Jan. 3, 2013). The Department does not 
agree that the IPA and its implementing regulations prevent the 
Department from allowing added staffing flexibility under the Wagner-
Peyser Act. Section 208 of the IPA transferred the authority of the 
Department and other agencies to prescribe standards for a merit system 
of personnel administration in various Federal grant-in-aid programs. 
42 U.S.C. 4728. In particular, the IPA transferred the Department's 
duties under the Wagner-Peyser Act and sec. 303(a)(1) of the Social 
Security Act (SSA), to the extent that the functions, powers, and 
duties under these laws relate to the prescription of personnel 
standards on a merit basis. 42 U.S.C. 4728(a) and (a)(2). The OPM 
regulations implementing the IPA provide a list of programs with a 
statutory or regulatory requirement for merit staff. The ``Employment 
Security (Unemployment Insurance and Employment Services)'' program, 
which cites as authority the SSA and the Wagner-Peyser Act, is listed 
as having a ``statutory requirement'' for merit staff. 5 CFR part 900, 
subpart F, Appendix A.
    However, there is no indication that Congress, in including the 
Wagner-Peyser Act in sec. 208 of the IPA, intended to affirm a merit-
staffing requirement not found in the Act itself, or to impliedly amend 
the Act to include one, rather than simply reflecting existing merit 
system functions being carried out by the Department at that time. The 
Department notes that the question of Congress's intent in enacting the 
IPA was considered by the court in Michigan v. Herman. After reviewing 
the text and legislative history of the Wagner-Peyser Act and the IPA, 
among other arguments, the court concluded that the Wagner-Peyser Act 
``does not explicitly require merit-staffing'' and that ``Congress has 
never clearly ratified or rejected the Department's inclusion of a 
merit-staffing requirement.'' Michigan v. Herman, 81 F. Supp. 2d at 
847-48.
    Similarly, there is no indication that OPM's regulations at 5 CFR 
part 900 are intended to be authoritative or interpretive of other 
statutes, rather than merely descriptive. The predecessor to the 
current part 900 regulations was issued jointly in 1963 by the 
Department of Health, Education and Welfare, the Department of Labor, 
and the Department of Defense, prior to the passage of the IPA and its 
resulting transfer of functions. It was codified at 45 CFR part 70. In 
prescribing merit standards under the Wagner-Peyser Act at that time, 
the regulations at part 70 cited as authority a provision in the 
Department's yearly congressional appropriation requiring merit-
staffing (former 29 U.S.C. 49n). This provision was not repeated in the 
Department of Labor Appropriations Act, 1965 (Pub. L. 88-605, 78 Stat. 
959, 960 (1964)), or in any such act thereafter. Thus, the current OPM 
regulations, as they relate to the Wagner-Peyser Act, originated not 
only from a former departmental interpretation of the Wagner-Peyser 
Act, but also in a long-expired appropriations rider. Notwithstanding 
DOL's imposition of a merit-staffing requirement at the time of the 
IPA's enactment, there was no longer any corresponding statutory 
requirement in the Wagner-Peyser Act.
    Further, while Appendix A in the current part 900 lists the ES as 
having a ``statutory requirement'' for merit-staffing, the accompanying 
citation is to sec. 5(b) of the Wagner-Peyser Act, 29 U.S.C. 49d(b). 
Section 5(b) does not impose any such requirement, but merely requires 
the Secretary to certify that States are complying with sec. 303 of the 
SSA (requiring, among other things, use of merit staff by States in 
administering their UI programs) and that States are coordinating ES 
activities with the provision of UI claimant services. The provisions 
administered by OPM constitute a transfer of functions and apply only 
to the extent the Department imposes an underlying merit-staffing 
requirement, which, as discussed above, the Wagner-Peyser Act does not 
impose. Indeed, OPM has previously revised Appendix A to reflect 
programmatic changes of the type effected by this final rule. Neither 
the IPA nor the OPM regulations contain an independent legal 
requirement for merit-staffing in the ES.
    The Department does not agree that the language in the Revised 
Continuing

[[Page 603]]

Appropriations Resolution, 2007 (Pub. L. 110-5) (Feb. 15, 2007)--the 
2006 appropriation commenters referred to--demonstrated that Congress 
was reaffirming a merit-staffing statutory requirement for the ES. In 
2007, the appropriation for fiscal year 2007 provided that none of the 
funds made available were to be used to finalize or implement any 
proposed regulation under WIA, the Wagner-Peyser Act, or the Trade 
Adjustment Assistance Reform Act of 2002 (TAARA) until legislation 
reauthorizing WIA and TAARA was enacted. Nothing in this language 
indicates that Congress thought the Department did not have the legal 
authority to give States the flexibility to provide Wagner-Peyser Act-
funded services with non-merit staff. Instead, the Department views 
this appropriation language as Congress's disapproval of the 
Department's policy choice, rather than a definitive statement on the 
Department's legal authority.
    As explained above, the Wagner-Peyser Act does not contain a 
statutory requirement that State merit staff perform ES activities. The 
Department now interprets the Wagner-Peyser Act to give States the 
flexibility to determine whether providing Wagner-Peyser Act-funded 
services through merit staff is the best way to deliver these services 
for their State. States are free to continue to have merit staff 
provide these services or to adopt other staffing models that may work 
better for their State.
    Several commenters opposed the proposed rule, because, they stated, 
merit-staffing is a statutory requirement and the Department does not 
have discretion to rescind this statutory requirement. These commenters 
pointed to TEGL No. 11-12 as affirming that the merit-staffing 
requirement is statutorily mandated in the Wagner-Peyser Act or for the 
proposition that the Department does not have the authority or 
discretion to rescind the statutory requirement that Wagner-Peyser Act-
funded activities be provided by merit-staffed employees.
    The Department agrees that Federal agencies do not have the 
discretion to rescind statutory requirements. However, as explained in 
response to other commenters, it is the Department's position that the 
Wagner-Peyser Act does not contain a statutory requirement for State 
merit staff to provide ES activities. Because the Department only 
interprets the Wagner-Peyser Act to permit the Department to impose 
such a requirement, it is within the Department's discretion to provide 
States the flexibility to deliver these services through merit staff or 
otherwise.
    Additionally, the Department notes TEGLs are guidance documents 
issued by ETA. They are interpretations of the statutes the Department 
administers and the regulations the Department promulgates to implement 
these statutes. TEGL No. 11-12, released in 2013, states that the 
guidance did not change the requirement that State merit staff 
employees deliver Wagner-Peyser Act labor exchange services, and it 
addresses the use of Wagner-Peyser Act funds to provide intensive 
services under WIA. The TEGL simply reminds States that nothing in the 
guidance changes the regulatory requirement in the WIA regulations that 
States provide Wagner-Peyser Act-funded services with merit staff. The 
TEGL does not, as commenters suggested, state that there is a statutory 
requirement to provide Wagner-Peyser Act-funded services with merit 
staff. Nor does it address the Department's authority or discretion to 
rescind a statutory requirement.
    Several commenters opposed the rule because they stated the history 
and origins of the Wagner-Peyser Act and the inherently governmental 
nature of the Wagner-Peyser Act functions show Congress's intention to 
require merit-staffing as a foundation of the ES system. Relatedly, a 
number of commenters opposed the rule because of the integration 
between the UI work test and the ES staff. These commenters explained 
that ES staff perform the UI work test as provided under sec. 
7(a)(3)(F) of the Wagner-Peyser Act to ensure that claimants are able 
to work, available for work, and actively seeking work. The commenters 
stated these are federally required conditions of State UI eligibility 
and, in this relationship, the ES staff function as gatekeepers, making 
the role of the ES staff inherently governmental. Because these 
commenters viewed this activity as inherently governmental, they stated 
these activities can only be handled by State merit staff. Similarly, 
some commenters stated that the UI work test duties are inherently 
governmental in nature, so they cannot be privatized. Other commenters 
stated that because the ES administers the work test to determine if 
individuals are able and available to work and actively seeking 
employment, the ES worker is in the position of determining eligibility 
for UI. The commenters stated that eligibility determination is a 
government function properly carried out by merit-based staff.
    The Department appreciates the history and development of the 
Federal ES beginning in the early twentieth century. Following years of 
a two-tiered, underfunded, and largely ineffective network of 
employment offices, the Wagner-Peyser Act was passed in 1933 in order 
to promote greater cooperation and coordination between the Federal and 
State programs, to avoid active competition between the two, and to 
ameliorate wastefulness in the system. See S. Rep. No. 73-63, at 3-4 
(1933). This final rule is in keeping with the spirit of Federal-State 
cooperation that undergirds the Wagner-Peyser Act, by allowing States 
the choice to staff their ES program activities and services as they 
deem most effective.
    To the extent that the system of State-run employment offices was 
created in order to put a stop to the abuses of private employment 
agencies,\7\ the Department notes that this final rule in no way marks 
a return to a private system of employment firms. All ES activities and 
services nationwide will continue to be provided through the public ES. 
Nor will the States be subject to any risk of patronage that may have 
been a concern in the early years of the program, prior to the 
development of many of the legal safeguards that are currently in 
place. States that opt to use alternative staffing methods will 
continue to be accountable, subject to all of the obligations found in 
the ES regulations regarding effective service delivery, including 
oversight and monitoring, as well as all other applicable laws, in 
administering the program.
---------------------------------------------------------------------------

    \7\ This history is detailed in Henry P. Guzda, ``The U.S. 
Employment Service at 50: it too had to wait its turn,'' Monthly 
Labor Review, 12-19 (June 1983).
---------------------------------------------------------------------------

    The Department does not agree with commenters that the functions of 
the Wagner-Peyser Act are inherently governmental. The Office of 
Management and Budget (OMB) has defined inherently governmental 
functions as those functions ``so intimately related to the public 
interest as to mandate performance only by Federal employees.'' OMB, 
Performance of Commercial Activities, Circular No. A-76 (August 4, 1983 
(Revised 1999)). Inherently governmental functions, according to this 
guidance, normally fall into two categories: (1) Acts of governance; 
and (2) monetary transactions and entitlements. Acts of governance are 
the discretionary exercise of government authority, such as criminal 
investigations, prosecutions, and other judicial functions. Monetary 
transactions and entitlements include functions such as tax collection 
and revenue disbursements.
    Section 7 enumerates the services the ES provides. These services 
include, among others, job search and placement

[[Page 604]]

activities for job seekers, appropriate recruitment services for 
employers, and developing linkages between services under the Wagner-
Peyser Act and other Federal or State legislation. None of these 
activities are inherently governmental because they do not involve 
governance or monetary transactions and entitlements. Indeed, one of 
private firms' core functions is finding the employees they need, and 
there are innumerable private firms offering job-search and job-
placement services. In addition, many of these services, such as the 
job search and placement activities, are similar to the services WIOA 
provides. That WIOA does not have a merit-staffing requirement supports 
the Department's position that these activities are not inherently 
governmental.
    The Department acknowledges that there are important linkages 
between the ES program and the UI program. Section 7(a)(3)(F) of the 
Wagner-Peyser Act requires ES staff to conduct the work test for the UI 
program, including making eligibility assessments. In the UI program 
context, the Department has previously explained that States may not 
use a service provider for inherently governmental functions and that 
these functions must be performed by State merit staff. See 
Unemployment Insurance Program Letter (UIPL) No. 12-01, Outsourcing of 
Unemployment Compensation Administrative Functions, Dec. 12, 2000. In 
this UIPL, the Department listed a number of UI functions that are 
considered inherently governmental and thus must be performed by State 
merit staff. One such function is determining whether to pay (or not 
pay) UI benefits.
    20 CFR 652.209(b)(2) requires the ES to administer the work test 
and conduct eligibility assessments for UI claimants. The UI work test 
includes activities designed to ensure that an individual whom a State 
determines to be eligible for UI benefits is able to work, available 
for work, and actively seeking work in accordance with the State's UI 
law. In providing these services, it is possible ES staff may detect 
eligibility issues for UI claimants. However, the Wagner-Peyser Act 
implementing regulations and guidance make clear that only UI merit 
staff members may adjudicate UI eligibility issues. Therefore, 20 CFR 
652.210(b)(3) requires ES staff to provide UI program staff with 
information about a UI claimant's ability or availability for work or 
the suitability of work offered to UI claimants. This ensures that UI 
merit staff have the information they need to adjudicate any 
eligibility issues detected during the work test or eligibility 
assessment.
    UIPL No. 14-18, Unemployment Insurance and the Workforce Innovation 
and Opportunity Act (Aug. 20, 2018), further explains how ES staff meet 
the requirements to provide these services to UI claimants and offer 
information about any eligibility issues the ES detects while providing 
these services. Specifically, the UIPL explains how States ensure that 
the necessary information about a UI claimant's ability, availability, 
or the suitability of work offered is referred to the State's UI staff. 
First, States are required to have in place an ``effective feedback 
loop'' to inform UI staff whether the claimant reported as directed and 
participated in the appropriate eligibility assessment and/or services. 
Second, States must ensure ES staff are trained to conduct a thorough 
eligibility assessment to identify potential eligibility issues for 
referral to UI staff. Third, States must ensure that ES staff are 
trained to properly document information for use by UI staff in 
adjudicating any eligibility issues. Finally, this feedback loop must 
be in place and clearly documented. Id. at 10.
    The work test and eligibility assessments themselves do not involve 
making a determination on whether to pay (or not pay) unemployment 
compensation; instead, the individuals conducting the test and 
assessment gather information and then share that information through 
the above-mentioned feedback loop with the UI program staff who make 
the determination about an individual's eligibility or continuing 
eligibility for unemployment compensation. Id. The Department requires 
a clearly documented feedback loop that advises UI staff whether the 
individual reported as directed and participated in the eligibility 
assessment and/or services. Id. Sending this information to UI staff 
ensures that only UI merit staff members are adjudicating UI 
eligibility issues, consistent with the requirement in sec. 303(a)(1) 
of the SSA that the UI program maintains personnel standards on a merit 
basis.
    One commenter opposed the proposed rule because, the commenter 
stated, that Congress envisioned at the Wagner-Peyser Act's inception, 
and affirmed over the years, a professional cadre of State government 
ES employees selected by merit to avoid favoritism or partisanship in 
the delivery of services. As discussed above, the Wagner-Peyser Act 
does not reflect any express intent to require merit-staffing in the 
ES. Congress could have chosen to insert such a requirement in the 
Wagner-Peyser Act at the time of its passage, or at any time 
thereafter, as it did in other legislation--for example, sec. 303(a)(1) 
of the SSA. Further, while a merit-staffing requirement has been 
included in a number of previous departmental appropriations acts, 
Congress specifically chose not to make this a permanent feature of the 
Wagner-Peyser Act. Instead, since its passage in 1933, the Wagner-
Peyser Act has explicitly given the Secretary discretion under sec. 
3(a) to develop and prescribe ``minimum standards of efficiency'' in 
the administration of the ES program. This discretion was affirmed in 
Michigan v. Herman, where the court found no conclusive evidence that 
Congress had intended to impose a merit-staffing requirement, or had 
affirmed or rejected such a requirement in the ensuing decades.
    Several commenters opposed the proposed rule because they viewed it 
as inconsistent with the reasons Congress initially created the ES. 
They contended that before Congress passed the Wagner-Peyser Act, there 
was corruption, political patronage, and inequities in private 
employment offices nationwide and that in passing the Act, Congress 
envisioned a State merit system to prevent favoritism and promote 
equality in the delivery of services. This final rule is consistent 
with the purposes of the Wagner-Peyser Act, which was passed primarily 
to strengthen the overall structure, value, and effectiveness of the ES 
system in the United States through innovation. The Department 
recognizes the history of ES offices in the United States, and the 
problems that first prompted States to create their own free, public 
employment offices. This final rule does not detract from the public 
nature of an ES system that offers universal access to job seekers, nor 
does it vest in private entities the ultimate responsibility for 
effective service delivery to the public. The myriad of obligations to 
which the States are subject as conditions for receipt of funding under 
the Wagner-Peyser Act, as well as obligations imposed by other 
applicable laws, remain unchanged by this final rule.
    One commenter viewed the history of the Wagner-Peyser Act and the 
inherently governmental nature of its functions carried out by merit 
staff as a foundation of the ES system and that Congress's actions to 
protect merit-staffing in the ES since the law's New Deal-era passage 
show Congressional intent for and support of merit-staffing for ES. The 
Department agrees that the staff who provide Wagner-Peyser Act-funded 
services are key to the success of the program and job seekers and 
employers' use of the ES. However, the Department views the foundation 
of the

[[Page 605]]

ES to be the services provided to job seekers and employers. Each State 
has unique needs from the ES and a one-size-fits-all staffing model may 
not be able to take these needs into account. Therefore, the Department 
has determined it would be most appropriate to give States the 
flexibility to determine which staffing model provides the most 
effective services to their customers.
    The Department acknowledges that Congress has taken actions related 
to merit-staffing of Wagner-Peyser Act-funded services. However, as 
explained above, while the imposition of a merit-staffing requirement 
is a permissible interpretation of sec. 3(a) of the Wagner-Peyser Act, 
it is not required by the Act.
    Likewise, several commenters opposed the flexibility in the 
proposed rule to provide Wagner-Peyser Act-funded services with staff 
other than merit staff, because they believed Congress would not 
approve of the flexibility. Specifically, the commenters explained that 
Congress's actions since the bill's passage show the original intent of 
the authors of the Wagner-Peyser Act and Congress's intent to require 
merit-staffing in the ES. Similarly, some commenters opposed the 
proposed rule because, they stated, there was a pattern of 
Congressional action to prevent the ``privatization'' (as they termed 
it) of ES activities, revealing that Congress has a critical role in 
supporting and maintaining the ES merit-staffing requirement. This rule 
does not privatize Wagner-Peyser Act services, but rather it provides 
flexibility to States to offer Wagner-Peyser Act services using the 
best staffing approach available to them to provide these services. The 
Department acknowledges that Congress has taken actions since the 
enactment of the Wagner-Peyser Act that maintained the Department's 
regulatory requirement that States provide ES activities with State 
merit staff. For the reasons discussed above, there is no current 
statutory merit staff requirement in the Wagner-Peyser Act. Since the 
enactment of the Wagner-Peyser Act in 1933, a number of years have 
passed during which Congress could have either amended the Wagner-
Peyser Act to make it a statutory requirement that States provide 
Wagner-Peyser Act-funded services with merit staff or continued to 
require use of merit staff in the ES system via appropriations rider, 
as was done for a number of years. But Congress has not done so.
    Most notably, on May 15, 1998, in Michigan v. Herman the court held 
that there was no explicit statutory mandate in the Wagner-Peyser Act 
to require States to deliver Wagner-Peyser Act-funded services with 
State merit staff. 81 F. Supp. 2d at 847. On August 7, 1998, a little 
over two months later, Congress enacted WIA, which included a number of 
amendments to the Wagner-Peyser Act. Thus, as of May 15, 1998, Congress 
was aware that a court had concluded there was no explicit merit-
staffing requirement in the Wagner-Peyser Act. Had Congress wanted to 
make it a statutory requirement, Congress could have used the 1998 
amendments to include one. However, Congress did not include such a 
requirement in these 1998 amendments. Similarly, in 2014, Congress 
again re-authorized the workforce development system and amended the 
Wagner-Peyser Act. Like the 1998 amendments, these amendments also did 
not include a statutory requirement to provide ES activities with State 
merit staff.
    Commenters also stated that later congressional actions can 
demonstrate the original intent of the authors of the Wagner-Peyser 
Act. The Wagner-Peyser Act was enacted in 1933. It is questionable 
whether congressional actions taken later, sometimes decades later, 
should have much relevance to the intent of the Act's authors. 
Regardless, the key language of the Act itself, which Congress has not 
amended, shows no congressional intent to impose a permanent merit-
staffing requirement.\8\
---------------------------------------------------------------------------

    \8\ The original Wagner-Peyser Act employed this language: ``The 
bureau shall also assist in coordinating the public employment 
offices throughout the country and in increasing their usefulness by 
developing and prescribing minimum standards of efficiency . . . .'' 
Public Law 73-30 Sec.  3(a), 48 Stat. 113, 114 (1933). The Act, as 
amended, uses the same ``minimum standards of efficiency'' language: 
``The Secretary shall assist in coordinating the State public 
employment service offices throughout the country and in increasing 
their usefulness by developing and prescribing minimum standards of 
efficiency . . . .'' 29 U.S.C. 49b(a) (2018).
---------------------------------------------------------------------------

    Several commenters opposed the proposed rule because they believe 
the ES system only qualifies as a ``public employment office'' if the 
employees are State merit-staffed employees. The commenters noted that 
sec. 1 of the Wagner-Peyser Act requires the establishment of a 
``national system of public employment service offices,'' and the 
commenters contended that a principal component of such a system are 
``employees of State government [who are] hired and promoted on the 
basis of merit under a civil service system.'' They believe this is 
what makes the offices ``public.'' Without merit-staffed State 
government employees, the commenters asserted, the public nature of the 
ES is given to private control and is no longer a ``public employment 
office.'' These commenters interpreted the term ``public'' in the 
phrase ``public employment office'' in sec. 1 of the Wagner-Peyser Act 
to refer to the employment relationship between the individuals 
providing Wagner-Peyser Act-funded services and the State. However, 
nothing in the Wagner-Peyser Act indicates this was the intent of 
Congress in establishing the ES. As explained above, the history of the 
Wagner-Peyser Act's passage indicates Congress established the ES to 
promote greater cooperation and coordination between the Federal and 
State programs, to avoid active competition between the two, and to 
ameliorate wastefulness in the system. See S. Rep. No. 73-63, at 3-4 
(1933). To the extent that the ES was created to end the abuses of 
private employment agencies,\9\ the Department notes that this final 
rule in no way marks a return to a private system of employment firms. 
All ES activities and services nationwide will continue to be provided 
through State-administered offices, with services universally available 
and financed with public funding via a grant from the Department, which 
will continue to oversee that States meet their obligations under the 
Wagner-Peyser Act. Accordingly, contrary to the commenter's assertion, 
the Department will continue to administer a national system of public 
employment service offices under this final rule.
---------------------------------------------------------------------------

