Please refer to Docket ID NRC-2025-0018 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:

• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2025-0018.

• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, at 301-415-4737, or by email to PDR.Resource@nrc.gov. For the convenience of the reader, instructions about obtaining materials referenced in this document are provided in the “Availability of Documents” section of this document.

• NRC's PDR: The PDR, where you may examine and order copies of publicly available documents, is open by appointment. To make an appointment to visit the PDR, please send an email to PDR.Resource@nrc.gov or call 1-800-397-4209 or 301-415-4737, between 8 a.m. and 4 p.m. eastern time, Monday through Friday, except Federal holidays.

• Technical Library: The Technical Library, which is located at Two White Flint North, 11545 Rockville Pike, Rockville, Maryland 20852, is open by appointment only. Interested parties may make appointments to examine documents by contacting the NRC Technical Library by email at Library.Resource@nrc.gov between 8 a.m. and 4 p.m. eastern time, Monday through Friday, except Federal holidays.

The NRC encourages electronic comment submission through the Federal rulemaking website ( https://www.regulations.gov ). Please include Docket ID NRC-2025-0018 in your comment submission.

The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at https://www.regulations.gov as well as enter the comment submissions into ADAMS. The NRC does not routinely edit comment submissions to remove identifying or contact information.

If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.

Because the NRC considers this action to be non-controversial, the NRC is publishing this proposed rule concurrently with a direct final rule in the Rules and Regulations section of this issue of the Federal Register . The direct final rule will become effective on September 15, 2025. However, if the NRC receives significant adverse comments by August 1, 2025, then the NRC will publish a document that withdraws the direct final rule. If the direct final rule is withdrawn, the NRC will address the comments in a subsequent final rule or as otherwise appropriate. Absent significant modifications to the proposed revisions requiring republication, the NRC will not initiate a second comment period on this action.

A significant adverse comment is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:

(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:

(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;

(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or

(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.

(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.

(3) The comment causes the NRC staff to make a change (other than editorial) to the rule.

For the specific proposed changes to the NRC's regulations and additional discussion and associated analyses (including the regulatory analysis, environmental assessment, and finding of no significant impact), see the direct final rule published in the Rules and Regulations section of this issue of the Federal Register and at https://www.regulations.gov under Docket ID NRC-2025-0018.

A standard design certification, also referred to simply as a design certification (DC), is a Commission approval by regulation of a final standard design for a nuclear power facility. A DC is codified via rulemaking and is independent of a specific site or an application to construct or operate a plant. An application to construct or operate a plant may reference a DC to take advantage of reviews previously completed by the NRC, though such an application must still address certain site-specific matters. The NRC's regulations governing DCs are codified in part 52 of title 10 of the Code of Federal Regulations (10 CFR), Subpart B, “Standard Design Certifications,” and specific DCs are published as appendices to part 52.

In this proposed rule, the NRC would amend its regulations to revise the duration of DCs, as approved by the Commission in Staff Requirements Memorandum (SRM)-COMDAW-24-0001, “Revising the Duration of Design Certifications,” dated November 14, 2024. Specifically, this proposed rule would replace the 15-year duration period for initial DCs and renewals with a 40-year duration period, both generically and for each DC currently in effect. For DCs currently in effect, the respective date of issuance or renewal ( i.e., the start date by which a DC may be referenced) would remain unchanged by this proposed rule. Otherwise stated, the 40-year duration period would start upon the date of issuance or renewal of the DC.

Five DCs are currently in effect: appendix A to 10 CFR part 52, “Design Certification Rule for the U.S. Advanced Boiling Water Reactor,” appendix D to 10 CFR part 52, “Design Certification Rule for the AP1000 Design,” appendix E to 10 CFR part 52, “Design Certification Rule for the ESBWR Design,” appendix F to 10 CFR part 52, “Design Certification Rule for the APR1400 Design,” and appendix G to 10 CFR part 52, “Design Certification Rule for NuScale.” Two DCs have expired because no timely renewal applications were submitted in accordance with § 52.57, “Application for renewal.” These are appendix B to 10 CFR part 52, “Design Certification Rule for the System 80 + Design,” and appendix C to 10 CFR part 52, “Design Certification Rule for the AP600 Design.” Accordingly, this direct final rule applies to the five DCs currently in effect and does not apply to the two expired DCs.