    \9\ This history is detailed in Henry P. Guzda, ``The U.S. 
Employment Service at 50: it too had to wait its turn,'' Monthly 
Labor Review, 12-19 (June 1983).
---------------------------------------------------------------------------

    The Department notes that sec. 2(6) of the Wagner-Peyser Act 
provides that the term ``employment service office'' means a local 
office of a State agency. The Department interprets this to mean that 
an ES office is any local office where the State agency provides ES 
activities (be it through State employees or a service provider). This 
is consistent with the definition the Department proposed for ``ES 
office'' in the NPRM and finalized in this rule.
    Several commenters opposed the flexibility provided in the proposed 
rule because they stated it contradicts the Department's long-standing 
position. They contended that it has been a long-standing position of 
the Department, as the Department argued in Michigan v. Herman, that 
the Wagner-Peyser Act requires merit-based staffing. Commenters 
explained that in the Michigan v. Herman case, the Department argued 
that Congress intended merit-staffing to be a key component of a public 
ES at the outset

[[Page 606]]

and described how Congress has reaffirmed this principle over time. The 
Department acknowledges that it has required States to provide labor 
exchange services with State merit staff. However, as explained 
elsewhere in this final rule, the Department is now changing its policy 
and is giving the States the flexibility to determine what staffing 
model works best for their State's needs. In Michigan v. Herman, the 
Department contended that its construction of the Wagner-Peyser Act to 
require merit staffing was supported by the language of the statute and 
was consistent with Congressional intent. However, the court ruled that 
it ``cannot state, as a matter of law, which of the various 
interpretations presented more accurately reflects Congressional 
intent'' and concluded that sec. 3(a) was broad enough to permit the 
Department to require merit-staffing. Michigan v. Herman, 81 F. Supp. 
2d at 847-48. Implicit in the court's decision is that it would also be 
a permissible read of this provision to not require merit-staffing. 
Now, consistent with the decision in Michigan v. Herman, the Department 
is exercising its discretion to interpret sec. 3(a) of the Wagner-
Peyser Act and will no longer require States to use State merit staff 
to deliver labor exchange services. As explained above, the Department 
notes that it is permissible for Federal agencies to change their 
interpretations as long as they provide a reasoned explanation for the 
change. Encino Motorcars, LLC, 136 S. Ct. at 2125. This includes 
``display[ing] awareness'' that the agency is changing its position and 
showing that there are good reasons for the change. Id. at 2126. As 
required, in the NPRM for this rule, the Department acknowledged that 
its proposal was a departure from the requirement to use merit staff 
and provided four reasons for this change. See 84 FR 29433, 29434 (June 
24, 2019). No commenters expressed that the prior rule engendered 
substantial reliance interests, and even if they had, as noted, the 
Department has provided a substantial justification for this 
change.\10\
---------------------------------------------------------------------------

    \10\ The Department also notes that the flexibilities permitted 
by this rule are purely optional, and the Department's monitoring 
and requirements of States' service delivery remain in place.
---------------------------------------------------------------------------

    One commenter asked if private entities receiving Wagner-Peyser Act 
funds would be required to comply with State and Federal freedom of 
information act rules and regulations. The Freedom of Information Act 
(FOIA) establishes a statutory scheme for members of the public to use 
in making requests for Federal agency records. Only agencies within the 
Executive Branch of the Federal government, independent regulatory 
agencies, Amtrak, and some components within the Executive Office of 
the President, are subject to the FOIA. See 5 U.S.C. 551(1) and 
552(f)(1) and 49 U.S.C. 24301(e). Therefore, if a private entity 
receives Wagner-Peyser Act funds from a State that entity is not 
subject to the FOIA or its implementing regulations.
    However, the Department notes that each State has its own open 
record law. The Department is not the appropriate entity to interpret 
the application of a State's laws. Entities receiving Wagner-Peyser Act 
funds from a State must conduct their own analysis to determine the 
applicability of a State's freedom of information laws and regulations.
    One commenter opposed the proposed rule, arguing in part that it 
could lead to politicization, which the commenter stated is currently 
prohibited, because most State employees are covered by the Hatch Act. 
The Hatch Act of 1939 (Pub. L. 76-252) restricts the political activity 
of individuals principally employed by State, District of Columbia, or 
local executive agencies and who work in connection with programs 
financed in part by Federal loans or grants. The Department 
acknowledges that some individuals providing ES activities may no 
longer be covered by the Hatch Act, as they may no longer be 
principally employed by a State, the District of Columbia, or a local 
executive agency. However, the ES is a universal access program that 
requires that labor exchange services be available to all employers and 
job seekers. See 20 CFR 652.207. States, regardless of who is providing 
the services, must ensure that this requirement is met. If a State 
decides to use the staffing flexibility in this final rule to provide 
these services, the State's monitoring will include ensuring the 
universal access requirement is met. In turn, the Department's 
monitoring of the State will also focus on this requirement.
    One commenter opposed the proposed rule because the commenter 
stated that recognizing the inherently governmental functions of the 
ES, Congress has acted many times in the 85-year history of the Wagner-
Peyser Act to require merit-staffing in the ES and has recognized that 
any changes require congressional action. The Department does not agree 
that changes in the merit-staffing requirement can only be made through 
congressional action. As explained above, the Wagner-Peyser Act permits 
the Department to require States to deliver Wagner-Peyser Act-funded 
services with State merit staff, but it does not impose a statutory 
requirement that such services be merit-staffed. Because the merit-
staffing requirement is not mandated by statute, as noted above, it is 
within the Department's authority to provide States with this 
flexibility.
    One commenter opposed the proposed rule because of the potential 
impact on the Reemployment Services and Eligibility Assessment (RESEA) 
program. The commenter explained that ``[p]rivatizing the public 
Employment Service'' could jeopardize the effectiveness of RESEA. The 
commenter noted that many States have launched RESEA models that rely 
on ES staff being cross-trained in UI to a level that they can deliver 
legally accurate guidance on the State's UI law and qualifying 
requirements. The commenter expressed concerns that allowing what they 
described as the privatization of services under RESEA grants would 
amount to privatizing key components of the UI program, a result that 
Congress did not intend when it expanded RESEA last year, and that is 
not permissible under current law. This rule does not privatize Wagner-
Peyser Act services, but rather it provides flexibility to States to 
offer Wagner-Peyser Act services using the best staffing approach 
available to them to provide these services. The Department does not 
agree that the proposed flexibility given to States would negatively 
impact the RESEA program. The RESEA program assesses the continued 
eligibility and reemployment needs of UI claimants for the program's 
targeted populations. As the Department explained in its guidance on 
RESEA, UI staff, Wagner-Peyser Act-funded State ES staff, WIOA staff, 
or other AJC staff may deliver these services. See UIPL 07-19, Fiscal 
Year (FY) 2019 Funding Allotments and Operating Guidance for 
Unemployment Insurance (UI) Reemployment Services and Eligibility 
Assessment (RESEA) Grants (Jan. 11, 2019). Therefore, the Department 
currently permits non-merit staff to carry out RESEA, as many WIOA 
staff are not merit staff. Additionally, the Department has provided 
guidance to States on handling eligibility issues that are detected in 
the course of providing RESEA services. Similar to how the ES program 
administers the work test, States are required to have feedback loops 
from the AJC to the UI system on whether claimants reported as directed 
and participated in the minimum activities outlined in their 
reemployment plans. This ensures that any eligibility issues are 
referred to the UI agency and that eligibility issues are

[[Page 607]]

adjudicated by State merit staff, consistent with the requirement in 
sec. 303(a)(1) of the SSA.
    The Department supports efforts that States have already made in 
launching RESEA programs and encourages States to continue to create 
the RESEA program that best fits each State's needs. The Department 
notes that this final rule does not require States to use non-merit 
staff to deliver their ES activities; instead, it gives the States the 
discretion to choose the staffing model that best meets each State's 
needs.
    A commenter cited the Federal law that created the cabinet-level 
U.S. Department of Labor in 1913, which states that the Department's 
purpose is to foster, promote, and develop the welfare of working 
people in order to improve their working conditions and enhance 
opportunities for profitable employment. The commenter stated that the 
proposed regulations are in step with the trend to reduce civil service 
protections, and they are out of step with the Department's purpose. 
This final rule is consistent with the Department's purposes, one of 
which, as the commenter noted, is to enhance opportunities for 
profitable employment. States are in the best position to decide what 
is the most effective, efficient, and cost-effective way to provide 
services under the Wagner-Peyser Act; this final rule recognizes this 
and gives States the flexibility to determine what staffing model best 
suits the States' needs without sacrificing the quality of Wagner-
Peyser Act services. Additionally, this flexibility may allow States to 
align the provision of Wagner-Peyser Act services with WIOA service 
delivery models so the programs work better together. Consistent with 
the Department's purpose, this will enhance opportunities for 
profitable employment.
    One commenter suggested that adoption of the additional flexibility 
in the proposed rule would undermine current or existing efforts to 
align and integrate services provided to job seekers and employers. The 
commenter noted existing efforts made in the operation of the Wagner-
Peyser Act since the enactment of WIOA; these efforts include the 
alignment of service delivery with WIOA, including cross-training of 
workforce programs, electronic systems, and a customer centered 
approach to service delivery. According to the commenter, States' 
efforts have resulted in more efficient offices and a more holistic 
approach to service delivery for customers. The Department commends the 
commenter's efforts to align and integrate services provided to job 
seekers and employers. The Department notes that this final rule does 
not impose any requirements on States to change their service delivery 
models and States may continue to use State merit staff to deliver 
Wagner-Peyser Act-funded labor exchange services if the State prefers 
this model. This final rule provides flexibility to States to consider 
and choose alternative staffing models if they determine it to be a 
more effective approach to serving the job seekers and job creators 
they serve.
    One commenter noted that contracted services under WIOA have 
resulted in a high turnover rate for staff and expressed concern that 
this turnover may happen in the Wagner-Peyser Act-funded labor exchange 
services if the merit-staffing requirement were removed. The commenter 
expressed concern that ``clients would suffer while contractors get `up 
to speed,' '' and that the networks developed over time cannot be 
replicated by a new service provider. The commenter also suggested that 
if the flexibility provided by this final rule were adopted, staffing 
retention would decrease and for-profit companies may generate ``false 
numbers.''
    Another commenter noted that contracting services may result in 
fewer services for individuals with barriers to employment and 
individuals who may require more services in order to obtain 
employment, because the ``contractors'' may perceive these individuals 
to be more costly to assist. The commenter appeared to suggest that 
service providers would be concerned more about profit than ensuring 
individuals receive individually appropriate services. Additionally, 
some commenters noted concerns about services to rural communities, if 
services are contracted out, because providing services in these 
communities may not be as profitable in a contract-for-service system. 
Other commenters expressed concerns about additional costs associated 
with contracting services provided under the Wagner-Peyser Act, which, 
according to the commenters, may result in reduced services to 
customers.
    A few commenters also noted their concerns that a service provider 
may have incentives inconsistent with the Wagner-Peyser Act goal of 
providing universal access to all job seekers. One stated that if a 
contracted firm is given a flat fee, there may be an incentive to 
``dump clients.'' Multiple commenters also stated another potential 
risk associated with contracted services is if a success-related 
incentive is provided, service providers may screen for the cases most 
likely to succeed regardless of intervention and have ``little 
incentive to consider whether they are referring candidates of diverse 
nationalities and races or simply referring the most employable 
workers.'' One commenter stated there is a ``potentially damaging 
incentive'' when it comes to job placement. The commenter stated that 
``contractors'' may be able to use the Worker Profiling and 
Reemployment Services system to identify those most likely to obtain 
employment and serve only those easier to serve individuals.
    The Department appreciates the considerations that States will need 
to take into account when deciding whether to use the staffing 
flexibility provided in this final rule, including how services and 
process changes are staffed and integrated at the local level. States, 
as Wagner-Peyser Act grantees, are required to oversee all operations 
of the Wagner-Peyser Act activities, regardless of how they choose to 
use this final rule's additional staffing flexibility. States are 
responsible for the operations and performance of the State's Wagner-
Peyser Act ES program, including the quality provision of services to 
employers and job seekers. These responsibilities continue to include 
the requirement at 20 CFR 652.207 to provide universal access to 
Wagner-Peyser Act services for all employers and job seekers to receive 
labor exchange services, not just those easiest to serve.
    The Department considers States to be in the best position to 
decide what is the most productive, efficient, and cost-effective way 
to provide services under the Wagner-Peyser Act. This regulation does 
not require States to change their staffing structure for providing 
services under the Wagner-Peyser Act, but it provides them flexibility 
in how they staff the delivery of these services. As stated above, 
States are ultimately responsible for the operations and performance of 
the State's Wagner-Peyser Act program. The Department encourages States 
to ensure the incentives of any agreements with service providers align 
with the goals and requirements of the Wagner-Peyser Act.
    One commenter was supportive of the proposed rule, but requested 
guidance related to the operations of the Wagner-Peyser Act, including 
on the services provided, colocation, referrals, farmworker services, 
and services to veterans. The Department recognizes there may be need 
for additional guidance on implementing staffing flexibility once this 
rule is finalized. The Department will continue to

[[Page 608]]

provide guidance to States and the workforce system as needed through 
webinars, WorkforceGPS, TEGLs, and other means to ensure effective 
operations of Wagner-Peyser Act activities. Currently, the Department 
has provided guidance on the provision of career services by ES staff 
in TEGL No. 19-16, guidance on veterans' priority of service including 
in the ES in TEGL No. 10-09, and guidance on the reporting of services 
to farmworkers by the ES in TEGL No. 14-18.
    One commenter asked how one-stop infrastructure costs and other 
shared one-stop operational costs will be handled if a State contracts 
for the delivery of its labor exchange Wagner-Peyser Act-funded 
services. Another commenter requested that local workforce development 
boards be consulted when services provided under the Wagner-Peyser Act 
are contracted out, in order to ensure one-stop financial commitments 
continue to be addressed. The Department recognizes the importance of 
addressing one-stop infrastructure costs and other shared operational 
costs for ES programs and notes that this final rule does not make any 
changes to obligations of WIOA required one-stop partners on 
infrastructure costs. The Department has provided guidance and 
technical assistance on the sharing and allocation of infrastructure 
costs among one-stop partners. All one-stop partners, including State 
ES programs, are still required to contribute to the infrastructure 
costs of AJCs. If a State's adjustments in ES staffing impact the cost 
allocation methods in the MOU, than the parties must modify the MOU as 
appropriate, consistent with 20 CFR part 678, subpart C. For more 
information and guidance on one-stop operations and infrastructure 
funding of the one-stop delivery system, see TEGL No. 16-16, One-Stop 
Operations Guidance for the American Job Center Network (Jan. 18, 
2017), and TEGL No. 17-16 Infrastructure Funding of the One-Stop 
Delivery System (Jan. 18, 2017). The Department will continue to 
provide guidance and technical assistance as needed.
    One commenter recommended that the Department require States to 
accept comments and consult with local workforce development boards and 
local elected officials if services provided under the Wagner-Peyser 
Act will be contracted to an entity other than a local workforce 
development board. The Department acknowledges that some States will 
want to consult with local workforce development boards and local 
elected officials, who have gained experience over the years with 
alternative staffing methods for the provision of WIOA services, as 
they determine the most appropriate staffing model for their State. 
However, the Department has chosen not to require States to accept 
comments or consult with local workforce development boards or local 
elected officials if the State implements staffing flexibility under 
this final rule. The flexibility in the final rule is based on the 
State's responsibility to oversee operations of ES activities including 
delivering effective services, and the State is in the best position to 
determine whether and how to consult with local workforce development 
boards.
    One commenter stated that onsite monitoring of Federal programs has 
been reduced, and that the changes to the merit-staffing requirement 
may result in less oversight of the Wagner-Peyser Act regulations. The 
commenter noted that less monitoring may lead to less ``fidelity to 
impartiality and fairness in the staffing of ES activities under the 
administrative flexibility.'' Based on this, the commenter recommended 
that merit-staffing of Wagner-Peyser Act-funded staff be maintained to 
ensure the fair and equitable delivery of ES activities to job seekers, 
UI claimants, MSFWs, and employers. The commenter suggested that, if 
the proposed flexibility is approved, the Department should add 
additional regulatory language to require onsite annual Federal reviews 
of State adherence to unbiased and impartial delivery of employment 
services, and prohibition of patronage in the selection and promotion 
of AJC ES and UI staff members.
    As explained above, States, as Wagner-Peyser Act grantees, are 
required to oversee all Wagner-Peyser Act operations, whether or not 
they decide to use alternate staffing methods, and are ultimately 
responsible for the operations and performance of the State's Wagner-
Peyser Act program. These responsibilities continue to include the 
requirement at 20 CFR 652.207 to provide universal access to Wagner-
Peyser Act services, and the Department expects States to ensure that 
services are delivered fairly and impartially.
    The commenter suggested including regulatory language requiring the 
Department to conduct onsite annual reviews of States. The Department 
has not included this as a requirement in the regulation, because, 
consistent with 20 CFR 683.400, the Department already conducts 
monitoring at the State and local levels, including onsite monitoring, 
on a regular schedule. Additionally, States are required to conduct 
regular onsite monitoring of its Wagner-Peyser Act program, consistent 
with 20 CFR 683.410. As the Department's grantees, States must continue 
to oversee, provide guidance, and ensure compliance of its Wagner-
Peyser Act operations and service delivery, regardless of whether they 
ultimately decide to take advantage of staffing flexibility or not.
Unemployment Insurance and the Wagner-Peyser Act
    The Department notes that this regulation does not change the 
requirement in sec. 303(a)(1) of the SSA that UI services be provided 
by merit staff.
    Several commenters opposed the proposed rule because they stated 
that title III of the SSA authorized the payment of Federal 
Unemployment Tax Act funds to administer UI benefits through public 
employment offices. They asserted that the integration of the financing 
and administration of UI and the public employment offices led to 
housing these two offices within the same State agency, thus, extending 
the merit-staffing requirements to the ES. The Department does not 
agree that the financing structure of the UI and ES programs extends 
the UI merit-staffing requirement to the ES. Section 901(a) of the SSA 
establishes an employment security administration account (ESA) and 
sec. 901(c)(1)(A) authorizes use of the funds in this account for 
certain enumerated purposes, including assisting the States in the 
administration of their UI laws and the establishment and maintenance 
of systems of public employment offices in accordance with the Wagner-
Peyser Act. Although the financing for the ES and the State's UI 
program come from the same source, the ESA, the administration 
requirements of the two programs are not the same. Specifically, sec. 
901(c)(1)(A)(ii) of the SSA provides for the establishment of public 
employment offices in accordance with the Wagner-Peyser Act's 
requirements. The Department interprets this to mean that the ESA funds 
used for the administration of the Wagner-Peyser Act are subject to the 
requirements of the Act. As explained above, the Department does not 
interpret the Wagner-Peyser Act to contain a statutory merit-staffing 
requirement. Therefore, the Department does not agree with commenters 
that the financing structure of the ES and UI program extends the 
merit-staffing requirement of sec. 303(a)(1) of the SSA for the UI 
program to the ES program.
    The Department acknowledges that in many States, the State agency 
administering the UI program is the

[[Page 609]]

same agency administering the ES program. The Department supports the 
close alignment of the ES and UI program, because the ES program plays 
a key role in UI, helping connect job seekers with employers so as to 
return UI recipients to work as soon as possible. The ES, however, does 
not administer the UI program. While it is reasonable for States to 
locate these functions within the same State agency, there is no 
requirement to do so. This final rule does not prohibit States from 
extending merit-staffing to the delivery of ES labor exchange services.
    One commenter noted that this proposed rulemaking would create a 
staffing disconnect between the Wagner-Peyser Act and UI programs, and 
not having these activities performed by State merit-staff employees 
would complicate the administration of UI benefit eligibility. Another 
commenter stressed the importance of keeping the connection between UI 
benefits and the labor exchange system funded by the Wagner-Peyser Act. 
The Department does not agree that the final rule will hamper the 
coordination of employment services and UI claimant services. 
Consistent with 20 CFR 652.209, States must provide reemployment 
services to UI claimants for whom such services are required as a 
condition for receipt of UI benefits. Even if States choose to use a 
service provider for the provision of Wagner-Peyser Act-funded 
services, States are still responsible for fulfilling the requirements 
of 20 CFR 652.209. The Department considers States to be in the best 
position to develop business processes designed to ensure coordination 
between UI and the Wagner-Peyser Act in serving unemployed job seekers. 
The Department monitors States to ensure they are fulfilling these 
statutory and regulatory requirements.
    Multiple commenters stated they opposed the flexibility provided in 
the rule because past reemployment initiatives have relied on the UI 
programs' ability to use ES staff, which would not be possible if ES 
programs were not merit-staffed. The Department recognizes that States 
may find value in having ES staff cross-trained and able to carry out 
UI functions, particularly in an economic downturn when UI workload can 
spike quickly. This rule does not prevent States from continuing this 
practice as long as any staff with responsibility for determining UI 
benefit eligibility are merit-staffed.
    Some commenters noted a concern regarding the accuracy in the 
administration of employment systems by non-State-merit staff under the 
proposed regulation and that it may complicate efforts to reduce the 
error rate in the administration of UI benefits. The Department 
appreciates the considerations that States need to take into account 
when deciding whether to use the staffing flexibility this final rule 
provides, including ensuring using accurate information to administer 
UI programs. States are in the best position to ensure staffing and 
procedures are in place to support the accurate administration of UI 
benefits, including ensuring that staff carrying out the UI work test 
under the Wagner-Peyser Act are properly trained. Regardless of whether 
or not a State takes advantage of the flexibility this final rule 
provides, the Department will still require States to properly and 
efficiently administer the UI program so as to ensure accuracy of 
benefit payments, including reporting on the accuracy of their payments 
through the Benefit Accuracy Measurement (BAM) under 20 CFR part 602 
and ensuring that all eligibility determinations meet the payment 
timeliness requirements at 20 CFR part 640.
    Additionally, States, as the Wagner-Peyser Act grantees, are 
required to oversee all operations of the Wagner-Peyser Act activities, 
whether they ultimately decide to use staffing flexibility to provide 
these services or not. Consistent with 20 CFR 683.400, the Department 
will continue to conduct monitoring at the State and local levels.
    A few commenters noted concerns regarding impartiality of the staff 
providing the services under the Wagner-Peyser Act. They expressed 
concern that non-merit staff would jeopardize its future as an 
impartial program connecting job seekers to UI benefits and job 
referrals. The Department appreciates the considerations that States 
will need to take into account when deciding whether to use staffing 
flexibility under this final rule, including how the program will 
maintain its impartiality in connecting job seekers to UI benefits and 
job referrals. ES staff have specific obligations in serving UI 
claimants and in carrying out services to job seekers, which include: 
Coordination and provision of labor exchange service; targeting UI 
claimants for job search assistance and referrals to employment; 
administering State UI work test requirements; and providing meaningful 
assistance to individuals seeking assistance in filing a UI claim. 
States, as the Wagner-Peyser Act grantees, are required to oversee all 
operations of the Wagner-Peyser Act activities, whether or not they 
ultimately decide to use the staffing flexibility provided by this 
final rule, because States are still subject to 20 CFR part 683, 
subpart D--Oversight and Resolution of Findings.
    One commenter noted that there may be challenges stemming from data 
privacy requirements in having contracted staff providing ES 
activities, as they related to UI and TAA administration. They noted 
that constraints associated with confidentiality of UI and TAA data 
remain intact. The commenter stated that in this new proposed system, 
which purportedly streamlines the provision of employment services to 
individuals, additional layers (obtaining written informed consent, 
monitoring ``contractors'' to ensure compliance with the Wagner-Peyser 
Act requirements) would have to be added. The Department appreciates 
the considerations that States will need to take into account when 
deciding whether to use staffing flexibility, including the 
confidentiality concerns associated with confidential UI and TAA data. 
States, as the Wagner-Peyser Act grantees, are required to oversee all 
operations of the Wagner-Peyser Act activities, whether they ultimately 
decide to take advantage of the staffing flexibility provided by this 
final rule for these services or not. The Department has issued 
guidance to support States in their efforts to integrate UI and WIOA 
programs, including the ES program in UIPL No. 14-18, Unemployment 
Insurance and the Workforce Innovation and Opportunity Act. This 
guidance includes information related to UI confidentiality 
requirements found in 20 CFR part 603 and the interaction between those 
requirements and the operation of WIOA programs, including the ES 
program, and the Department encourages States to review this guidance. 
In addition, WIOA partner programs have experience integrating services 
within an AJC while maintaining the confidentiality of individual 
participants' data; therefore, States adopting this final rule's 
flexibility should be able to ensure privacy requirements are 
maintained.
    Some commenters noted concerns regarding the administration of 
State UI programs, including a concern that the work-test function of 
UI eligibility being performed by non-State-merit staff under the 
proposed regulation would result in inaccuracies or process delays of 
UI benefits. One commenter mentioned concerns about the services 
provided to unemployed job seekers, including the long-term unemployed, 
since they are the most vulnerable job seekers. The commenter was 
concerned about the impact of non-merit staff being involved in the 
provision and

[[Page 610]]

reporting of services, because negative results have serious economic 
impact on the individual due to it causing a delay or denial of their 
UI benefits. The commenter noted it is important that the individuals 
reporting these results be held accountable for the accuracy of their 
reports and stated that merit-based employees best exemplify this level 
of accountability.
    One commenter asked what safeguards would be implemented to ensure 
that the work readiness test performed by ES staff for UI purposes 
would not be compromised and will continue to be administered fairly 
and equitably. The Department recognizes the importance of the 
connection between the UI and Wagner-Peyser Act programs, and considers 
the flexibility this regulation provides to States as an opportunity 
for States to test and improve strategies for serving unemployed 
individuals. To assist with this, the Department continues to place an 
emphasis on planning across the Wagner-Peyser Act and UI programs, 
through the required WIOA State Plan process. As part of that process, 
States are required to address strategies developed to support training 
and awareness across core programs and the UI program, including on the 
identification of UI eligibility issues and referrals to UI staff for 
adjudication. Additionally, as part of this process the States are 
required to describe strategies for providing reemployment assistance 
to UI claimants and other unemployed individuals. These requirements 
can be found at OMB Control Number 1205-0522, Required Elements for 
Submission of the Unified or Combined State Plan and Plan Modifications 
under the Workforce Innovation and Opportunity Act.
    Regarding the commenter's concerns about UI benefit delays or 
inaccuracies and what ``safeguards'' would be implemented to ensure 
that the work readiness test performed by ES staff for UI purposes is 
not compromised, the Department notes that it has been permissible for 
non-State merit staff to carry out similar functions, for example, 
reviewing compliance with State work search requirements, as part of 
the RESEA program and its predecessor, the REA program, for many years. 
The service delivery staff must be trained to identify any potential UI 
eligibility issues that come to their attention, or that are identified 
when staff are providing such services, and refer any such issues to UI 
merit staff to adjudicate, as appropriate, potential UI eligibility 
issues. Additional guidance can be found in UIPL No. 12-01, Outsourcing 
of Unemployment Compensation Administrative Functions, UIPL No. 12-01, 
Change 1, Outsourcing of Unemployment Compensation Administrative 
Functions-Claims Taking, and UIPL No. 14-18, Unemployment Insurance and 
the Workforce Innovation and Opportunity Act.
    Additionally, regardless of whether or not a State takes advantage 
of the flexibility this final rule provides, the Department will still 
require States to properly and efficiently administer the UI program so 
as to ensure accuracy of benefit payments, including reporting on the 
accuracy of their payments through the BAM under 20 CFR part 602 and 
ensuring that all eligibility determinations meet the payment 
timeliness requirements at 20 CFR part 640.
Sec.  652.216 May the one-stop operator provide guidance to Employment 
Service staff in accordance with the Wagner-Peyser Act?
    Section 652.216 governs how one-stop operators provide guidance to 
ES staff. The Department received comments on this section and responds 
to them below. The Department is finalizing this section as proposed.
    One commenter requested the Department include a requirement in the 
regulation that States that continue to use State merit-staffing models 
must follow all applicable State personnel laws and regulations, 
because the commenter was concerned that not including this would 
potentially allow non-State entities to determine personnel actions 
that are solely the responsibility of the SWA. The Department 
recognizes that some States will continue to use State merit-staffing 
models. However, the Department declines to include language in the 
regulation instructing States to follow applicable State personnel laws 
and regulations because it is unnecessary; States are already bound to 
follow their applicable State personnel laws and regulations. The 
Department notes that States that choose to continue providing ES 
activities with State merit staff may consider developing policies or 
including terms in the local MOU to clearly delineate what 
responsibilities the one-stop operator may have or not have within the 
State's personnel system.

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

    Part 653 sets forth the principal regulations of the Wagner-Peyser 
Act ES concerning the provision of services for MSFWs consistent with 
the requirement that all services of the workforce development system 
be available to all job seekers in an equitable fashion. This includes 
ensuring MSFWs have access to these services in a way that meets their 
unique needs. MSFWs must receive services on a basis that is 
qualitatively equivalent and quantitatively proportionate to services 
provided to non-MSFWs.
    In part 653, the Department changed the language throughout to 
reflect States' new flexibility in staffing. In addition to what was 
proposed in the NRPM and in response to commenters' concerns, the 
Department made three additional notable changes in part 653: (1) 
Strengthening the recruitment criteria for outreach staff and ES staff 
at significant MSFW one-stop centers by requiring that SWAs seek such 
staff who speak the language of a significant portion of the MSFW 
population in the State; (2) strengthening the outreach staff 
identification card requirement by ensuring the SWAs provide outreach 
staff members with an identification card or other materials 
identifying them as representatives of the State; and (3) clarifying 
that the SMA may recommend the onsite review be delegated only to a SWA 
official.
Sec.  653.107 Outreach and Agricultural Outreach Plan
    20 CFR 653.107 governs the outreach requirements States must carry 
out to ensure services are provided to MSFWs on a qualitatively 
equivalent and quantitatively proportionate basis as services provided 
to others in the ES program. The Department is finalizing the changes 
proposed in 20 CFR 653.107 except for the changes described below.
    First, the final rule adds a new paragraph to 20 CFR 653.107(a) on 
SWA responsibilities. Newly added 20 CFR 653.107(a)(6) makes clear that 
it is the State's obligation to ensure outreach staff receive an 
identification card or other materials identifying them as 
representatives of the State. The existing regulation contains a long-
standing requirement at Sec.  653.107(b)(10) for outreach staff to be 
provided with, and carry and display, upon request, identification 
cards or other material identifying them as employees of the SWA. 
However, there was no corresponding requirement to issue the badge or 
other materials in paragraph (a) of 20 CFR 653.107 that outlines the 
SWA's responsibilities. Therefore, while it was always the State's 
responsibility to provide a badge or these other materials, the 
Department is adding this paragraph to Sec.  653.107(a) for clarity.
    The new paragraph will read, ``SWAs must ensure each outreach staff 
member is provided with an identification card

[[Page 611]]

or other materials identifying them as representatives of the State.'' 
States can meet this requirement in a variety of ways. For example, the 
SWA could issue a template for service providers to use in creating the 
badge or identification materials. Alternatively, the State could issue 
identification cards to all outreach staff, including any who are 
employees of service providers. States may also use any other method 
that ensures outreach staff have a card or other materials identifying 
them as representatives of the State. The Department is making this 
clarifying change to ensure that, if a State chooses to use merit staff 
flexibility, this responsibility of the State is clear and all outreach 
staff will continue to have the same level of authority and access when 
conducting outreach to MSFWs.
    Second, and relatedly, the Department is amending paragraph (b)(10) 
of Sec.  653.107 to state that outreach staff must be provided with, 
carry, and display, upon request, identification cards or other 
material identifying them as representatives of the State. This change 
clarifies that the outreach staff are representatives of the State. 
This addition is intended to help outreach staff retain access to and 
trust with agricultural employers. It gives all outreach staff, whether 
they are a State employee or the employee of a service provider, an 
official identification to assuage concerns from agricultural employers 
who may be cautious about letting unknown representatives on their 
property. It will also demonstrate to MSFW customers that the outreach 
staff member is an official representative of the State who can be 
trusted to provide services and receive complaints.
    Finally, in response to concerns that outreach staff of a service 
provider would not have the experience and characteristics necessary to 
serve MSFWs, the Department is strengthening the criteria that SWAs 
must use to seek qualified outreach staff. The current regulations 
require SWAs to seek outreach staff who: (1) Are from MSFW backgrounds; 
(2) speak a language common among MSFWs in the State; or (3) are 
racially or ethnically representative of the MSFWs in the service area. 
See 20 CFR 653.107(a)(3)(i) through (iii).
    The NPRM proposed to require SWAs to ensure that outreach staff 
candidates were sought using the same criteria used for SMAs. Those 
criteria are located in Sec.  653.108(b)(1) through (3) and are as 
follows: (1) Who are from MSFW backgrounds; or (2) who speak Spanish or 
other languages of a significant proportion of the State MSFW 
population; or (3) who have substantial work experience in farmworker 
activities.
    While the Department proposed to align the hiring criteria with 
that of the SMA in the NPRM, in response to commenters' concerns about 
effective services for MSFWs, the Department has determined it could 
better strengthen the recruitment criteria for language requirements at 
Sec.  653.107(a)(3) to mandate that SWAs must seek qualified candidates 
who speak the language of a significant proportion of the State MSFW 
population, and who are either from MSFW backgrounds or have 
substantial work experience in farmworker activities.
    This change will help ensure outreach staff speak the language 
spoken by a significant proportion of the State MSFW population, and 
that the outreach staff sought will be from an MSFW background or have 
work experience in farmworker activities. The Department interprets the 
requirement that the outreach staff sought be from an MSFW background 
to mean that they or a family member have worked in farmwork as defined 
at 20 CFR 651.10. The Department interprets the requirement that the 
outreach staff sought have work experience in farmworker activities to 
mean that they have worked with farmworkers, either as a service 
provider or through other means. These changes will enable new outreach 
staff to connect confidently with MSFWs.
    The final rule maintains the same recruitment requirements for the 
SMA position, a position that has a wide range of responsibilities, as 
those in the existing regulation. However, for positions that require 
daily direct interaction with farmworkers, the Department has 
considered the concerns of commenters and strengthened the recruitment 
requirements to include language, paired with either farmworker 
background or experience, instead of just one of these three 
qualifications. The Department further strongly encourages States to 
recruit SMAs who speak the language of a significant proportion of 
MSFWs in their State.
    Many commenters expressed concerns about the effects that changes 
in the staffing requirements for outreach workers would have on MSFWs. 
Commenters stated that outreach staff play an important role in 
assisting farmworkers to access ES activities and that for many MSFWs, 
outreach staff are their principal source of contact with the ES 
system. Commenters who opposed changes in the staffing requirements 
cited many reasons for their opposition. Commenters stated the changes 
would erode the Judge Richey Court Order in NAACP, Western Region v. 
Brennan, No. 2010-72, 1974 WL 229 (D.D.C. Aug. 13, 1974), by allowing 
SWAs to use less experienced individuals with little or no knowledge of 
the MSFW population to conduct MSFW outreach and perform required 
monitoring activities.
    The Department has concluded that the Judge Richey Court Order is 
no longer in effect. Regardless, the Department is still committed to 
ensuring that MSFWs have equal access to the ES program and therefore 
has decided to retain the key requirements of the Judge Richey Court 
Order to ensure that MSFWs receive ES services on a qualitatively 
equivalent and quantitatively proportionate basis. The Department has 
concluded the changes in this final rule will not undermine this 
commitment.
    The Department will continue to hold SWAs accountable to ensure 
MSFWs are offered the full range of employment and training services on 
a basis that is qualitatively equivalent and quantitatively 
proportionate to the same services offered to non-MSFWs. Moreover, SWAs 
must continue to seek qualified outreach staff who have the 
characteristics identified at 20 CFR 653.107(a)(3). Lastly, if a State 
chooses to change its staffing arrangements, the State must ensure that 
new staff are trained and familiarized with the position and the 
corresponding duties. The SWA must continue to comply with 20 CFR 
653.107(b), including the training of outreach staff as required at 20 
CFR 653.107(b)(7). This will help equip new staff with the knowledge 
necessary to provide quality services to MSFWs and meet MSFWs' 
employment needs.
    Commenters stated that ``outside contractors'' will lack the 
established relationships with employers, MSFW service agents, 
community ties, and extensive knowledge of the local labor market that 
longtime outreach staff have developed over the years. Commenters also 
asserted that the proposal will disrupt well-established and productive 
relationships. The Department acknowledges that States may want to 
consider the potential impact on established relationships that 
staffing flexibility may have as they are deciding if using staffing 
flexibility is the right approach for their State. The Department notes 
that States may choose to retain existing staff as nothing in the 
regulation requires States to change their current staffing for these 
services. As previously stated, if a State chooses to change its 
staffing arrangements the State must ensure that

[[Page 612]]

new staff are trained and familiarized with the position and the 
corresponding duties. The SWA must continue to comply with 20 CFR 
653.107(b), including the training of outreach staff as required at 20 
CFR 653.107(b)(7).
    Commenters stated that contracted outreach staff will not 
understand the unique needs of MSFWs. The Department does not agree 
with these commenters. The Department anticipates that outreach staff 
will be familiar with the unique needs of MSFWs because States must 
seek to hire outreach staff that meet the characteristics identified at 
20 CFR 653.107(a), which include individuals who are from MSFW 
backgrounds or have significant experience in farmworker activities.
    Commenters stated there will be a reduction in reports of apparent 
violations of employment-related laws. Commenters stated the new hires 
will lack the current outreach staff familiarity with relevant 
employment-related laws, built up through numerous training sessions 
and years of monitoring employer compliance. One commenter stated that, 
when abusive labor practices occur, farmworkers often first seek out 
the outreach staff to report an issue and ask for assistance. The 
contact outreach staff have with MSFWs becomes only more important as 
the number of available agricultural job opportunities through the ES 
system grows, and the potential for labor abuses increases.
    The Department does not anticipate that there would be a reduction 
in reports of apparent violations of employment-related laws if States 
take advantage of the staffing flexibility provided in this final rule. 
The Department notes 20 CFR 653.107(b)(7) does not change with this 
final rule. This section states, in part, that outreach staff must be 
trained in the benefits and protections afforded MSFWs by the ES, as 
well as the procedure for informal resolution of complaints. The 
regulatory text further clarifies that trainings are intended to help 
outreach staff identify when such issues may be occurring in the fields 
and how to document and refer the cases to the appropriate enforcement 
agencies.
    Moreover, 20 CFR 653.107(b)(6) requires that outreach staff be 
alert to observe the working and living conditions of MSFWs and, upon 
observation or upon receipt of information regarding a suspected 
violation of Federal or State employment-related law, document and 
refer information to the ES Office Manager for processing. 
Additionally, if an outreach staff member observes or receives 
information about apparent violations (as described in Sec.  658.419 of 
this chapter), the outreach staff member must document and refer the 
information to the appropriate ES Office Manager. Therefore, States are 
required to ensure that outreach staff, even if they are not State 
merit staff, are trained to identify and report potential violations of 
the ES regulations and employment-related laws.
    One commenter noted that contracted outreach staff may not be fully 
committed to the work, stating that public sector employees are more 
motivated by responsibility, growth, and feedback, and less motivated 
by financial rewards or earning a good salary. Another commenter 
asserted that the staffing flexibility will result in a deterioration 
of services to MSFWs. The commenter stated that, when outside entities 
operate one-stop centers, they only occasionally retain the former 
State employees who had previously held the jobs. According to this 
commenter, much of the turnover is due to for-profit businesses that 
reduce compensation and benefits to employees to cut operating costs. 
The commenter stated that this results in worse service and that 
similar results are likely if the outreach staff positions are 
contracted out.
    Some commenters expressed support for the staffing flexibility for 
outreach staff. One commenter stated that the proposed rulemaking would 
give States flexibility to staff employment and farmworker outreach 
services in the most effective and efficient way, using a combination 
of State employees, local government employees, contracted services, 
and other staffing models, which could make more resources available to 
help employers find employees and help job seekers find work. Another 
commenter stated the resources allocated to worker outreach for the 
extension of services, while they are important and may impact a 
potential employee's ability to work, should be considered secondary to 
the effort devoted to securing gainful employment for unemployed/
underemployed workers.
    The Department appreciates the considerations States must take into 
account when considering if exercising the staffing flexibility 
provided in this final rule is best for their State. However, the 
Department notes that, regardless of who is providing the services, the 
State, as the Wagner-Peyser Act grantee, is responsible for ensuring 
the services provided to MSFWs meet the requirements of these 
regulations. The Department continues to require State Administrators 
to ensure their SWAs monitor their own compliance with ES regulations 
in serving MSFWs on an ongoing basis and notes that the State 
Administrator has overall responsibility for SWA self-monitoring, as 
required by Sec.  653.108(a). Regardless of how a State chooses to 
staff positions, it will be held accountable for delivering services in 
accordance with the ES regulations. Moreover, the Department at the 
national and regional levels will continue to monitor and assess SWA 
performance and compliance with ES regulations. See 20 CFR 658.602(j) 
and 658.603(a).
Sec.  653.108 State Workforce Agency and State Monitor Advocate 
Responsibilities
    20 CFR 653.108 governs the obligations of the SWA and the SMA in 
providing ES activities to MSFWs. The Department is finalizing this 
section as proposed, except for the changes noted herein.
    The Department is making one change to the criteria at Sec.  
653.108(b)(2), which currently provides that, among qualified 
candidates, SWAs must seek persons who speak Spanish or other languages 
of a significant proportion of the State MSFW population, by removing 
the reference to Spanish. As finalized, the rule reads, in part, 
``[w]ho speak the language of a significant proportion of the State 
MSFW population.'' The Department is removing the reference to speaking 
Spanish, because some MSFWs do not speak Spanish and the Department 
wants to ensure recruitment for these positions focuses on seeking to 
hire individuals who can speak the language common to MSFWs in the 
State to facilitate communication and the provision of services.
    Several commenters expressed general opposition to the proposed 
changes at 20 CFR 653.108. Other commenters expressed general support 
for the changes at Sec.  653.108. One commenter agreed that it would be 
more appropriate for the SMA to be a State employee and that flexible 
staffing models would allow for more responsive staffing determinations 
and ultimately ensure that MSFWs receive ES activities that are 
qualitatively equivalent and quantitatively proportionate to the 
services provided to other job seekers. Other commenters supported the 
change noting their support for general staffing flexibility.
    The Department notes that the proposed changes mean that States 
have the flexibility to staff the provision of Wagner-Peyser Act-funded 
services in the most effective and efficient way. Therefore, the SMA's 
compensation may or may not change, depending on the decision of the 
State. The