The NRC is proposing to amend its regulations to revise the duration of DCs by replacing the 15-year duration for initial DCs and renewals with a 40-year duration period, both generically and for each DC currently in effect, as approved by the Commission in SRM-COMDAW-24-0001, “Revising the Duration of Design Certifications.” 1 The NRC is proposing to revise these regulations based on lessons learned from carrying out the DC renewal process. These amendments would reduce unnecessary regulatory burden on applicants and save NRC resources without any reduction in safety or security.

As discussed in the 1989 final rule promulgating 10 CFR part 52, the 15-year duration for DCs was originally intended to allow actual operating experience with a given design to accumulate before the DC either expires or becomes eligible for renewal (54 FR 15372; April 18, 1989). However, experience has shown that the current 15-year certification period does not allow for sufficient time for such operating experience to accumulate prior to a DC either expiring or needing to be renewed to remain effective. In this situation, both the DC renewal applicant and the NRC expend resources involved with the submittal and review of a DC renewal application that does not reflect additional insights derived from the DC being referenced in the licensing context.

In addition, other existing regulations will continue to ensure that codified DCs and the plants referencing them meet safety and security requirements. With respect to generic changes to DC rules, the Commission has existing criteria under § 52.63(a)(1) for determining when it may modify, rescind, or impose new requirements on the certification information for a previously certified design. For example, one way the Commission may make changes to a DC rule is where the change is “necessary to provide adequate protection of the public health and safety or the common defense and security” (10 CFR 52.63(a)(1)(ii)). The Commission may change a DC rule either on its own motion or in response to a petition for rulemaking from any person, including design vendors, and such changes will provide for notice and opportunity for public comment (10 CFR 52.63(a)(2)(ii)). For potential plant-specific safety or security issues, the Commission may use plant-specific orders, subject to applicable issue finality provisions ( e.g., § 52.63(a)(4) for Tier 1 information). In addition, licensees and applicants who reference a DC may also address potential safety or security concerns using the departure process described in the associated DC rule. That is, all DC rules are codified in appendices to part 52 and are structured such that Section VIII of the associated DC rule appendix prescribes an appropriate process for evaluating potential departures from the DC rule, including via a request for a license amendment or exemption. If NRC approval is required, the NRC would evaluate the request using its typical processes.

Accordingly, the change in duration for DCs would provide more time for a design to be referenced in a license application and more time for the design vendor to accumulate construction and actual operating experience before a design vendor would need to submit a renewal application. In addition, it would reduce unnecessary burdens with no reduction in safety or security. Therefore, the NRC is proposing to amend its regulations to change the DC duration to 40 years generically in §§ 52.55, 52.57, and 52.61 as well as for DCs currently in effect in the applicable appendices to 10 CFR part 52.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31885).

This proposed rule does not contain any new or amended collections of information subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). Existing collections of information were approved by the Office of Management and Budget (OMB), approval number 3150-0151.

The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the document requesting or requiring the collection displays a currently valid OMB control number.

Executive Order (E.O.) 12866, as amended by E.O. 14215, provides that the Office of Information and Regulatory Affairs (OIRA) will determine whether a regulatory action is significant as defined by E.O. 12866 and will review significant regulatory actions. OIRA determined that this proposed rule is a significant regulatory action under E.O. 12866.

The documents identified in the following table are available to interested persons as indicated.

The NRC may post materials related to this document, including public comments, on the Federal rulemaking website at https://www.regulations.gov under Docket ID NRC-2025-0018.

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments using a method listed under the ADDRESSES section. Include “Docket No. FAA-2025-1350; Project Identifier MCAI-2024-00510-R” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this NPRM.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Adam Hein, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2024-0173, dated September 4, 2024 (EASA AD 2024-0173) (also referred to as the MCAI), to address an unsafe condition on Airbus Helicopters Model EC 155 B and EC 155 B1 helicopters. The MCAI states that during tests concerning jettisoning of windows on a Model EC 155 helicopter, it was identified that the required forces to jettison the windows exceed the maximum jettisoning effort requirements. The MCAI also states that Airbus Helicopters developed a modification of the jettisonable windows to address this unsafe condition. This condition, if not addressed, could lead to an inability to jettison the window(s) during an emergency, which could result in a reduced capability to evacuate helicopter occupants and consequent injury to occupants during an emergency. The FAA is proposing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2025-1350.

The FAA reviewed EASA AD 2024-0173, which specifies procedures for replacement of the jettisonable windows and seals on the sliding doors and fixed panels on the left-hand and right-hand sides. The MCAI also specifies procedure for installation of new labels on the sliding doors and fixed panels. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

These products have been approved by the aviation authority of another country and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This proposed AD would require accomplishing the actions specified in the material already described, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2024-0173 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2024-0173 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2024-0173 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2024-0173. Material referenced in EASA AD 2024-0173 for compliance will be available at regulations.gov under Docket No. FAA-2025-1350 after the FAA final rule is published.