[[Page 613]]

Department does not intend for the role of the SMA to be reduced in any 
way, or change beyond the staffing flexibility, given that the SMA must 
remain a SWA official with extensive responsibilities, identified at 20 
CFR 653.108.
    One commenter opposed the proposed rule because, the commenter 
stated, the Department's proposed changes for the SMA would reduce the 
SMA's prestige, influence, and likely the compensation of the SMA. The 
commenter stated that the Department had not provided sufficient 
justification for these changes. The final rule provides States with 
additional flexibility in the delivery of ES activities. States will be 
free to choose the staffing model that best fits their needs. The final 
rule allows the States to create a staffing model that works best for 
their unique circumstances, taking into consideration all relevant 
factors for effective implementation of ES programs, including the 
prestige, influence, and compensation of the SMA. The Department notes 
that this regulatory change, by itself, will do nothing to reduce the 
SMA's prestige, influence, or compensation, as States will not be 
obligated to make any changes to staffing requirements for ES programs. 
The Department further notes that the preamble to the NPRM provided 
substantial justification for the changes to this section.
    Regarding 20 CFR 653.108(b), one commenter expressed opposition to 
the proposed elimination of the requirement that the SMA be State merit 
staff. This commenter stated that a State merit employee is required to 
ensure direct employment services are provided to migrant workers and 
employers that are qualitatively equivalent and quantitatively 
proportionate to the services provided to other job seekers. The 
Department notes that the State agency has the flexibility to choose to 
maintain the SMA as merit staff, if it so desires. Moreover, SWAs must 
continue to ensure the services provided to MSFWs are qualitatively 
equivalent and quantitatively proportionate to the services provided to 
non-MSFWs. The Department notes it will continue to monitor SWA 
compliance with the ES regulations.
    Regarding 20 CFR 653.108(c), where the Department proposed to 
remove the requirement that the SMA must have status and compensation 
as approved by the civil service classification system and be 
comparable to other State positions assigned similar levels of tasks, 
complexity, and responsibility, some commenters pointed to the 
settlement arising from the court order in NAACP, W. Region. Commenters 
stated that the consent decree in that case took care to ensure that 
SMAs were afforded unfettered access to State ES officials on matters 
impacting services to the MSFW population. Commenters further stated 
that the consent decree gave the SMA position the same degree of 
influence within the State agency as other senior policy positions with 
similar levels of tasks, complexity, and responsibility, which has been 
in regulations since 1980.
    Commenters stated that the Department did not provide an 
explanation for proposing to remove the requirement and that the role 
of the SMA has not diminished in importance. Commenters further stated 
that the role of the SMA to ensure that the SWAs comply with their 
obligations is even more essential today than in 1980, due to the 
increase in H-2A workers in the country, the need to ensure that wages 
and working conditions offered to H-2A workers are at least equal to 
those prevailing in the area of employment, and that the housing 
offered meets Federal regulations. Lastly, they asserted that close 
monitoring is also required of U.S. workers referred to jobs with H-2A 
employers, because U.S. workers often suffer discriminatory treatment 
in favor of the guestworkers. In contrast, some commenters stated that 
they supported the proposed changes to the status of the SMA, because 
they support flexible staffing for activities conducted under the 
Monitor Advocate System.
    As the Department explained in the NPRM, this change is intended to 
give States the flexibility to determine what is appropriate for the 
SMA position and is consistent with other changes proposed in the NPRM. 
For the SMA position in particular, which the Department deemed 
appropriate to maintain as a SWA official, the Department notes that 
States have the discretion to determine their employee's status and 
compensation. There is nothing in the final rule that requires States 
to change the status, compensation, or the influences of the SMA.
    The Department also notes it is not suggesting that the role of the 
SMA has diminished in importance. Rather, States determine how to 
compensate SMAs appropriately. The SMA will continue to have the same 
responsibilities under these regulations, even if a State chooses to 
remove the SMA from its merit system, and the Department anticipates 
States will compensate the SMA accordingly.
    In response to commenters who asserted that close monitoring is 
required to ensure U.S. workers who are referred to jobs with H-2A 
employers are not subject to discriminatory practices, the Department 
agrees and notes that the SMA position continues to include monitoring 
as a key component of the position. Moreover, SWAs must continue to 
ensure the services provided to MSFWs are qualitatively equivalent and 
quantitatively proportionate to the services provided to non-MSFWs. The 
Department notes it will continue to monitor SWA compliance with the ES 
regulations.
    Likewise, the Department acknowledges that the SMA has an important 
role in ensuring States and employers are complying with the 
requirements of the H-2A program. The SMA will continue to have the 
same responsibilities as the SMA had prior to this final rule. For 
example, the SMA will continue to be responsible for talking to workers 
in the field, which includes H-2A workers and U.S. workers. This 
ensures that the SMA will be detecting and taking action when wage and 
housing compliance issues emerge. Therefore, the Department does not 
anticipate that there will be a negative impact on States' and 
employers' compliance with the H-2A program requirements. The 
Department notes that States are still required to conduct field checks 
on all clearance job orders, including those job orders attached to H-
2A applications, pursuant to 20 CFR 653.503.
    One commenter noted that the SMA is still required to be a State 
employee, but that the requirement to have ``status and compensation as 
approved by the civil service classification system and be comparable 
to other State positions assigned similar levels of tasks, complexity, 
and responsibility'' was removed. The commenter explained that 
individuals employed in the commenter's SWA are covered by all 
applicable State personnel laws and regulations. Meaning, if the SMA is 
a State employee, by default the SMA is a State merit-staffed 
individual. The commenter opposed the removal of this provision and 
recommended it be retained, noting that the Department does not have 
the authority to allow States to arbitrarily determine status and 
compensation outside of the civil service classification system.
    The Department understands the commenter's concern and clarifies 
that the Department is not requiring States to change how they 
structure their pay scales or systems. The regulation only gives States 
the flexibility to create the staffing arrangement that best suits each 
State's needs. States are free to structure the status and compensation 
for the

[[Page 614]]

SMA position consistent with their own States' laws, regulations, and 
policies, as long as the SMA remains a State employee. Therefore, if 
keeping the SMA as a State employee means that the SMA will be in the 
State's civil service system, the State is free to do so. The 
Department has concluded no change is needed to the text of the 
regulation in response to this comment.
    One commenter questioned whether the last sentence in 20 CFR 
653.108(d)--which as proposed stated that any State that proposes less 
than full-time dedication must demonstrate to its Regional 
Administrator (RA) that the SMA function can be effectively performed 
with part-time ES staffing--should include ``ES.'' The commenter stated 
the reference to ``ES'' does not appear necessary, as this sentence is 
speaking specifically to the SMA function, which is a SWA official and 
not ES staff. The commenter recommended the sentence revert to the 
original text that does not include the ``ES'' reference. The 
Department appreciates the commenter raising this incongruence and 
agrees the addition of ``ES'' is not appropriate given that the 
requirement is referring to the SMA. Therefore, it is not correct to 
use the term ``ES staffing'' here. The final rule removes ``ES'' from 
this provision.
    One commenter stated that the Department proposed to remove the 20 
CFR 653.108(g)(1) requirement that SMAs ``without delay, must advise 
the SWA and local offices of problems, deficiencies, or improper 
practices in the delivery of services and protections'' to MSFWs. The 
commenter stated that this provision was part of the original 
regulations issued in 1980 to resolve the NAACP, W. Region litigation 
and that those regulations were intended to allow the SWAs and local 
offices to quickly correct deficiencies. The commenter stated that the 
Department did not indicate that this section has proven overly 
burdensome or ineffective, and it offers no reason for removing it. The 
commenter stated that the deletion is arbitrary and capricious and 
recommends that the language be retained as a tool to assist in 
effective agency self-monitoring.
    The Department did not propose to remove the requirement at 20 CFR 
653.108(g)(1), which requires the SMA to advise the SWA and local 
offices of problems, deficiencies, or improper practices in the 
delivery of services and protections afforded by regulations and 
permits the SMA to request a corrective action plan to address these 
deficiencies. This provision also requires the SMA to advise the SWA on 
means to improve the delivery of services. In the NPRM, the Department 
addressed its proposed changes to paragraph (g)(1), and did not propose 
to change the aforementioned text. Therefore, the Department clarifies 
that the final regulatory text retains the second and third sentences 
of paragraph (g)(1) as is and, as proposed in the NPRM, revises the 
first sentence to read: ``Conduct an ongoing review of the delivery of 
services and protections afforded by the ES regulations to MSFWs by the 
SWA and ES offices (including efforts to provide ES staff in accordance 
with Sec.  653.111, and the appropriateness of informal complaint and 
apparent violation resolutions as documented in the complaint logs).''
    One commenter noted that the Department proposed 20 CFR 
653.108(g)(3) to ensure all significant MSFW one-stop centers not 
reviewed onsite by Federal staff are reviewed at least once per year by 
ES staff. The commenter noted that, instead of changing the former 
reference from ``State staff'' to ``ES staff,'' it should be changed 
from ``State staff'' to ``SWA officials.'' Otherwise, this function is 
given to the local level and bypasses State-level oversight. The 
Department agrees with the commenter that it would be more appropriate 
for a State employee to carry out the kind of monitoring envisioned 
here. The responsibilities laid out in paragraph (g) of 20 CFR 653.108 
are the responsibilities of the SMA, and thus, a State employee (SWA 
official) should do this monitoring. Therefore, the Department will 
finalize 20 CFR 653.108(g)(3) to provide that all significant MSFW one-
stop centers not reviewed onsite by Federal staff are reviewed at least 
once per year ``by a SWA official.''
    Also in 20 CFR 653.108(g), the Department is making two additional 
changes to clarify the roles in onsite reviews. The first change is to 
20 CFR 653.108(g)(2)(v). The proposed language for Sec.  
653.108(g)(2)(v) stated that the corrective action plan must be 
approved or revised by appropriate superior officials and the SMA. 
However, the NPRM's preamble for this provision explained that the 
Department was proposing to replace ``superior officials'' with ``SWA 
officials'' to make it clear that a State employee must approve the 
corrective action plan. See 84 FR 29433, 29441 (June 24, 2019). The 
proposed regulatory language for this provision in the NPRM 
inadvertently did not include this revision. The final rule's 
regulatory text adopts the text as described in the NPRM preamble. It 
states, ``The plan must be approved or revised by SWA officials and the 
SMA.''
    The second change is to 20 CFR 653.108(g)(2)(vii). The Department 
proposed to revise this provision to state that the SMA may recommend 
the onsite review ``be delegated to an ES staff person.'' As proposed, 
this would permit the staff of a service provider to carry out these 
onsite reviews, permitting the service provider to monitor itself. The 
Department intends for the State to carry out monitoring of the local 
one-stop centers, as the State is the entity ultimately responsible for 
ensuring its compliance with the requirements for providing services to 
MSFWs. Therefore, to ensure the State is providing these services as 
required, the Department will require a State official to conduct these 
reviews. The Department is finalizing this rule with a minor change to 
the proposed rule text to provide that the SMA may delegate the onsite 
review to a SWA official (not ES staff) to clarify that the SMA may 
only delegate the responsibility for onsite reviews to a State 
employee. The final rule provides that the SMA may recommend that the 
review described in paragraph (g)(2) of this section be delegated to a 
SWA official. The Department notes that the current version of the 
regulatory text allows for this delegation to a responsible, 
professional member of the administrative staff of the SWA. As 
explained above, the rule as finalized will change this language to 
permit the delegation to a SWA official. The Department anticipates 
that the SMA would choose to delegate these reviews to a SWA official 
that is responsible and professional.
    One commenter stated that at 20 CFR 653.108(o), the proposed rule 
referenced ``significant MSFW ES offices,'' where other sections of the 
regulations refer to ``significant MSFW one-stop centers.'' For 
consistency, the commenter suggested using ``significant MSFW one-stop 
centers.'' The Department agrees with the commenter that ``significant 
MSFW ES offices'' should be written ``significant MSFW one-stop 
centers,'' particularly because ``significant MSFW one-stop centers'' 
is a defined term in the ES regulations at 20 CFR 651.10.
Sec.  653.111 State Workforce Agency Staffing Requirements
    20 CFR 653.111 governs the requirements for SWA staffing. The 
Department is finalizing this section as proposed, except for the 
changes described below.
    The Department stated in the NPRM that it had ``serious concerns 
about the constitutionality of the additional, race-based and 
ethnicity-based hiring criteria in the current regulation.'' 84 FR at

[[Page 615]]

29441. The NPRM noted that the regulations were adopted in response to 
a 1974 court order--now 45 years ago--and that more recent Supreme 
Court precedent had emphasized that a racial-classification scheme 
cannot last ``longer than the discriminatory effects it is designed to 
eliminate,'' Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227 
(1995), and that a university, by comparison, cannot impose ``a fixed 
quota'' or ``some specified percentage'' of a racial or ethnic group. 
Fisher v. Texas, 136 S. Ct. 2198, 2208 (2016). The Department's legal 
concerns remain, especially when commenters did not present evidence of 
systemic discrimination in the ES program today.
    The NPRM also stated that the Department believed it could meet the 
needs of MSFWs without resorting to race-based or ethnicity-based 
criteria, and instead use the criteria employed for selecting State 
Monitor Advocates. The Department believes the criteria it establishes 
in this final rule for staffing significant MSFW ES offices, in 
addition to all the other safeguards and requirements in the MSFW 
program, will ensure that MSFWs are appropriately served.
    One commenter opposed the Department's proposal to remove 
requirements from 653.111 that obligate States to engage in affirmative 
action hiring practices. The commenter stated that simply citing U.S. 
Supreme Court decisions that have limited the use of race-based 
affirmative action programs is not a legally sufficient basis to remove 
the affirmative action requirements. Specifically, the commenter stated 
that the Department had not offered evidence that the discrimination 
the affirmative action provisions were intended to rectify was 
remedied. The commenter stated they opposed the elimination of these 
provisions, because there continues to be systemic racism in the United 
States as evidenced by a wage and wealth gap between white and African 
American workers. The Department has the authority to remove the 
affirmative action race-based hiring criteria and believes it is 
required to remove or revise these criteria as presently constituted to 
comply with current law. The federal government may impose race-based 
classifications only if the requirement meets the strict scrutiny 
standard. See Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227 
(1995). In order to meet strict scrutiny, the federal agency must 
demonstrate that the racial classification serves a compelling 
governmental interest and is narrowly tailored to further that 
interest. For the reasons provided in the NPRM and discussed here, the 
Department has serious constitutional concerns about the regulations as 
they have been written, and has additionally determined as a policy 
matter that it can meet farmworkers' needs without resorting to race-
based hiring criteria. Other criteria can be just as probative, or 
perhaps even more so, of candidates' ability to serve MSFWs.
    The ES regulations have a number of provisions intended to ensure 
that MSFWs' needs are met. For example, as explained above, the 
Department is finalizing 20 CFR 653.111 with slight changes for the 
recruitment criteria for outreach staff and ES staff in significant 
MSFW offices. The Department will require that States ensure the 
recruitment of ES staff who speak a language that a significant 
proportion of the State's MSFW population speak and who are from MSFW 
backgrounds or who have substantial work experience in farmworker 
activities. Bringing prominence to the requirement that States ensure 
that outreach workers and ES staff speak a language that a significant 
proportion of MSFWs speak will help ensure that the ES Staff directly 
engaging with MSFWs are best able to meet MSFWs' needs.
    One commenter opposed the removal of the affirmative action hiring 
requirements because, the commenter stated, the proposed changes to the 
affirmative action hiring requirements would mean that ES staff people 
would no longer be subject to key, longstanding protections against 
racial discrimination. The Department disagrees that ES staff will no 
longer be subject to longstanding protections from racial 
discrimination. ES staff are subject to all anti-discrimination 
provisions applicable to the ES program. This includes the 
nondiscrimination and equal opportunity provisions of WIOA sec. 188 and 
its implementing regulations at 29 CFR part 38, which prohibit 
employment discrimination in the administration of or in connection 
with the Wagner-Peyser Act program based on race, color, religion, sex, 
national origin, age, disability, or political affiliation or belief. 
See, e.g., 29 CFR 38.18. Additionally, under Sec.  653.111(c), which is 
being finalized as proposed, SWAs remain subject to all applicable 
Federal laws prohibiting discrimination and protecting equal employment 
opportunity.
    One commenter opposed the changes to the affirmative action hiring 
requirements because, the commenter stated, discrimination against 
MSFWs in the ES still exists. Specifically, the commenter explained 
that the affirmative action hiring goals are the result of a 1974 court 
order, and that while subsequent Supreme Court decisions have limited 
the use of certain types of race-based affirmative action programs, the 
Department had acknowledged that such targets still may be used until 
the discriminatory effects of past discrimination are eliminated. 
According to the commenter, for ES activities provided to MSFWs, 
lingering discriminatory practices warrant retention of the affirmative 
action plans. Although a number of commenters opposed the removal of 
the affirmative action provisions, neither this commenter nor any other 
commenters offered any evidence that lingering discriminatory practices 
against MSFWs still exist in the ES program. As explained above, the 
Department has concluded that it can effectively meet the needs of 
MSFWs without using hiring criteria that favor or disfavor applicants 
based on their race. Moreover, the nondiscrimination and equal 
opportunity provisions of WIOA sec. 188 and its implementing 
regulations prohibit discrimination in the Wagner-Peyser Act program 
based on race, color, religion, sex, national origin, age, disability, 
or political affiliation or belief, or, for beneficiaries, applicants, 
and participants only, on the basis of citizenship status or 
participation. See, e.g., 29 CFR 38.5 and 38.18. Further, as noted 
above, SWAs remain subject to all applicable Federal laws prohibiting 
discrimination and protecting equal employment opportunity under 20 CFR 
653.111(c), which is being finalized as proposed. States should 
continue to hire the individuals they determine will help best meet 
MSFWs' needs and will effectively carry out the requirements of the 
final rule.
    One commenter opposed the Department's proposal to remove the 
affirmative action hiring requirements because, the commenter asserted, 
the Department did not suggest or offer any evidence that the 
inequities in service delivery highlighted in the NAACP, W. Region 
litigation were eradicated. The commenter stated that the ES is little 
more diverse than it was in 1980, and given that there are now a large 
number of indigenous workers from Mexico and Central America, as well 
as Afro-Caribbean immigrants, there is no basis for removing the 
affirmative action references in the regulations. Regardless, current 
law does not permit the Department to maintain 20 CFR 653.111's 
affirmative action race-based hiring requirement as presently written. 
The Federal government may impose race-based classifications only if 
they

[[Page 616]]

meet the strict scrutiny standard. Adarand, 515 U.S. at 227. As 
explained in the NPRM, the Department believes the current scheme is 
not narrowly tailored, and it has determined as a policy matter that it 
can meet farmworkers' needs without resorting to race-based hiring 
criteria.
    The Department agrees with the commenter that special provision 
must be made to provide effective services to MSFWs. In order to ensure 
that the ES staff who are working with MSFWs are able to provide the 
best services possible and most effectively engage with MSFWs, the 
Department is slightly modifying the recruitment criteria for ES staff 
at significant MSFW one-stop centers at 20 CFR 653.111 and outreach 
staff at 20 CFR 653.107. For the reasons explained in the preamble 
discussion of 20 CFR 653.107 and 653.108 in this final rule, in 
recruiting for these positions, States will be required to ensure that 
individuals are sought who speak a language spoken by a significant 
proportion of the State's MSFW population and who are from MSFW 
backgrounds or who have substantial work experience in farmworker 
activities. Increasing the recruitment focus on language ability will 
help ensure that MSFWs are best able to engage with the ES program.
    One commenter opposed the removal of the affirmative action 
staffing requirements because it would, the commenter stated, reduce 
diversity at the SWA and adversely affect MSFWs. The commenter noted 
that eliminating the affirmative action hiring practices within the SWA 
will inevitably decrease the diversity of the SWA's workforce--and that 
when there is a diminished presence of minority public servants in 
SWAs, MSFWs inevitably suffer, because the potential for bringing 
together and building connections is most successful when individuals 
are able to connect at a very basic human level. Those connections are 
more likely to occur, the commenter stated, when the persons providing 
services are of similar ethnic, racial, linguistic, and historical 
backgrounds as the individuals being served. Similarly, another 
commenter stated that eliminating affirmative action hiring goals is 
misguided, because MSFWs have particular needs, beyond linguistic 
needs. The commenter explained that actively hiring outreach staff from 
farmworker communities, which are disproportionately communities of 
color, is one of the few ways to guarantee that outreach staff have the 
cultural competency, sensitivity, and humility necessary to assist 
MSFWS with meeting their employment needs. The Department appreciates 
the commenters' concerns about providing effective services to MSFWs 
and notes that States should continue to hire the individuals they 
determine will help best meet MSFWs' needs within the requirements of 
the final rule, including those that come from farmworker backgrounds.
    Additionally, to ensure that MSFWs still have access to effective 
ES activities, the Department still requires that States ensure that 
recruitment for these positions be for individuals who are from MSFW 
backgrounds or who have substantial work experience in farmworker 
activities. Individuals with these characteristics are familiar with 
the array of issues MSFWs experience in their employment and have the 
cultural competency and sensitivity necessary to meet MSFWs' employment 
needs.
    One commenter stated it opposed the elimination of affirmative 
action provisions for any aspect of the workforce, citing evidence of 
systemic racism that persists in the United States. It also asserted 
that eliminating affirmative action hiring practices within SWAs will 
decrease the diversity of its workforce. It stated that there are 
studies of States that have eliminated affirmative action over the past 
several years, which show that minorities working in State and local 
government decreased when affirmative action was dismantled. One 
commenter stated that, when there is a diminished presence of minority 
public servants in SWAs, MSFWs suffer. This commenter went on to say 
that building connections between job seekers and employers ``are more 
likely to occur when the persons providing services are of similar 
ethnic, racial, linguistic, and historical backgrounds as the 
individuals being served.''
    Commenters asserted that eliminating the presence of individuals at 
SWAs of similar backgrounds will make it more difficult for farmworkers 
to benefit from the services provided by these SWAs. They referenced 
the particular needs of MSFWs, which go beyond linguistic needs, and 
may include, as one commenter noted, cultural isolation. One commenter 
stated that language skills, cultural awareness, and sensitivity should 
be top priorities for any staff working with MSFWs. Another commenter 
stated that actively hiring outreach staff that come from farmworker 
communities, which are disproportionately communities of color, is 
particularly needed and can guarantee that outreach staff have the 
cultural competency to assist farmworkers with their employment needs, 
and to serve both MSFWs and H-2A workers.
    As stated in the NPRM, the Department is fully committed to serving 
all MSFWs, and to requiring that States provide useful help to MSFWs 
from staff who can speak their languages and understand their work 
environments. As described in the NPRM and above, affirmative action 
requirements that mandate States to hire people of certain races or 
ethnicities are unconstitutional. The Department continues to harbor 
serious concerns about the constitutionality of the hiring scheme that 
has been in place. And the Department has decided as a policy matter 
that it can meet the needs of MSFWs without using race-based and 
ethnicity-based hiring criteria. Instead, the Department is mandating 
recruitment of ES staff with the skills and background necessary to 
provide quality services to farmworkers, specifically language skills 
paired with farmworker background or experience. Accordingly, the 
Department is maintaining in the final rule an emphasis on hiring ES 
staff who speak languages spoken by MSFWs and who have an MSFW 
background or experience. Additionally, the Department will continue to 
monitor SWA's compliance with the ES regulations, which includes 
ensuring MSFWs have access to employment and training services in a way 
that meets their unique needs, and it will take appropriate action if 
it determines that the SWA is not meeting its obligations under these 
regulations.
    At 20 CFR 653.111(a), the NPRM proposed that the SWA must implement 
and maintain a program for staffing significant MSFW one-stop centers 
by providing ES staff in a manner facilitating the delivery of 
employment services tailored to the special needs of MSFWs, including 
by seeking ES staff that meet the criteria in Sec.  653.108(b)(1) 
through (3). Those criteria are as follows: (1) Who are from MSFW 
backgrounds; or (2) who speak Spanish or other languages of a 
significant proportion of the State MSFW population; or (3) who have 
substantial work experience in farmworker activities.
    In response to commenters' concerns about providing effective 
services to MSFWs, the Department is strengthening recruitment criteria 
for ES staff in significant MSFW one-stop centers. The Department is 
aligning the recruitment criteria with those used for outreach staff at 
Sec.  653.107(a)(3)(i) and (ii), which requires SWAs to seek persons 
who speak the language of a significant proportion of the State

[[Page 617]]

MSFW population; and (1) who are from MSFW backgrounds; or (2) who have 
substantial work experience in farmworker activities. Therefore, as 
finalized, Sec.  653.111(a) provides, ``The SWA must implement and 
maintain a program for staffing significant MSFW one-stop centers by 
providing ES staff in a manner facilitating the delivery of employment 
services tailored to the special needs of MSFWs, including by seeking 
ES staff that meet the criteria in Sec.  653.107(a)(3).''
    This change will ensure that recruitment for ES staff in 
significant MSFW one-stop centers and outreach staff will seek 
individuals that speak the language spoken by a significant proportion 
of the State MSFW population, and who are from an MSFW background--
meaning that they or a family member have worked in farmwork as defined 
at 20 CFR 651.10--or have work experience in farmworker activities--
meaning that they have worked with farmworkers, either as a service 
provider or through other means. These changes will enable ES staff at 
significant MSFW one-stop centers to better connect with and provide 
services to MSFWs. The Department notes that it removed the requirement 
for SWAs to seek persons who speak Spanish from the recruitment 
criteria for SMAs, staff at significant MSFW one-stop centers, and 
outreach staff, because some MSFWs do not speak Spanish. The Department 
wants to ensure recruitment for these positions focuses on seeking to 
hire individuals who can speak the language common to MSFWs in the 
State to facilitate communication and the provision of services. 
Additionally, the criteria to seek persons who speak the language of a 
significant proportion of the State MSFW population achieves the goal 
of ensuring that staff speak a language common to MSFWs in the State, 
which may be Spanish or another language.
    One commenter asserted that ``privatizing these functions'' would 
likely result in MSFWs receiving inferior services. The Department 
notes that SWAs will continue to be held accountable to the same 
standards, regardless of how the SWAs choose to staff the provision of 
services. Moreover, SWAs must continue to ensure the services provided 
to MSFWs are qualitatively equivalent and quantitatively proportionate 
to the services provided to non-MSFWs. The Department will continue to 
monitor SWA compliance with the ES regulations.
    One commenter stated that MSFW staff are well-trained to ensure 
that workers are treated appropriately and that housing meets basic 
standards. The commenter also stated that non-governmental staff will 
likely lack the necessary authority to enforce the kinds of legal 
protections that these longstanding regulations were designed to 
ensure. The Department responds that, under Federal regulations, ES 
staff are not authorized to enforce legal protections. Rather, outreach 
staff must be trained to identify potential violations of the ES 
regulations or employment-related laws. It is then incumbent upon them 
to refer the potential violations to ES Office Managers or the 
Complaint System Representatives to attempt to resolve the issue 
informally. In some cases, violations may need to be logged and 
immediately referred to the appropriate enforcement agency.

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

    Part 658 sets forth systems and procedures for complaints, 
monitoring for compliance assessment, enforcement, and sanctions for 
violations of the ES regulations and employment-related laws, including 
discontinuation of services to employers and decertification of SWAs. 
In part 658, the Department, among other changes, is finalizing the 
following proposed changes: (1) The State Administrator has overall 
responsibility for the Employment Service and Employment-Related Law 
Complaint System (Complaint System), which includes informal resolution 
of complaints; (2) a SWA official (as defined at Sec.  651.10) must 
make determinations regarding initiation of the discontinuation of 
services to an employer; and (3) the RMA does not have to be a full-
time position.
Sec.  658.501 Basis for Discontinuation of Services
    Section 658.501 governs when States may or must discontinue 
providing services to employers. One State agency asked whether the 
intent of the change at 20 CFR 658.501(b) from ``The SWA may'' to ``SWA 
officials may'' is only to give the authority of discontinuing services 
to the SWA and not local ES offices. The Department clarifies that the 
intent of the change is to permit only SWA officials to discontinue 
services and it is finalizing this section as proposed.
Sec.  658.601 State Workforce Agency Responsibility
    Section 658.601 governs the States' establishment and maintenance 
of a self-appraisal system. The Department is finalizing this provision 
with the change described below.
    One commenter stated that the proposed change at 20 CFR 658.601 is 
incorrect. The commenter asserted that the required self-appraisal 
system was not reported as part of the 9002A. The commenter clarified 
that it has been replaced under WIOA as a narrative with aggregate 
State customized data in the annual narrative. The Department clarifies 
that Sec.  658.601(a)(1)(ii) instructs SWAs to use a particular ETA 
report to compare planned numerical performance goals to actual 
accomplishments. Because the 9002A report is obsolete, the Department 
updated the language to reflect the new report that States are required 
to use, the WIOA Common Performance Reporting System, ETA Form 9172 
(Participant Individual Record Layout).
Sec.  658.603 Employment and Training Administration Regional Office 
Responsibility
    Section 658.603 governs ETA responsibilities in overseeing the 
States' provision of ES activities to MSFWs. The Department received 
comments on this section and is responding to them below. The 
Department is finalizing this section as proposed.
    Several commenters opposed the proposed changes to Sec.  658.603 
and raised three main issues in their comments: (1) The Department did 
not offer an explanation for the changes; (2) the changes will erode 
the effectiveness of the RMA in protecting MSFWs; and (3) contracting 
ES staff will create the need for States and RMAs to enhance the 
monitoring of SWAs, because outsourced staff may have little or no 
experience serving farmworkers and complying with the exacting dictates 
of the regulations and those governing the H-2A program.
    In the NPRM, the Department explained that it was proposing to 
remove the requirement that the RMA be full-time, because different 
States have different MSFW needs, and the Department has determined it 
is most appropriate for the ETA RA to determine whether those needs 
merit a full-time employee dedicated to serving one population. This 
gives the RA greater flexibility in how they staff their offices based 
on the needs of their region.
    The Department does not predict there will be an erosion in the 
effectiveness of the RMA in protecting farmworkers. First, the RMA must 
continue to carry out all of the RMA duties set forth at 20 CFR 
658.603(f). Second, the RA continues to have the

[[Page 618]]

responsibility to regularly review and assess SWA performance and 
compliance with ES regulations pursuant to 20 CFR 658.603(a).\11\ 
Through these reviews and assessments, the Department will work to 
guarantee that the Monitor Advocate System ensures services to 
farmworkers are provided on a qualitatively equivalent and 
quantitatively proportionate basis to the services provided to non-
MSFWs, regardless of the staffing model the State selects. This will 
ensure that the RMA's effectiveness in protecting MSFWs is not eroded.
---------------------------------------------------------------------------

    \11\ 20 CFR 658.603(a) states that the RA is responsible for 
regularly reviewing and assessing SWA performance and ensuring their 
compliance with ES regulations.
---------------------------------------------------------------------------

    The Department reaffirms that the responsibilities of the State to 
comply with the ES regulations do not change with this final rule. 
Pursuant to 20 CFR 658.601(a) each SWA must establish and maintain a 
self-appraisal system for ES operations to determine success in 
reaching goals and to correct deficiencies in performance. Whether the 
State continues to hire merit staff in its local offices or uses a 
services provider, the State Administrators must ensure their SWA 
monitors their own compliance with ES regulations in serving MSFWs on 
an ongoing basis.\12\ Additionally the SMAs must conduct an ongoing 
review of the delivery of services and protections afforded by the ES 
regulations to MSFWs by the SWA and ES offices.\13\ This includes 
ensuring MSFWs have access to ES activities in a way that meets their 
unique needs. MSFWs must receive services on a basis that is 
qualitatively equivalent and quantitatively proportionate to services 
provided to non-MSFWs; nothing in this final rule changes that 
requirement. The Department notes it has extensive experience 
overseeing programs with different staffing models and that the SMAs, 
RMAs, and NMA will continue to monitor to ensure the State is providing 
equitable services to MSFWs, regardless of the staffing structure the 
SWA chooses. The Department will provide monitoring guidance for States 
that choose to outsource the provision of employment services.
---------------------------------------------------------------------------

    \12\ 20 CFR 653.108(a).
    \13\ 20 CFR 653.108(g)(1).
---------------------------------------------------------------------------

Removing Full-Time Staffing Requirement
    Commenters opposed the Department's proposal to remove the full-
time staffing requirement for the RMA position at 20 CFR 658.603(f), 
because commenters stated the RMA position was expressly deemed to be 
full-time, with a wide range of specified duties. According to one 
commenter, the Department does not suggest that the challenges faced by 
the ES have so lessened since 1980 that RMA support is only needed on a 
part-time basis. The Department appreciates the commenter's historical 
context. However, the Department clarifies that it is not suggesting 
the RMA is only needed on a part-time basis; rather, it is at the 
discretion of RAs to determine how best to staff the responsibilities 
of their region. In the NPRM, the Department explained it was removing 
the requirement that the RMA position be a full-time position, 
recognizing different States' MSFW populations in the relevant labor 
markets. The Department recognizes that not all States have the same 
number of significant MSFW one-stop centers and that not all DOL 
regions have the same number of significant MSFW States, significant 
MSFW one-stop centers, or regional staff. Therefore, the Department is 
giving RAs the flexibility to analyze the MSFW needs in the relevant 
labor market and the available staffing to determine if a full time RMA 
is needed. Allowing local management to determine whether RMAs can 
perform their duties part-time enhances the effectiveness and cost-
efficiency of ES programs. Of course, RMAs may remain full-time if the 
demands of their region necessitate a full-time position. Furthermore, 
the Department does not suggest that the challenges faced by the ES 
have lessened since 1980. Rather, the Department notes, as it explained 
in the NPRM preamble, that different States have different MSFW 
populations in the relevant labor market. The Department reiterates, 
however, that regardless of the time spent by the RMA, whether full-
time or part-time, the activities and requirements of the RMA remain.
Revising Onsite Review Requirements
    A couple of commenters stated that removing the mandate for the RMA 
to visit each State in its region at least once per year will hinder 
the RMA's ability to monitor the region. One commenter stated that the 
Department's reasoning that it is ``very challenging'' for RMAs to make 
harvest time visits to the States in their region is insufficient and 
that the challenge could only be exacerbated by a shift to part-time 
staffing. The commenter stated the Department offered no reason for 
relieving the RMA of the obligation for harvest time trips and 
attendance at MSFW-related meetings. Furthermore, the commenter stated, 
given the rapidly changing landscape of agricultural ES activities in 
every region in the wake of rapidly increasing numbers of H-2A 
applications and the accompanying challenges for the SWAs, there is no 
justifiable basis for diminishing regional oversight activities.
    The Department understands the RMA's importance in monitoring the 
States for compliance with the MSFW regulations. The Department notes 
that even though RMAs are no longer required to visit each State once a 
year, the RMAs will continue to monitor all States in their region 
pursuant to 20 CFR 658.603(f)(1) and (2) and that nothing would prevent 
the RMA from visiting a State once a year (or more often) if necessary. 
These provisions require RMAs to review the effective functioning of 
the SMAs in their regions and review the performance of SWAs in 
providing the full range of employment services to MSFWs. As explained 
in the preamble to the NPRM, the Department is eliminating this 
requirement, because it may not be necessary for the RMA to travel to a 
State once a year where there is not a significant MSFW population or 
where the NMA has already traveled. The Department also noted in the 
NPRM preamble that travel to each State once a year is challenging with 
the limited funding available to the Department. In an effort to ensure 
limited funding is used most efficiently, the Department determined 
that RAs are in the best position to make travel decisions for their 
staff depending on the needs of the Region. Moreover, if it is not a 
significant MSFW State and the RMA has a good sense of what is 
happening in the State, it may not be necessary to travel there.
    One commenter opposed the proposed change to remove the requirement 
that RMAs make harvest time visits to the States, because the commenter 
stated that the Department's explanation that it was very challenging 
to make these trips was not sufficient. The commenter explained that 
given the rapidly changing landscape of agricultural ES activities in 
each region and the increasing numbers of H-2A applications and 
accompanying challenges for SWAs, there is no justifiable basis for 
diminishing regional oversight activities.
    The Department is finalizing this change because, if an RMA 
conducted an on-site review in a particular State it may not be 
necessary to return to that same State to conduct a harvest time visit. 
If there is not a significant MSFW population in that particular State 
or if the NMA already visited the State that year, such a visit may not 
be necessary. However, the Department notes the importance of these 
visits and that, if warranted, the goals of these could be

[[Page 619]]

accomplished by using technology such as videoconferencing or 
teleconferences.

IV. Rulemaking Analyses and Notices

A. Executive Orders 12866 (Regulatory Planning and Review) and 13563 
(Improving Regulation and Regulatory Review)

    Under E.O. 12866, the OMB's Office of Information and Regulatory 
Affairs determines whether a regulatory action is significant and, 
therefore, subject to the requirements of the E.O. and review by OMB. 
58 FR 51735. Section 3(f) of E.O. 12866 defines a ``significant 
regulatory action,'' as an action that is likely to result in a rule 
that: (1) Has an annual effect on the economy of $100 million or more, 
or adversely affects in a material way a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, or tribal governments or communities (also 
referred to as economically significant); (2) creates serious 
inconsistencies or otherwise interferes with an action taken or planned 
by another agency; (3) materially alters the budgetary impacts of 
entitlement grants, user fees, or loan programs, or the rights and 
obligations of recipients thereof; or (4) raises novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the E.O. OMB has determined that while this 
final rule is not an economically significant regulatory action under 
sec. 3(f) of E.O. 12866, it raises novel legal or policy issues and is 
therefore otherwise significant. Accordingly, OMB has reviewed this 
final rule.
    E.O. 13563 directs agencies to propose or adopt a regulation only 
upon a reasoned determination that its benefits justify its costs; it 
is tailored to impose the least burden on society, consistent with 
achieving the regulatory objectives; and in choosing among alternative 
regulatory approaches, the agency has selected those approaches that 
maximize net benefits. E.O. 13563 recognizes that some benefits are 
difficult to quantify and provides that, where appropriate and 
permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a `major rule', as defined by 5 U.S.C. 804(2).
Public Comments
    Commenters asserted that the economic analysis in the proposed rule 
left out any discussion of program effectiveness or accountability and 
that a determination of whether to make the proposed changes should be 
based on the cost-effectiveness of ES activities. One commenter stated 
that the proposal would impose greater costs on employers through 
Federal and State unemployment taxes. Commenters contended that the 
2004 Jacobson study \14\ demonstrates that the benefits of using merit-
staffing outweigh its costs. Commenters also contended that a 2012 
study of Nevada's REA program \15\ found that requiring merit-based 
staff to conduct all program components improved outcomes. Some 
commenters pointed to examples of efforts in the United States to 
privatize (as the commenters termed it) the delivery of social service 
programs that resulted in cost overruns and other problems. The 
Department recognizes these studies and findings, but this final rule 
does not privatize Wagner-Peyser Act services; rather, it provides 
flexibility to States to offer Wagner-Peyser Act services using the 
best staffing models available to them to provide these services, while 
the Department maintains oversight and long-established criteria for 
proper and efficient delivery of those services. States are encouraged 
to consider cost-effectiveness when determining whether to use flexible 
staffing models for the delivery of ES activities. States are also 
encouraged to conduct evaluations of various service delivery models. 
The Department anticipates that States will choose the service delivery 
model that is the most cost effective in their State.
---------------------------------------------------------------------------

    \14\ Louis Jacobson, Ian Petta, Amy Shimshak, and Regina Yudd, 
``Evaluation of Labor Exchange Services in a One-Stop Delivery 
System Environment,'' prepared by Westat for the U.S. Department of 
Labor, Employment and Training Administration Occasional Paper 2004-
09 (Feb. 2004).
    \15\ Marios Michaelides, Eileen Poe-Yamagata, Jacob Benus, and 
Dharmendra Tirumalasetti, ``Impact of the Reemployment and 
Eligibility Assessment (REA) Initiative in Nevada,'' prepared by 
IMPAQ for the U.S. Department of Labor (Jan. 2012).
---------------------------------------------------------------------------

    Some commenters stated that current ES programs are more cost-
efficient than flexibly staffed WIOA title I programs. The Department 
anticipates that States will take cost information for their State into 
consideration when determining the most cost-effective approach to 
delivering ES activities. The Department did not compare the average 
cost per participant receiving Wagner-Peyser Act services to the 
average cost per participant receiving WIOA Dislocated Worker services 
due to the differences between the two programs. When isolating similar 
services provided by the Wagner-Peyser Act and the WIOA Adult and 
Dislocated Worker programs, the outcomes were similar. However, the 
cost of the totality of services available in the Dislocated Worker 
program is not comparable to the cost of the services available through 
the Wagner-Peyser Act because the Dislocated Worker program provides 
more comprehensive services, such as individualized career services and 
training services.
    Some commenters stated that the economic analysis relied on too few 
States. As explained in the proposed rule, to estimate the potential 
wage savings to States, the Department surveyed a sample of States that 
receive various levels of Wagner-Peyser Act funding. The Department 
began by sorting the 54 jurisdictions by funding level (from high to 
low), and then divided the list into three tiers. Next, the Department 
selected States from each of the three tiers and sent questions to 
those States regarding work hours and staff occupations. The Department 
has determined the eight States that were selected are a representative 
sample that allows for a robust analysis; therefore, the Department did 
not survey additional States for the final rule.
    Two commenters questioned why the proposed rule assumed that 50 
percent of merit staff would be replaced with non-merit staff. The 
Department provided the following explanation in the proposed rule: 
``The three pilot States have an average of 52 percent non-State-merit 
staff providing labor exchange services; therefore, the Department 
assumes a 50 percent substitution rate in its wage savings 
calculations.''
    Some commenters stated that the economic analysis used inaccurately 
high wages for public sector employees, and they stated that 
Occupational Employment Statistics (OES) data should not be relied on 
to compare the salaries of government and private sector workers. 
However, the commenters did not provide any alternative sources for 
wage data. The Department continues to believe that OES is the best 
source available for wage data by occupation, industry, and State. No 
data source is perfect, but OES data are the most robust and reliable 
data for the Department's analysis.
    One commenter pointed out that the analysis does not use the most 
current and relevant information available from U.S. Bureau of Labor 
Statistics (BLS). The Department used 2017 OES data,

[[Page 620]]

which were the most current data available when the analysis was 
conducted. The Department has updated the data to 2018 for the analysis 
in this final rule.
    Commenters also stated that the analysis does not compare similar 
workers in both sectors and that the occupational codes are not 
representative of the actual work done by ES staff. The Department 
compared the wage rates for three Standard Occupational Classification 
(SOC) codes: (1) SOC 11-3011 Administrative Services Managers; (2) SOC 
13-1141 Compensation, Benefits, and Job Analysis Specialists; and (3) 
SOC 43-9061 Office Clerks, General. The Department has determined these 
are the most applicable SOC codes because they represent three 
occupational levels of ES staff: Managers or supervisors; project 
managers or mid-level analysts; and administrative assistants or 
customer service representatives. The Department maintained these three 
occupations in the final rule because these three occupations most 
closely reflect the job duties of ES staff members. Moreover, 
commenters did not suggest specific alternatives.
    Some commenters asserted that the Department unreasonably assumed 
that administrative costs for contracting out services would be small. 
Other commenters contended that the Department failed to sufficiently 
account for the administrative costs of providing services through 
contracts. Several commenters provided examples of costs that would be 
incurred by States that choose to use contract-based staffing methods 
for the delivery of ES activities, including expenses related to 
developing requests for proposal, managing the bidding process, 
reviewing proposals, drafting contracts, and monitoring contracts. The 
Department recognizes that there would be costs associated with 
obtaining a service provider to deliver ES activities. There would also 
be a reduction in costs due to the diminished need for management and 
oversight of State employees. The Department does not have a way to 
reliably estimate the difference between the new administrative costs 
and the administrative cost savings, but addressed commenters' concerns 
to the extent possible by lowering the overhead rate for government 
workers, as described below.
    Some commenters questioned why the Department doubled the wage 
rates to account for fringe benefits and overhead without elaboration. 
To address comments about administrative and overhead costs, the 
Department lowered the overhead rate for State government workers. In 
the proposed rule, the Department doubled the base wage rate for 
government workers and all sector workers to account for fringe 
benefits and overhead costs. For government workers, doubling the base 
wage rate reflected a fringe benefits rate of 60 percent \16\ and an 
overhead rate of 40 percent.\17\ For all sector workers, doubling the 
base wage rate reflected a fringe benefits rate of 44 percent \18\ and 
an overhead rate of 56 percent.\19\ In the final rule, the Department 
used updated ECEC data to calculate the fringe benefits rates and the 
results were the same: 60 percent for the government sector \20\ and 44 
percent for private sector workers.\21\ In response to public comments, 
the Department reevaluated the most appropriate overhead rates to use 
in the final rule. The Department decided to keep the 56 percent 
overhead rate for new hires (represented by all sector workers) in 
light of the costs related to awarding funds and monitoring 
subrecipients, and to reduce the overhead rate for government workers 
from 40 percent to 17 percent \22\ to reflect the lower marginal 
increase in overhead costs for retaining incumbent workers than hiring 
new workers.
---------------------------------------------------------------------------

    \16\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For State and local government workers, 
wages and salaries averaged $30.45 per hour worked in 2017, while 
benefit costs averaged $18.12, which is a benefits rate of 60 
percent.
    \17\ U.S. Department of Health and Human Services, ``Guidelines 
for Regulatory Impact Analysis'' (2016), https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf. In its guidelines, HHS 
states, ``as an interim default, while HHS conducts more research, 
analysts should assume overhead costs (including benefits) are equal 
to 100 percent of pre-tax wages.'' HHS explains that 100 percent is 
roughly the midpoint between 46 and 150 percent, with 46 percent 
based on Employer Costs for Employee Compensation (ECEC) data that 
suggest benefits average 46 percent of wages and salaries, and 150 
percent based on the private sector ``rule of thumb'' that fringe 
benefits plus overhead equal 150 percent of wages. To isolate the 
overhead costs from HHS's 100 percent assumption, the Department 
subtracted the 60 percent benefits rate calculated from ECEC data, 
resulting in an overhead rate of approximately 40 percent.
    \18\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For private industry workers, wages and 
salaries averaged $23.26 per hour worked in 2017, while benefit 
costs averaged $10.16, which is a benefits rate of 44 percent.
    \19\ U.S. Department of Health and Human Services, ``Guidelines 
for Regulatory Impact Analysis'' (2016), https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf. To isolate the overhead 
costs from HHS's 100 percent assumption, the Department subtracted 
the 44 percent benefits rate calculated from ECEC data, resulting in 
an overhead rate of approximately 56 percent.
    \20\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For State and local government workers, 
wages and salaries averaged $31.12 per hour worked in 2018, while 
benefit costs averaged $18.69, which is a benefits rate of 60 
percent.
    \21\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For private industry workers, wages and 
salaries averaged $23.86 per hour worked in 2018, while benefit 
costs averaged $10.38, which is a benefits rate of 44 percent.
    \22\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
---------------------------------------------------------------------------

    Some commenters stated that the proposal would lead to increased 
staff turnover. The Department acknowledges that, on average, employee 
turnover is higher in the private sector than in the public sector. 
According to data from the Job Openings and Labor Turnover Survey 
(JOLTS) program, the separations rate for the private sector was 4.1 
percent on average over the past year, while the separations rate for 
State and local government was 1.6 percent,\23\ substantiating 
commenters' statements insofar as they stand for the general 
proposition that turnover is higher among private sector workers than 
government workers. While private sector workers on average may have a 
higher turnover rate than State employees on average, the Department is 
unable to quantify the potential impact on ES activities particularly, 
aside from reducing the overhead rate for State employees, as described 
above. Importantly, the Department is not requiring delivery of ES 
activities by private sector workers and anticipates that States will 
take employee turnover into consideration when assessing the cost 
effectiveness of various service delivery options.
---------------------------------------------------------------------------

    \23\ BLS, JOLTS program, https://www.bls.gov/jlt. 
``Separations'' includes quits, layoffs and discharges, and other 
separations. Total separations is referred to as ``turnover.''
---------------------------------------------------------------------------

    Several commenters stated that the Department is unsure of the 
proposed rule's costs, and that this degree of uncertainty cautions 
against implementing the proposal. Even though the Department has 
determined that its cost estimates are based on the best available 
data, the Department acknowledges that projections of future costs and 
estimates based on surveys are subject to some degree of uncertainty. 
As such, the Department discussed in detail the areas of uncertainty in 
the analysis.
Wage Savings for States
    As stated elsewhere in this preamble, the Department is exercising 
its discretion under the Wagner-Peyser Act to give States more staffing 
options for how they provide labor exchange services and carry out 
certain other ES

[[Page 621]]

activities authorized by that Act. This flexibility will permit States 
to continue using State merit-staffing models to perform these 
functions, or to use other innovative models that best suit each 
State's individual needs. All 50 States, plus the District of Columbia, 
Puerto Rico, Guam, and the U.S. Virgin Islands, receive funding under 
the Wagner-Peyser Act (54 jurisdictions total).
    To estimate the wage savings to States, the Department surveyed a 
sample of States that receive various levels of Wagner-Peyser Act 
funding to obtain an approximation of staffing levels and patterns. In 
Program Year (PY) 2019, 17 jurisdictions received annual Wagner-Peyser 
Act funding between $12.4 and $77.5 million (labeled Tier 1 States in 
this analysis), 17 jurisdictions received funding between $6.0 million 
and $12.2 million (labeled Tier 2 States in this analysis), and 20 
jurisdictions received funding of less than $6.0 million (labeled Tier 
3 States in this analysis).\24\ Eight States were surveyed by the 
Department and asked to provide the total number of Full-Time 
Equivalent (FTE) hours worked by State merit staff dedicated to 
delivering Wagner-Peyser Act-funded services, as well as the 
occupational/position title for all employees included in the FTE 
calculations.\25\ The results ranged from 561 FTEs in California, the 
State that received the highest level of Wagner-Peyser Act funding in 
PY 2019, to 19 FTEs in Delaware, the State that received the lowest 
level of Wagner-Peyser Act funding in PY 2019.\26\ On average among the 
States surveyed, 15 percent of staff funded under the Wagner-Peyser Act 
are managers or supervisors, 19 percent provide project management or 
mid-level analysis, and 66 percent provide administrative support and/
or customer service.\27\
---------------------------------------------------------------------------

    \24\ State allotments are primarily based on a State's relative 
share of the civilian labor force and relative share of total 
unemployment.
    \25\ The eight States surveyed were California, Delaware, Idaho, 
Maryland, North Dakota, Ohio, Tennessee, and Utah. California, Ohio, 
and Maryland are in Tier 1. Tennessee and Idaho are in Tier 2. Utah, 
North Dakota, and Delaware are in Tier 3. In the proposed rule, 
Tennessee was in Tier 1 and Maryland was in Tier 2 based on PY 2018 
funding levels; in the final rule, Maryland is in Tier 1 and 
Tennessee is in Tier 2 based on PY 2019 funding levels.
    \26\ The U.S. Virgin Islands and Guam received lower levels of 
Wagner-Peyser Act funding than Delaware. The PY 2019 allotments are 
available at https://www.federalregister.gov/documents/2019/04/19/2019-07729/program-year-py-2019-workforce-innovation-and-opportunity-act-wioa-allotments-py-2019-wagner-peyser.
    \27\ Three States (California, North Dakota, and Ohio) provided 
a breakdown of FTEs by occupation. The Department calculated an 
average distribution based on those three States, and then applied 
the distribution to the other five States. Table X reflects the data 
provided by California, North Dakota, and Ohio and the calculated 
distributions for Maryland, Tennessee, Idaho, Utah, and Delaware.
---------------------------------------------------------------------------

    To estimate the percent of current ES positions that States would 
choose to re-staff under this final rule, the Department surveyed three 
States that participate in a Wagner-Peyser Act pilot program and 
already have non-State-merit staff providing labor exchange services: 
Colorado, Massachusetts, and Michigan. These three States were asked 
how many of their Wagner-Peyser Act-funded FTE hours are provided by 
non-State-merit staff.\28\ The three pilot States have an average of 52 
percent non-State-merit staff providing labor exchange services; 
therefore, the Department assumes a 50 percent substitution rate in its 
wage savings calculations. For example, the Department estimated that 
California would employ 280.5 FTEs (= 561 FTEs x 50%) who are neither 
merit-staffed nor State employees after the final rule takes effect, 
while Delaware would employ 9.5 such FTEs (= 19 FTEs x 50%). The FTEs 
are assumed to be distributed in accordance with the average staffing 
patterns of the surveyed States: 15 percent are managers or 
supervisors, 19 percent provide project management or mid-level 
analysis, and 66 percent provide administrative support and/or customer 
service.
---------------------------------------------------------------------------

    \28\ SMAs will continue to be State staff, so they are not 
included in the calculations of this final rule.
---------------------------------------------------------------------------

    To calculate the potential savings, median wage rates for 
government workers in each of the eight States were obtained from the 
BLS OES program.\29\ The median wage rates for private sector workers 
are not available by State and occupation; therefore, the Department 
used the median wage rates for all sectors \30\ as a proxy because 
private sector jobs constitute 85 percent of total employment.\31\ The 
median wage rates were obtained for three SOC codes: (1) SOC 11-3011 
Administrative Services Managers; (2) SOC 13-1141 Compensation, 
Benefits, and Job Analysis Specialists; and (3) SOC 43-9061 Office 
Clerks, General. To account for fringe benefits, the Department used a 
60 percent benefits rate for the government sector \32\ and a 44 
percent rate for private sector workers.\33\ To account for overhead 
costs, the Department used a 17 percent overhead rate \34\ for the 
government sector and a 56 percent overhead rate \35\ for new hires 
(represented by all sector workers). In response to public comments, 
the Department reduced the overhead rate for government workers from 40 
percent to 17 percent in the final rule to reflect the lower marginal 
increase in overhead costs for retaining incumbent workers than hiring 
new workers.
---------------------------------------------------------------------------

    \29\ BLS OES data for government workers by State (May 2018): 
https://www.bls.gov/oes/special.requests/oes_research_2018_sec_99.xlsx. These data do not distinguish between 
government staff employed under a merit system and staff who are 
not, thus the Department could not accurately estimate of the impact 
of transitioning to State employees not under a merit system.
    \30\ BLS OES data for all sectors by State (May 2018): https://www.bls.gov/oes/special.requests/oesm18st.zip.
    \31\ In May 2018, total employment was 144,733,270 (https://www.bls.gov/oes/current/oes_nat.htm), with 122,999,150 jobs (85%) in 
the private sector (https://www.bls.gov/oes/current/000001.htm) and 
21,734,120 jobs (15%) in the government sector (https://www.bls.gov/oes/current/999001.htm).
    \32\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For State and local government workers, 
wages and salaries averaged $31.12 per hour worked in 2018, while 
benefit costs averaged $18.69, which is a benefits rate of 60 
percent.
    \33\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For private industry workers, wages and 
salaries averaged $23.86 per hour worked in 2018, while benefit 
costs averaged $10.38, which is a benefits rate of 44 percent.
    \34\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
    \35\ U.S. Department of Health and Human Services, ``Guidelines 
for Regulatory Impact Analysis'' (2016), https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf. To isolate the overhead 
costs from HHS's 100 percent assumption, the Department subtracted 
the 44 percent benefits rate calculated from ECEC data, resulting in 
an overhead rate of approximately 56 percent.
---------------------------------------------------------------------------

    Then the difference between the fully loaded wage rates of 
government workers and workers in all sectors was calculated. For 
example, in Ohio, the median hourly wage rate for managers/supervisors 
is $35.91 in the government sector and $40.84 in all sectors. 
Accounting for fringe benefits and overhead costs, the fully loaded 
median hourly rate is $63.56 in the government sector [= $35.91 + 
($35.91 x 60%) + ($35.91 x 17%)] and $81.68 in all sectors [= $40.84 + 
($40.84 x 44%) + ($40.84 x 56%)], a difference of $18.12 per hour. 
Since the fully loaded wage rate is $18.12 per hour higher in all 
sectors than in the government sector, Ohio would not realize a savings 
at the manager/supervisor level under this final rule. Likewise, Ohio 
would not realize a savings at the project management level because the 
fully loaded wage rate is $6.89 per hour higher in all sectors than in 
the government sector (= $49.31 for government workers--$56.20 for 
workers in all sectors). However, Ohio would realize a $1.23 per hour 
savings at the administrative support level (=

[[Page 622]]

$32.71 for government workers--$31.48 for workers in all sectors).
    Multiplying this fully loaded wage rate difference by the estimated 
number of FTEs in this occupation (34.0 FTEs) and by 2,080 hours (= 40 
hours per week x 52 weeks per year) results in a potential savings for 
Ohio of $86,986 per year at the administrative support level (= $1.23 
per hour savings x 34.0 FTEs x 2,080 hours per year). The same process 
was followed for the other seven States surveyed by the Department.
    Next, the estimated wage savings for the States within each tier 
were summed. The estimated savings for the Tier 1 States of California 
($950,456), Ohio ($86,986), and Maryland ($0) equals $1,037,442. The 
estimated savings for the Tier 2 States of Tennessee ($0) and Idaho 
($9,058) equals $9,058. The estimated savings for the Tier 3 States of 
Utah ($106,579), North Dakota ($0), and Delaware ($13,250) equals 
$119,829.
    The results for each tier were then multiplied by the appropriate 
ratio to estimate the wage savings for the entire tier. There are 17 
States in Tier 1, so the estimated savings for the Tier 1 States of 
California, Ohio, and Maryland ($1,037,442) was multiplied by 17/3, 
bringing the total estimated savings to $5,878,836 per year for Tier 1. 
There are 17 States in Tier 2, so the estimated savings for the Tier 2 
States of Tennessee and Idaho ($9,058) was multiplied by 17/2, bringing 
the total estimated savings to $76,996 per year for Tier 2. There are 
20 States in Tier 3, so the estimated savings for the Tier 3 States of 
Utah, Nevada, and Delaware ($119,829) was multiplied by 20/3, bringing 
the total estimated savings to $798,859 per year for Tier 3.
    Finally, the estimated wage savings for each tier were added 
together. Therefore, the total estimated savings of this final rule is 
$6,754,691 per year (= $5,878,836 for Tier 1 States + $76,996 for Tier 
2 States + $798,859 for Tier 3 States), as shown in Table X.\36\
---------------------------------------------------------------------------

    \36\ This rule may have other effects, which are described 
qualitatively here. The changes to Sec.  653.111, regarding the 
staffing of significant MSFW one-stop centers, could affect States' 
administrative costs. The changes would revise the staffing criteria 
for these centers, eliminating some requirements and adding new 
requirements. It is unknown whether this change will reduce or 
increase costs, but the Department believes that the effect in 
either case will be small.
---------------------------------------------------------------------------

    For purposes of E.O.s 12866 and 13771, the base wage and fringe 
benefit portions of these estimated savings are categorized as 
transfers from employees to States.

                                                                            Table X--Estimated Wage Savings per Year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                  Cost savings =
                                                                                  Number of FTEs    Median wage    Loaded median                                    Difference     estimated FTE
                                                                  Number of FTEs     with 50%        rate for      wage rate for    Median wage    Loaded median  between loaded    x wage rate
                            SOC code                                 (rounded)     substitution     government      government     rate for all    wage rate for  wage rates for   difference x
                                                                                       rate           sector          sector          sectors       all sectors   government and  2080 hours per
                                                                                                                                                                    all sectors        year
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CA:
    11-3011.....................................................             117            58.5          $54.25          $96.02          $51.07         $102.14           $6.12              $0
    13-1141.....................................................              74            37.0           34.45           60.98           34.20           68.40            7.42               0
    43-9061.....................................................             370           185.0           20.58           36.43           16.98           33.96           -2.47       (950,456)
                                                                             561           280.5  ..............  ..............  ..............  ..............  ..............  ..............
OH:
    11-3011.....................................................               8             4.0           35.91           63.56           40.84           81.68           18.12               0
    13-1141.....................................................               7             3.5           27.86           49.31           28.10           56.20            6.89               0
    43-9061.....................................................              68            34.0           18.48           32.71           15.74           31.48           -1.23        (86,986)
                                                                              84            42.0  ..............  ..............  ..............  ..............  ..............  ..............
MD:
    11-3011.....................................................              12             6.0           45.04            79.2           52.08          104.16           24.44               0
    13-1141.....................................................              16             8.0           29.42           52.07           34.45           68.90           16.83               0
    43-9061.....................................................              53            26.5           17.24           30.51           15.67           31.34            0.83               0
                                                                              81            40.5  ..............  ..............  ..............  ..............  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated cost savings for CA, OH, and MD.......................................................................  ..............  ..............  ..............  ..............     (1,037,442)
                                                                                                                                 ---------------------------------------------------------------
Estimated cost savings for 17 Tier 1 States.....................................................................  ..............  ..............  ..............  ..............     (5,878,836)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TN:
    11-3011.....................................................              22            11.0           35.47           62.78           38.81           77.62           14.84               0
    13-1141.....................................................              28            14.0           24.63           43.60           25.74           51.48            7.88               0
    43-9061.....................................................              97            48.5           15.46           27.36           14.96           29.92            2.56               0
                                                                             148            74.0  ..............  ..............  ..............  ..............  ..............  ..............
ID:
    11-3011.....................................................              10             5.0           29.72           52.60           33.87           67.74           15.14               0
    13-1141.....................................................              13             6.5           28.11           49.75           24.54           49.08           -0.67         (9,058)
    43-9061.....................................................              46            23.0           15.62           27.65           14.62           29.24            1.59               0
                                                                              70            35.0  ..............  ..............  ..............  ..............  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated cost savings for TN and ID............................................................................  ..............  ..............  ..............  ..............         (9,048)
                                                                                                                                 ---------------------------------------------------------------
Estimated cost savings for 17 Tier 2 States.....................................................................  ..............  ..............  ..............  ..............        (76,996)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
UT:
    11-3011.....................................................              11             5.5           32.60           57.70           36.44           72.88           15.18               0
    13-1141.....................................................              14             7.0           30.42           53.84           23.26           46.52           -7.32       (106,579)
    43-9061.....................................................              48            24.0           14.94           26.44           14.96           29.92            3.48               0
                                                                              73            36.5  ..............  ..............  ..............  ..............  ..............  ..............
ND:
    11-3011.....................................................               6             3.0           35.43           62.71           37.75           75.50           12.79               0
    13-1141.....................................................              15             7.5           30.42           53.84           27.10           54.20            0.36               0
    43-9061.....................................................              21            10.5           18.76           33.21           18.09           36.18            2.97               0
                                                                              41            20.5  ..............  ..............  ..............  ..............  ..............  ..............
DE:
    11-3011.....................................................               3             1.5           41.33           73.15           53.61          107.22           34.07               0

[[Page 623]]

 
    13-1141.....................................................               4             2.0           26.95           47.70           31.81           63.62           15.92               0
    43-9061.....................................................              13             6.5           16.43           29.08           14.05           28.10           -0.98        (13.250)
                                                                              19             9.5  ..............  ..............  ..............  ..............  ..............  ..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated cost savings for UT, ND, and DE.......................................................................  ..............  ..............  ..............  ..............       (119,829)
                                                                                                                                 ---------------------------------------------------------------
Estimated cost savings for 20 Tier 3 States.....................................................................  ..............  ..............  ..............  ..............       (798,859)
                                                                                                                                 ---------------------------------------------------------------
    Total estimated cost savings................................................................................  ..............  ..............  ..............  ..............     (6,754,691)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Rule Familiarization Costs
    Regulatory familiarization costs represent direct costs to States 
associated with reviewing the new regulation. The Department calculated 
this cost by multiplying the estimated time to review the rule by the 
hourly compensation of a Human Resources Manager and by the number of 
jurisdictions (including the District of Columbia, Puerto Rico, Guam, 
and the U.S. Virgin Islands).
    The Department estimates that rule familiarization will take on 
average one hour by a State government Human Resources Manager who is 
paid a median hourly wage of $48.66.\37\ The Department used a 60 
percent benefits rate \38\ and a 17 percent overhead rate,\39\ so the 
fully loaded hourly wage is $86.13 [= $48.66 + ($48.66 x 60%) + ($48.66 
x 17%)]. Therefore, the one-time rule familiarization cost for all 54 
jurisdictions (the 50 States, the District of Columbia, Puerto Rico, 
Guam, and the U.S. Virgin Islands) is estimated to be $4,651 (= $86.13 
x 1 hour x 54 jurisdictions).
---------------------------------------------------------------------------

    \37\ BLS OES National Industry-Specific Occupational Employment 
and Wage Estimates, Sector 99 (May 2018): https://www.bls.gov/oes/current/naics2_99.htm.
    \38\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. For State and local government workers, 
wages and salaries averaged $31.12 per hour worked in 2018, while 
benefit costs averaged $18.69, which is a benefits rate of 60 
percent.
    \39\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
---------------------------------------------------------------------------

Summary of Estimated Impacts and Discussion of Uncertainty
    For all States, the expected first-year budget savings will be 
approximately $6,750,040 (= $6,754,691 wage savings - $4,651 regulatory 
familiarization costs).
    This analysis assumes a 50 percent substitution rate, meaning that 
States will choose to re-staff certain positions with personnel other 
than State merit staff because these models may be more efficient and 
less expensive. Wage savings will vary among States based on each 
State's substitution rate. For some States, substitution at the 
managerial level may be cheaper; for other States, cost savings may be 
realized for administrative staff. Some States may find that private 
sector wage rates, for example, are more expensive than State merit 
staff wage rates and so choose to keep their current Wagner-Peyser Act 
merit staff. Under this final rule, States are not required to re-staff 
employment services and certain other activities under the Wagner-
Peyser Act; they are given the option to do so. The purpose of this 
final rule is to grant States maximum flexibility in administering the 
Wagner-Peyser Act ES program and thereby free up resources for more and 
better service to employers and job seekers. Each State's wage savings 
will depend on the choices it makes for staffing.\40\
---------------------------------------------------------------------------

    \40\ This rule is expected to reduce deadweight loss (DWL). DWL 
occurs when a market operates at less than optimal equilibrium 
output, which happens any time the conditions for a perfectly 
competitive market are not met. Causes of DWL include taxes, 
subsidies, externalities, labor market interventions, price 
ceilings, and price floors. This rule removes a wage premium. The 
lower cost of labor may lead to an increase in the total number of 
labor hours purchased on the market. DWL reduction is a function of 
the difference between the compensation employers would be willing 
to pay for the hours gained and the compensation employees would be 
willing to accept for those hours. The size of the DWL reduction 
will largely depend on the elasticities of labor demand and labor 
supply.
---------------------------------------------------------------------------

Non-Quantifiable Benefits
    In addition to cost savings, this final rule will likely provide 
benefits to States and to society. The added staffing flexibility this 
final rule gives to States will allow them to identify and achieve 
administrative efficiencies. Given the estimated cost savings that will 
result, States will be able to dedicate more resources under the 
Wagner-Peyser Act to providing services to job seekers and employers. 
These services, which help individuals find jobs and help employers 
find workers, will provide economic benefits through greater 
employment. These resources can also provide the States with added 
capacity to deliver more career services, including individualized 
career services, which studies have shown improve employment outcomes.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. Chapter 6, requires 
the Department to evaluate the economic impact of this final rule on 
small entities. The RFA defines small entities to include small 
businesses, small organizations, including not-for-profit 
organizations, and small governmental jurisdictions. The Department 
must determine whether the final rule imposes a significant economic 
impact on a substantial number of such small entities. The Department 
concludes that this final rule does not directly regulate any small 
entities, so any regulatory effect on small entities will be indirect. 
Accordingly, the Department has determined this final rule will not 
have a significant economic impact on a substantial number of small 
entities within the meaning of the RFA.

C. Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing 
for public comment a summary of the collection of information and a 
brief description of the need for and proposed use of the information.
    As part of its continuing effort to reduce paperwork and respondent 
burden, the Department conducts a preclearance consultation program to 
provide the public and Federal agencies

[[Page 624]]

with an opportunity to comment on proposed and continuing collections 
of information in accordance with the PRA. See 44 U.S.C. 3506(c)(2)(A). 
This activity helps to ensure that the public understands the 
Department's collection instructions, respondents can provide the 
requested data in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the Department can properly assess the impact of 
collection requirements on respondents.
    A Federal agency may not conduct or sponsor a collection of 
information unless approved by OMB under the PRA and displays a 
currently valid OMB control number. The public is also not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. In addition, notwithstanding any other 
provisions of law, no person will be subject to penalty for failing to 
comply with a collection of information if the collection of 
information does not display a currently valid OMB control number (44 
U.S.C. 3512).
    In accordance with the PRA, the Department submitted two 
information collection requests (ICRs) to OMB in concert with the 
publishing of the NPRM. This provided the public the opportunity to 
submit comments on the ICRs, either directly to the Department or to 
OMB. The 60-day period for the public to submit comments began with the 
submission of the ICRs to OMB. The Department did not receive comments 
on either of the two ICRs. The Department notes that the changes in the 
State Plan ICR are limited to the Wagner-Peyser Act program portion of 
that ICR and are consistent with the narrow focus of the changes in 
this final rule. The Department is clarifying that this joint State 
Plan ICR as a whole was approved by OMB in September 2019 with an 
expiration date of September 30, 2022. The other five (5) core programs 
affected by this joint State Plan ICR will not be impacted by the 
changes in this ICR package.
    Therefore, the ICRs are being finalized consistent with this final 
rule.
    The information collections in this final rule are summarized as 
follows.
Required Elements for Submission of the Unified or Combined State Plan 
and Plan Modifications Under the Workforce Innovation and Opportunity 
Act
    Agency: DOL-ETA.
    Title of Collection: Required Elements for Submission of the 
Unified or Combined State Plan and Plan Modifications under the 
Workforce Innovation and Opportunity Act.
    Type of Review: Revision.
    OMB Control Number: 1205-0522.
    Description: Under the provisions of WIOA, the Governor of each 
State or Territory must submit a Unified or Combined State Plan to the 
U.S. Department of Labor--approved jointly with the U.S. Department of 
Education--that fosters strategic alignment of the six core programs, 
which include: The Adult, Dislocated Worker, Youth, Wagner-Peyser Act 
ES, Adult Education and Family Literacy Act, and VR programs.
    Affected Public: States, Local, and Tribal Governments.
    Obligation to Respond: Required to Obtain or Retain Benefits.
    Estimated Total Annual Respondents: 38.
    Estimated Total Annual Responses: 38.
    Estimated Total Annual Burden Hours: 8,136.
    Estimated Total Annual Other Burden Costs: $0.
    Regulations Sections: DOL programs--20 CFR 652.211, 653.107(d), 
653.109(d), 676.105, 676.110, 676.115, 676.120, 676.135, 676.140, 
676.145, 677.230, 678.310, 678.405, 678.750(a), 681.400(a), 
681.410(b)(2), 682.100, 683.115. ED programs--34 CFR parts 361, 462, 
and 463.
Migrant and Seasonal Farmworker Monitoring Report and Complaint/
Apparent Violation Form
    This information collection is not new. The MSFW information 
collected supports regulations that set forth requirements to ensure 
such workers receive services that are qualitatively equivalent and 
quantitatively proportionate to other workers. ETA is revising Form 
ETA-5148 to conform to the changes in this final rule. In the proposed 
rule, the Department listed Sec. Sec.  653.107(a)(3), 653.108(g)(1) and 
(s)(11), and 653.111 as including proposed changes that affected the 
information collection. Only the final rule's changes in Sec.  
653.108(s)(2) affect the information collection. This update is 
reflected below.
    Unrelated to this rulemaking, this information collection is 
currently being revised for other purposes. Those changes were the 
subject of a separate Federal Register Notice published in a Federal 
Register notice on March 7, 2019 (84 FR 8343). While this package is 
unrelated, the Department is incorporating the modifications to the 
burden estimate. Since the unrelated package contains the most current 
calculations for estimating the burden, the Department is aligning the 
calculations in this final rule to ensure future consistency.

    Agency: DOL-ETA.
    Title of Collection: Migrant and Seasonal Farmworker Monitoring 
Report and Complaint/Apparent Violation Form.
    Type of Review: Revision.
    OMB Control Number: 1205-0039.
    Description: This information collection package includes the ETA 
Form 5148 (Services to Migrant and Seasonal Farmworkers Report) and the 
ETA Form 8429 (Complaint/Apparent Violation Form). SWAs must submit 
(pursuant to Sec.  653.109) ETA Form 5148 quarterly to report the level 
of services provided to MSFWs through the one-stop centers and through 
outreach staff to demonstrate the degree to which MSFWs are serviced 
and to ensure that such services are provided on a basis that is 
qualitatively equivalent and quantitatively proportionate to the 
services provided to non-MSFWs. The Department requires SWAs to use ETA 
Form 8429 when logging and referring complaints and/or apparent 
violations pursuant to part 658, subpart E.
    Affected Public: State and Local Governments; Individuals or 
Households.
    Obligation to Respond: Required to Obtain or Retain Benefits.
    Estimated Total Annual Respondents: 51.
    Estimated Total Annual Responses: 6,572.
    Estimated Total Annual Burden Hours: 8,813.
    Estimated Total Annual Other Burden Costs: $361,949.
    Regulations Sections: Sec.  653.108(s)(2).
    Interested parties may obtain a copy free of charge of one or more 
of the ICRs submitted to the OMB on the reginfo.gov website at https://www.reginfo.gov/public/do/PRAMain. From the Information Collection 
Review tab, select Information Collection Review. Then select 
Department of Labor from the Currently Under Review dropdown menu and 
look up the Control Number. You may also request a free copy of an ICR 
by contacting the person named in the ADDRESSES section of this 
preamble.

D. Executive Order 13132 (Federalism)

    E.O. 13132 requires Federal agencies to ensure that the principles 
of Federalism animating our Constitution guide the executive 
departments and agencies in the formulation and implementation of 
policies and to further the policies of the Unfunded Mandates Reform 
Act. Further, agencies must strictly adhere to constitutional 
principles. Agencies must closely examine the constitutional and 
statutory

[[Page 625]]

authority supporting any action that would limit the policy-making 
discretion of the States and they must carefully assess the necessity 
for any such action. To the extent practicable, State and local 
officials must be consulted before any such action is implemented. The 
Department has reviewed the final rule in light of these requirements 
and has concluded that it is properly premised on the statutory 
authority given to the Secretary to set standards of efficiency for 
programs under the Wagner-Peyser Act, and it meets the requirements of 
E.O. 13132 by enhancing, rather than limiting, States' discretion in 
the administration of these programs.
    Accordingly, the Department has reviewed this final rule and has 
concluded that the rulemaking has no substantial direct effects on 
States, or on the distribution of power and responsibilities among the 
various levels of government as described by E.O. 13132. Therefore, the 
Department has concluded that this final rule does not have a 
sufficient Federalism implication to warrant consultation with State 
and local officials or the preparation of a summary impact statement.

E. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4) requires each Federal agency to prepare a written statement 
assessing the effects of any Federal mandate in a final agency rule 
that may result in an expenditure of $100 million or more (adjusted 
annually for inflation with the base year 1995) in any one year by 
State, local, and tribal governments, in the aggregate, or by the 
private sector. A Federal mandate is defined in 2 U.S.C. 658, in part, 
as any provision in a regulation that imposes an enforceable duty upon 
State, local, or tribal governments, or the private sector.
    Following consideration of these factors, the Department has 
concluded that the final rule contains no unfunded Federal mandates, 
including either a ``Federal intergovernmental mandate'' or a ``Federal 
private sector mandate.'' Rather, this final rule increases State 
flexibility in staffing the Wagner-Peyser Act program.

F. Executive Order 13175 (Indian Tribal Governments)

    The Department has reviewed the NPRM under the terms of E.O. 13175 
and DOL's Tribal Consultation Policy, and have concluded that the 
changes to regulatory text that are the focus of the final rule would 
not have tribal implications, as these changes do not have substantial 
direct effects on one or more Indian tribes, the relationship between 
the Federal government and Indian tribes, nor the distribution of power 
and responsibilities between the Federal government and Indian tribes. 
Therefore, no consultations with tribal governments, officials, or 
other tribal institutions were necessary.

List of Subjects

20 CFR Part 651

    Employment, Grant programs--labor.

20 CFR Part 652

    Employment, Grant programs--labor, Reporting and recordkeeping 
requirements.

20 CFR Part 653

    Agriculture, Employment, Equal employment opportunity, Grant 
programs--labor, Migrant labor, Reporting and recordkeeping 
requirements.

20 CFR Part 658

    Administrative practice and procedure, Employment, Grant programs--
labor, Reporting and recordkeeping requirements.

    Accordingly, the Employment and Training Administration amends 20 
CFR chapter V, parts 651, 652, 653 and 658, as follows:

PART 651--GENERAL PROVISIONS GOVERNING THE WAGNER-PEYSER ACT 
EMPLOYMENT SERVICE

0
1. The authority citation for part 651 continues to read as follows:

    Authority: 29 U.S.C. 49a; 38 U.S.C. part III, 4101, 4211; Secs. 
503, 3, 189, Pub. L. 113-128, 128 Stat. 1425 (July 22, 2014).


0
2. Amend Sec.  651.10 by:
0
a. Removing the definition of ``Affirmative action'';
0
b. Adding a definition for ``Complaint System Representative'';
0
c. Revising the definition of ``Employment Service (ES) office'';
0
d. Adding definitions in alphabetical order for ``Employment Service 
(ES) Office Manager'' and ``Employment Service (ES) staff'';
0
e. Revising the definitions of ``Field checks'' and ``Field visits'';
0
f. Removing the definition of ``Local Office Manager'';
0
g. Revising the definition for ``Outreach contact'';
0
h. Adding a definition in alphabetical order for ``Outreach staff'';
0
i. Revising the definition of ``Respondent''; and
0
j. Adding in alphabetical order a definition for ``State Workforce 
Agency (SWA) official''.
    The additions and revisions read as follows:


Sec.  651.10  Definitions of terms used in this part and parts 652, 
653, 654, and 658 of this chapter.

* * * * *
    Complaint System Representative means the ES staff individual at 
the local or State level who is responsible for handling complaints.
* * * * *
    Employment Service (ES) office means a site that provides Wagner-
Peyser Act services as a one-stop partner program. A site must be 
colocated in a one-stop center consistent with the requirements of 
Sec. Sec.  678.305 through 678.315 of this chapter.
    Employment Service (ES) Office Manager means the individual in 
charge of all ES activities in a one-stop center.
* * * * *
    Employment Service (ES) staff means individuals, including but not 
limited to State employees and staff of a subrecipient, who are funded, 
in whole or in part, by Wagner-Peyser Act funds to carry out activities 
authorized under the Wagner-Peyser Act.
* * * * *
    Field checks means random, unannounced appearances by ES staff and/
or Federal staff at agricultural worksites to which ES placements have 
been made through the intrastate or interstate clearance system to 
ensure that conditions are as stated on the job order and that the 
employer is not violating an employment-related law.
    Field visits means appearances by Monitor Advocates or outreach 
staff to the working and living areas of migrant and seasonal 
farmworkers (MSFWs), to discuss employment services and other 
employment-related programs with MSFWs, crew leaders, and employers. 
Monitor Advocates or outreach staff must keep records of each such 
visit.
* * * * *
    Outreach contact means each MSFW that receives the presentation of 
information, offering of assistance, or follow-up activity from 
outreach staff.
    Outreach staff means ES staff with the responsibilities described 
in Sec.  653.107(b) of this chapter.
* * * * *
    Respondent means the individual or entity alleged to have committed 
the violation described in the complaint, such as the employer, service 
provider, or State agency (including a State agency official).
* * * * *

[[Page 626]]

    State Workforce Agency (SWA) official means an individual employed 
by the State Workforce Agency or any of its subdivisions.
* * * * *

PART 652--ESTABLISHMENT AND FUNCTIONING OF STATE EMPLOYMENT SERVICE

0
3. The authority citation for part 652 continues to read as follows:

    Authority: 29 U.S.C. 491-2; Secs. 189 and 503, Public Law 113-
128, 128 Stat. 1425 (July 22, 2014).


0
4. Amend Sec.  652.204 by revising the first sentence to read as 
follows:


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

    No, sec. 7(b) of the Wagner-Peyser Act provides that 10 percent of 
the State's allotment under the Wagner-Peyser Act is reserved for use 
by the Governor for performance incentives, supporting exemplary models 
of service delivery, professional development and career advancement of 
SWA officials as applicable, and services for groups with special 
needs. * * *


0
5. Amend Sec.  652.207 by revising paragraph (b)(3) to read as follows:


Sec.  652.207  How does a State meet the requirement for universal 
access to services provided under the Wagner-Peyser Act?

* * * * *
    (b) * * *
    (3) In each local area, in at least one comprehensive physical 
center, ES staff must provide labor exchange services (including staff-
assisted labor exchange services) and career services as described in 
Sec.  652.206; and
* * * * *

0
6. Amend Sec.  652.210 by revising paragraph (b) introductory text to 
read as follows:


Sec.  652.210  What are the Wagner-Peyser Act's requirements for 
administration of the work test, including eligibility assessments, as 
appropriate, and assistance to unemployment insurance claimants?

* * * * *
    (b) ES staff must assure that:
* * * * *

0
7. Revise Sec.  652.215 to read as follows:


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

    Yes, Wagner-Peyser Act-funded activities can be provided through a 
variety of staffing models. They are not required to be provided by 
State merit-staff employees; however, States may still choose to do so.

0
8. Revise Sec.  652.216 to read as follows:


Sec.  652.216  May the one-stop operator provide guidance to Employment 
Service staff in accordance with the Wagner-Peyser Act?

    (a) Yes, the one-stop delivery system envisions a partnership in 
which Wagner-Peyser Act labor exchange services are coordinated with 
other activities provided by other partners in a one-stop setting. As 
part of the local MOU described in Sec.  678.500 of this chapter, the 
SWA, as a one-stop partner, may agree to have ES staff receive guidance 
from the one-stop operator regarding the provision of labor exchange 
services.
    (b) The guidance given to ES staff must be consistent with the 
provisions of the Wagner-Peyser Act, the local MOU, and applicable 
collective bargaining agreements.

PART 653--SERVICES OF THE WAGNER-PEYSER ACT EMPLOYMENT SERVICE 
SYSTEM

0
9. The authority citation for part 653 continues to read as follows:

    Authority: Secs. 167, 189, 503, Public Law 113-128, 128 Stat. 
1425 (July 22, 2014); 29 U.S.C. chapter 4B; 38 U.S.C. part III, 
chapters 41 and 42.


0
10. Amend Sec.  653.102 by revising the third sentence to read as 
follows:


Sec.  653.102  Job information.

    * * * One-stop centers must provide adequate assistance to MSFWs to 
access job order information easily and efficiently. * * *

0
11. Amend Sec.  653.103 by revising paragraphs (c) and (d) to read as 
follows:


Sec.  653.103  Process for migrant and seasonal farmworkers to 
participate in workforce development activities.

* * * * *
    (c) One-stop centers must provide MSFWs a list of available career 
and supportive services in their native language.
    (d) One-stop centers must refer and/or register MSFWs for services, 
as appropriate, if the MSFW is interested in obtaining such services.

0
12. Amend Sec.  653.107 by:
0
a. Revising paragraphs (a)(1), (a)(2) introductory text, and (a)(3) and 
(4);
0
b. Adding paragraph (a)(6); and
0
c. Revising paragraphs (b) introductory text, (b)(2), (b)(4)(iv), 
(b)(5) through (11), and (c).
    The revisions and addition read as follows:


Sec.  653.107  Outreach and Agricultural Outreach Plan.

    (a) * * *
    (1) Each SWA must provide an adequate number of outreach staff to 
conduct MSFW outreach in their service areas. SWA Administrators must 
ensure State Monitor Advocates (SMAs) and outreach staff coordinate 
their outreach efforts with WIOA title I sec. 167 grantees as well as 
with public and private community service agencies and MSFW groups.
    (2) As part of their outreach, SWAs must ensure outreach staff:
* * * * *
    (3) For purposes of providing and assigning outreach staff to 
conduct outreach duties, and to facilitate the delivery of employment 
services tailored to the special needs of MSFWs, SWAs must seek 
qualified candidates who speak the language of a significant proportion 
of the State MSFW population; and
    (i) Who are from MSFW backgrounds; or
    (ii) Who have substantial work experience in farmworker activities.
    (4) In the 20 States with the highest estimated year-round MSFW 
activity, as identified in guidance issued by the Secretary, there must 
be full-time, year-round outreach staff to conduct outreach duties. For 
the remainder of the States, there must be year-round part-time 
outreach staff, and during periods of the highest MSFW activity, there 
must be full-time outreach staff. All outreach staff must be 
multilingual, if warranted by the characteristics of the MSFW 
population in the State, and must spend a majority of their time in the 
field.
* * * * *
    (6) SWAs must ensure each outreach staff member is provided with an 
identification card or other materials identifying them as 
representatives of the State.
    (b) Outreach staff responsibilities. Outreach staff must locate and 
contact MSFWs who are not being reached by the normal intake activities 
conducted by the ES offices. Outreach staff responsibilities include:
* * * * *
    (2) Outreach staff must not enter work areas to perform outreach 
duties described in this section on an employer's property without 
permission of the employer unless otherwise authorized to enter by law; 
must not enter workers' living areas without the permission of the 
workers; and must comply with appropriate State laws regarding access.
* * * * *

[[Page 627]]

    (4) * * *
    (iv) Referral of complaints to the ES office Complaint System 
Representative or ES Office Manager;
* * * * *
    (5) Outreach staff must make follow-up contacts as necessary and 
appropriate to provide the assistance specified in paragraphs (b)(1) 
through (4) of this section.
    (6) Outreach staff must be alert to observe the working and living 
conditions of MSFWs and, upon observation or upon receipt of 
information regarding a suspected violation of Federal or State 
employment-related law, document and refer information to the ES Office 
Manager for processing in accordance with Sec.  658.411 of this 
chapter. Additionally, if an outreach staff member observes or receives 
information about apparent violations (as described in Sec.  658.419 of 
this chapter), the outreach staff member must document and refer the 
information to the appropriate ES Office Manager.
    (7) Outreach staff must be trained in local office procedures and 
in the services, benefits, and protections afforded MSFWs by the ES, 
including training on protecting farmworkers against sexual harassment. 
While sexual harassment is the primary requirement, training also may 
include similar issues, such as sexual coercion, assault, and human 
trafficking. Such trainings are intended to help outreach staff 
identify when such issues may be occurring in the fields and how to 
document and refer the cases to the appropriate enforcement agencies. 
They also must be trained in the procedure for informal resolution of 
complaints. The program for such training must be formulated by the 
State Administrator, pursuant to uniform guidelines developed by ETA. 
The SMA must be given an opportunity to review and comment on the 
State's program.
    (8) Outreach staff must maintain complete records of their contacts 
with MSFWs and the services they perform. These records must include a 
daily log, a copy of which must be sent monthly to the ES Office 
Manager and maintained on file for at least 2 years. These records must 
include the number of contacts, the names of contacts (if available), 
and the services provided (e.g., whether a complaint was received and 
if the complaint or apparent violation was resolved informally or 
referred to the appropriate enforcement agency, and whether a request 
for career services was received). Outreach staff also must maintain 
records of each possible violation or complaint of which they have 
knowledge, and their actions in ascertaining the facts and referring 
the matters as provided herein. These records must include a 
description of the circumstances and names of any employers who have 
refused outreach staff access to MSFWs pursuant to paragraph (b)(2) of 
this section.
    (9) Outreach staff must not engage in political, unionization, or 
anti-unionization activities during the performance of their duties.
    (10) Outreach staff must be provided with, carry, and display, upon 
request, identification cards or other material identifying them as 
representatives of the State.
    (11) Outreach staff in significant MSFW local offices must conduct 
especially vigorous outreach in their service areas.
    (c) ES office outreach responsibilities. Each ES Office Manager 
must file with the SMA a monthly summary report of outreach efforts. 
These reports must summarize information collected, pursuant to 
paragraph (b)(8) of this section. The ES Office Manager and/or other 
appropriate staff must assess the performance of outreach staff by 
examining the overall quality and productivity of their work, including 
the services provided and the methods and tools used to offer services. 
Performance must not be judged solely by the number of contacts made by 
the outreach staff. The monthly reports and daily outreach logs must be 
made available to the SMA and Federal onsite review teams.
* * * * *

0
13. Amend Sec.  653.108 by revising:
0
a. Paragraphs (b) introductory text, (b)(2), (c), and (d);
0
b. The first sentence of paragraph (g)(1);
0
c. Paragraph (g)(2)(i)(D);
0
d. The second sentence of paragraph (g)(2)(v);
0
e. Paragraphs (g)(2)(vii) and (g)(3);
0
f. The first sentence of paragraph (i);
0
g. The first and second sentences of paragraph (o); and
0
h. Paragraphs (s)(2) and (3) and (9) and (11).
    The revisions read as follows:


Sec.  653.108  State Workforce Agency and State Monitor Advocate 
responsibilities.

* * * * *
    (b) The State Administrator must appoint an SMA who must be a SWA 
official. The State Administrator must inform farmworker organizations 
and other organizations with expertise concerning MSFWs of the opening 
and encourage them to refer qualified applicants to apply. Among 
qualified candidates, the SWAs must seek persons:
* * * * *
    (2) Who speak the language of a significant proportion of the State 
MSFW population; or
* * * * *
    (c) The SMA must have direct, personal access, when necessary, to 
the State Administrator.
    (d) The SMA must have ES staff necessary to fulfill effectively all 
of the duties set forth in this subpart. The number of ES staff 
positions must be determined by reference to the number of MSFWs in the 
State, as measured at the time of the peak MSFW population, and the 
need for monitoring activity in the State. The SMA must devote full 
time to Monitor Advocate functions. Any State that proposes less than 
full-time dedication must demonstrate to its Regional Administrator 
that the SMA function can be effectively performed with part-time 
staffing.
* * * * *
    (g) * * *
    (1) Conduct an ongoing review of the delivery of services and 
protections afforded by the ES regulations to MSFWs by the SWA and ES 
offices (including efforts to provide ES staff in accordance with Sec.  
653.111, and the appropriateness of informal complaint and apparent 
violation resolutions as documented in the complaint logs). * * *
    (2) * * *
    (i) * * *
    (D) Complaint logs including logs documenting the informal 
resolution of complaints and apparent violations; and
* * * * *
    (v) * * * The plan must be approved or revised by SWA officials and 
the SMA. * * *
* * * * *
    (vii) The SMA may recommend that the review described in paragraph 
(g)(2) of this section be delegated to a SWA official, if and when the 
State Administrator finds such delegation necessary. In such event, the 
SMA is responsible for and must approve the written report of the 
review.
    (3) Ensure all significant MSFW one-stop centers not reviewed 
onsite by Federal staff are reviewed at least once per year by a SWA 
official, and that, if necessary, those ES offices in which significant 
problems are revealed by required reports, management information, the 
Complaint System, or other means are reviewed as soon as possible.
* * * * *
    (i) At the discretion of the State Administrator, the SMA may be

[[Page 628]]

assigned the responsibility as the Complaint System Representative. * * 
*
* * * * *
    (o) The SMA must ensure that outreach efforts in all significant 
MSFW one-stop centers are reviewed at least yearly. This review will 
include accompanying at least one outreach staff from each significant 
MSFW one-stop center on field visits to MSFWs' working, living, and/or 
gathering areas. * * *
* * * * *
    (s) * * *
    (2) An assurance that the SMA has direct, personal access, whenever 
he/she finds it necessary, to the State Administrator.
    (3) An assurance the SMA devotes all of his/her time to Monitor 
Advocate functions. Or, if the SMA conducts his/her functions on a 
part-time basis, an explanation of how the SMA functions are 
effectively performed with part-time staffing.
* * * * *
    (9) A summary of the training conducted for ES staff on techniques 
for accurately reporting data.
* * * * *
    (11) For significant MSFW ES offices, a summary of the State's 
efforts to provide ES staff in accordance with Sec.  653.111.

0
14. Amend Sec.  653.109 by revising paragraph (c) to read as follows:


Sec.  653.109  Data collection and performance accountability measures.

* * * * *
    (c) Provide necessary training to ES staff on techniques for 
accurately reporting data.
* * * * *

0
15. Revise Sec.  653.111 to read as follows:


Sec.  653.111  State Workforce Agency staffing requirements.

    (a) The SWA must implement and maintain a program for staffing 
significant MSFW one-stop centers by providing ES staff in a manner 
facilitating the delivery of employment services tailored to the 
special needs of MSFWs, including by seeking ES staff that meet the 
criteria in Sec.  653.107(a)(3).
    (b) The SMA, Regional Monitor Advocate, or the National Monitor 
Advocate, as part of his/her regular reviews of SWA compliance with 
these regulations, must monitor the extent to which the SWA has 
complied with its obligations under paragraph (a) of this section.
    (c) SWAs remain subject to all applicable Federal laws prohibiting 
discrimination and protecting equal employment opportunity.

0
16. Amend Sec.  653.501 by revising paragraphs (a) introductory text, 
(c)(3)(vii), and (d)(6) and (9) to read as follows:


Sec.  653.501  Requirements for processing clearance orders.

    (a) Assessment of need. No ES office or SWA official may place a 
job order seeking workers to perform farmwork into intrastate or 
interstate clearance unless:
* * * * *
    (c) * * *
    (3) * * *
    (vii) Outreach staff must have reasonable access to the workers in 
the conduct of outreach activities pursuant to Sec.  653.107.
    (d) * * *
    (6) ES staff must assist all farmworkers, upon request in their 
native language, to understand the terms and conditions of employment 
set forth in intrastate and interstate clearance orders and must 
provide such workers with checklists in their native language showing 
wage payment schedules, working conditions, and other material 
specifications of the clearance order.
* * * * *
    (9) If weather conditions, over-recruitment, or other conditions 
have eliminated the scheduled job opportunities, the SWAs involved must 
make every effort to place the workers in alternate job opportunities 
as soon as possible, especially if the worker(s) is/are already en 
route or at the job site. ES staff must keep records of actions under 
this section.
* * * * *

0
17. Amend Sec.  653.502 by revising paragraph (e)(2) to read as 
follows:


Sec.  653.502  Conditional access to the Agricultural Recruitment 
System.

* * * * *
    (e) * * *
    (2) With the approval of an appropriate SWA official, remove the 
employer's clearance orders from intrastate and interstate clearance; 
and
* * * * *

0
18. Amend Sec.  653.503 by revising paragraphs (d) and (e) to read as 
follows:


Sec.  653.503  Field checks.

* * * * *
    (d) If the individual conducting the field check observes or 
receives information, or otherwise has reason to believe that 
conditions are not as stated in the clearance order or that an employer 
is violating an employment-related law, the individual must document 
the finding and attempt informal resolution where appropriate (for 
example, informal resolution must not be attempted in certain cases, 
such as E.O.-related issues and others identified by the Department 
through guidance). If the matter has not been resolved within 5 
business days, the SWA must initiate the Discontinuation of Services as 
set forth at part 658, subpart F of this chapter and must refer 
apparent violations of employment-related laws to appropriate 
enforcement agencies in writing.
    (e) SWA officials may 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. The agreement may include the sharing of information 
and any actions taken regarding violations of the terms and conditions 
of the employment as stated in the clearance order and any other 
violations of employment-related laws. An enforcement agency field 
check must satisfy the requirement for SWA field checks where all 
aspects of wages, hours, and working and housing conditions have been 
reviewed by the enforcement agency. The SWA must supplement enforcement 
agency efforts with field checks focusing on areas not addressed by 
enforcement agencies.
* * * * *

PART 658--ADMINISTRATIVE PROVISIONS GOVERNING THE WAGNER-PEYSER ACT 
EMPLOYMENT SERVICE

0
19. The authority citation for part 658 continues to read as follows:

    Authority:  Secs. 189, 503, Pub. L. 113-128, 128 Stat. 1425 
(July 22, 2014); 29 U.S.C. chapter 4B.


0
20. Amend Sec.  658.410 by revising paragraphs (b), (c) introductory 
text, (c)(6), (f), (g), (h), (i), (k), and (m) to read as follows:


Sec.  658.410  Establishment of local and State complaint systems.

* * * * *
    (b) The State Administrator must have overall responsibility for 
the operation of the Complaint System; this includes responsibility for 
the informal resolution of complaints. In the ES office, the ES Office 
Manager is responsible for the operation of the Complaint System.
    (c) SWAs must ensure centralized control procedures are established 
for the processing of complaints. The ES Office Manager and the SWA 
Administrator must ensure a central complaint log is maintained, 
listing all

[[Page 629]]

complaints taken by the ES office or the SWA, and specifying for each 
complaint:
* * * * *
    (6) The action taken, and whether the complaint has been resolved, 
including informally. The complaint log also must include action taken 
on apparent violations.
* * * * *
    (f) Complaints may be accepted in any one-stop center, or by a SWA, 
or elsewhere by outreach staff.
    (g) All complaints filed through the local ES office must be 
handled by a trained Complaint System Representative.
    (h) All complaints received by a SWA must be assigned to a trained 
Complaint System Representative designated by the State Administrator, 
provided that the Complaint System Representative designated to handle 
MSFW complaints must be the State Monitor Advocate (SMA).
    (i) State agencies must ensure any action taken by the Complaint 
System Representative, including referral on a complaint from an MSFW, 
is fully documented and contains all relevant information, including a 
notation of the type of each complaint pursuant to Department guidance, 
a copy of the original complaint form, a copy of any ES-related 
reports, any relevant correspondence, a list of actions taken, a record 
of pertinent telephone calls, and all correspondence relating thereto.
* * * * *
    (k) The appropriate ES staff handling a complaint must offer to 
assist the complainant through the provision of appropriate services.
* * * * *
    (m) Follow-up on unresolved complaints. When an MSFW submits a 
complaint, the SMA must follow-up monthly on the handling of the 
complaint, and must inform the complainant of the status of the 
complaint. No follow-up with the complainant is required for non-MSFW 
complaints.
* * * * *

0
21. Amend Sec.  658.411 by:
0
a. Revising paragraph (a)(1);
0
b. Removing in paragraphs (a)(2)(iii), (a)(3) and (4), (b)(1)(ii) 
introductory text, (b)(1)(ii)(B) through (D), (c)(1), (d)(2)(i) and 
(ii), and (d)(3)(i) the words ``Complaint System representative'' 
wherever they appear and adding in their place ``Complaint System 
Representative''; and
0
c. Revising paragraphs (d)(3)(ii), (d)(5)(ii), and (d)(5)(iii)(G).
    The revisions read as follows:


Sec.  658.411  Action on complaints.

    (a) * * *
    (1) Whenever an individual indicates an interest in filing a 
complaint under this subpart with an ES office, the SWA, or outreach 
staff, the individual receiving the complaint must offer to explain the 
operation of the Complaint System and must offer to take the complaint 
in writing.
* * * * *
    (d) * * *
    (3) * * *
    (ii) If resolution at the SWA level has not been accomplished 
within 30 working days after the complaint was received by the SWA (or 
after all necessary information has been submitted to the SWA pursuant 
to paragraph (a)(4) of this section), whether the complaint was 
received directly or from an ES office pursuant to paragraph (d)(2)(ii) 
of this section, the SWA official must make a written determination 
regarding the complaint and must send electronic copies to the 
complainant and the respondent. The determination must follow the 
procedures set forth in paragraph (d)(5) of this section.
* * * * *
    (5) * * *
    (ii) If SWA officials determine that the employer has not violated 
the ES regulations, the SWA must offer to the complainant the 
opportunity to request a hearing within 20 working days after the 
certified date of receipt of the notification.
    (iii) * * *
    (G) With the consent of the SWA official and of the State hearing 
official, the party who requested the hearing may withdraw the request 
for the hearing in writing before the hearing.
* * * * *

0
22. Amend Sec.  658.419 by revising paragraph (a) to read as follows:


Sec.  658.419  Apparent violations.

    (a) If a SWA, an ES office employee, or outreach staff observes, 
has reason to believe, or is in receipt of information regarding a 
suspected violation of employment-related laws or ES regulations by an 
employer, except as provided at Sec.  653.503 of this chapter (field 
checks) or Sec.  658.411 (complaints), the employee must document the 
suspected violation and refer this information to the ES Office 
Manager.
* * * * *

0
23. Amend Sec.  658.501 by revising paragraphs (a) introductory text, 
(b), and (c) to read as follows:


Sec.  658.501  Basis for discontinuation of services.

    (a) SWA officials must initiate procedures for discontinuation of 
services to employers who:
* * * * *
    (b) SWA officials may discontinue services immediately if, in the 
judgment of the State Administrator, exhaustion of the administrative 
procedures set forth in this subpart in paragraphs (a)(1) through (7) 
of this section would cause substantial harm to a significant number of 
workers. In such instances, procedures at Sec. Sec.  658.503 and 
658.504 must be followed.
    (c) If it comes to the attention of an ES office or a SWA that an 
employer participating in the ES may not have complied with the terms 
of its temporary labor certification, under, for example the H-2A and 
H-2B visa programs, SWA officials must engage in the procedures for 
discontinuation of services to employers pursuant to paragraphs (a)(1) 
through (8) of this section and simultaneously notify the Chicago 
National Processing Center (CNPC) of the alleged non-compliance for 
investigation and consideration of ineligibility pursuant to Sec.  
655.184 or Sec.  655.73 of this chapter respectively for subsequent 
temporary labor certification.

0
24. Amend Sec.  658.601 by revising paragraphs (a)(1)(ii) and 
(a)(2)(ii) to read as follows:


Sec.  658.601  State Workforce Agency responsibility.

    (a) * * *
    (1) * * *
    (ii) To appraise numerical activities/indicators, actual results as 
shown on the Department's ETA Form 9172, or any successor report 
required by the Department must be compared to planned levels. 
Differences between achievement and plan levels must be identified.
* * * * *
    (2) * * *
    (ii) To appraise these key numerical activities/indicators, actual 
results as shown on ETA Form 9172, or any successor report required by 
the Department must be compared to planned levels. Differences between 
achievement and plan levels must be identified.
* * * * *

0
25. Amend Sec.  658.602 by revising paragraphs (l), (o)(1), and (s)(2) 
to read as follows:


Sec.  658.602  Employment and Training Administration National Office 
responsibility.

* * * * *

[[Page 630]]

    (l) If the NMA finds the effectiveness of any RMA has been 
substantially impeded by the Regional Administrator or other regional 
office official, he/she must, if unable to resolve such problems 
informally, report and recommend appropriate actions directly to the 
OWI Administrator. If the NMA receives information that the 
effectiveness of any SMA has been substantially impeded by the State 
Administrator, a State or Federal ES official, or other ES staff, he/
she must, in the absence of a satisfactory informal resolution at the 
regional level, report and recommend appropriate actions directly to 
the OWI Administrator.
* * * * *
    (o) * * *
    (1) Meet with the SMA and other ES staff to discuss MSFW service 
delivery; and
* * * * *
    (s) * * *
    (2) Provide technical assistance to ETA regional office and ES 
staff for administering the Complaint System, and any other employment 
services as appropriate.
* * * * *

0
26. Amend Sec.  658.603 by:
0
a. Revising the section heading and paragraphs (f) introductory text 
and (h);
0
b. Republishing paragraph (n) introductory text; and
0
e. Revising paragraphs (n)(3), (o), (r) introductory text, (r)(1), and 
(t).
    The revisions read as follows:


Sec.  658.603  Employment and Training Administration regional office 
responsibility.

* * * * *
    (f) The Regional Administrator must appoint a RMA who must carry 
out the duties set forth in this subpart. The RMA must:
* * * * *
    (h) The Regional Administrator must ensure that staff necessary to 
fulfill effectively all the regional office responsibilities set forth 
in this section are assigned.
* * * * *
    (n) The RMA must review the activities and performance of the SMAs 
and the State monitoring system in the region, and must recommend any 
appropriate changes in the operation of the system to the Regional 
Administrator. The RMA's review must include a determination whether 
the SMA:
* * * * *
    (3) Is making recommendations that are being consistently ignored 
by SWA officials. If the RMA believes that the effectiveness of any SMA 
has been substantially impeded by the State Administrator, other State 
agency officials, any Federal officials, or other ES staff, he/she must 
report and recommend appropriate actions to the Regional Administrator. 
Copies of the recommendations must be provided to the NMA 
electronically or in hard copy.
* * * * *
    (o)(1) The RMA must be informed of all proposed changes in policy 
and practice within the ES, including ES regulations, which may affect 
the delivery of services to MSFWs. He/she must advise the Regional 
Administrator on all such proposed changes which, in his/her opinion, 
may adversely affect MSFWs or which may substantially improve the 
delivery of services to MSFWs.
    (2) The RMA also may recommend changes in ES policy or regulations, 
as well as changes in the funding of State Workforce Agencies and/or 
adjustments of reallocation of the discretionary portions of funding 
formulae as they pertain to MSFWs.
* * * * *
    (r) As appropriate, each year during the peak harvest season, the 
RMA must visit each State in the region not scheduled for an onsite 
review during that fiscal year and must:
    (1) Meet with the SMA and other ES staff to discuss MSFW service 
delivery; and
* * * * *
    (t) The RMA must attend MSFW-related public meeting(s) conducted in 
the region, as appropriate. Following such meetings or hearings, the 
RMA must take such steps or make such recommendations to the Regional 
Administrator, as he/she deems necessary to remedy problem(s) or 
condition(s) identified or described therein.
* * * * *

0
27. Amend Sec.  658.704 by republishing paragraph (a) introductory text 
and revising paragraph (a)(4) to read as follows:


Sec.  658.704  Remedial actions.

    (a) If a SWA fails to correct violations as determined pursuant to 
Sec.  658.702, the Regional Administrator must apply one or more of the 
following remedial actions to the SWA:
* * * * *
    (4) Requirement of special training for ES staff;
* * * * *

John P. Pallasch,
Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2019-27260 Filed 1-3-20; 8:45 am]
 BILLING CODE 4510-FN-P