The FAA estimates that this AD, if adopted as proposed, would affect 16 helicopters of U.S. registry. The FAA estimates the following costs to comply with this proposed AD.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Would not affect intrastate aviation in Alaska, and

(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2025-1351; Project Identifier MCAI-2024-00667-T” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend the proposal because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this NPRM.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to John Massey, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: (516) 228-7300; email: 9-avs-nyaco-cos@faa.gov. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

Transport Canada, which is the aviation authority for Canada, has issued Transport Canada AD CF-2024-38, dated November 12, 2024 (Transport Canada AD CF-2024-38) (also referred to after this as the MCAI), to correct an unsafe condition on all Bombardier, Inc., Model BD-100-1A10 airplanes. The MCAI states that Bombardier has been advised that the overhaul required by certificate maintenance requirement (CMR) task 27-40-00-104 * was not fully completed on some units. As a result, some of the parts that were required to be replaced on the affected HSTAs as part of the overhauled task were re-installed in error. This condition, if not corrected, can lead to the failure of HSTA components, which can contribute to horizontal stabilizer surface disconnect at the actuator level and could lead to loss of continued safe flight and landing.

The FAA is proposing this AD to address the unsafe condition on these products.

You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2025-1351.

The FAA reviewed the following Bombardier material:

• Bombardier Service Bulletin 100-27-23, dated October 28, 2024;

• Bombardier Service Bulletin 350-27-014, dated October 28, 2024.

This material specifies procedures for verifying the HSTA serial number and, if applicable, corrective actions to include replacing the HSTA. These documents are distinct since they apply to different airplane configurations.

This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI and material referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

This proposed AD would require accomplishing the actions specified in the material already described. This proposed AD would also prohibit the installation of affected parts under certain conditions.

Regarding the corrective action for certain HSTAs, as specified in Bombardier Service Bulletin 100-27-23 and 350-27-014, both dated October 28, 2024, rework of the HSTA is required by the manufacturer, since this manufacturer is the only producer of the affected part.

The FAA estimates that this AD, if adopted as proposed, would affect 982 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

The FAA estimates the following costs to do any on-condition action that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need this on-condition action:

The FAA has included all known costs in its cost estimate. According to the manufacturer, however, some or all of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected operators.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Would not affect intrastate aviation in Alaska, and

(3) Would not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

The Immigration and Nationality Act (INA), as amended by the Immigration Reform and Control Act of 1986 (IRCA), establishes an “H-2A” nonimmigrant visa classification for a worker “having a residence in a foreign country which he has no intention of abandoning who is coming temporarily to the United States to perform agricultural labor or services . . . of a temporary or seasonal nature.” 8 U.S.C. 1101(a)(15)(H)(ii)(a); see also 8 U.S.C. 1184(c)(1) and 1188. 1 Agricultural labor or services includes the types of labor and services “defined by the Secretary of Labor in regulations,” as well as the Internal Revenue Code definition of “agricultural labor” at “section 3121(g) of title 26,” the Fair Labor Standards Act definition of “agriculture” at “section 203(f) of title 29,” and “the pressing of apples for cider on a farm . . . .” 8 U.S.C. 1101(a)(15)(H)(ii)(a).

The admission of foreign workers under this classification involves a multi-step process before several Federal agencies. A prospective H-2A employer must first apply to the Secretary of Labor (Secretary) for a certification that:

(A) there are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services involved in the petition, and

(B) the employment of the alien in such labor or services will not adversely affect the wages and working conditions of workers in the United States similarly employed.

8 U.S.C. 1188(a)(1). The INA prohibits the Secretary from issuing this certification—known as a “temporary labor certification”—unless both of the above referenced conditions are met and none of the conditions in 8 U.S.C. 1188(b) apply concerning strikes or lock-outs, labor certification program debarments, workers' compensation assurances, and positive recruitment.

The Secretary has delegated the authority to issue temporary agricultural labor certifications to the Assistant Secretary for Employment and Training, who in turn has delegated that authority to ETA's Office of Foreign Labor Certification (OFLC). 2 In addition, the Secretary has delegated to the Department's Wage and Hour Division (WHD) the responsibility under sec. 218(g)(2) of the INA, 8 U.S.C. 1188(g)(2), to assure employer compliance with the terms and conditions of employment under the H-2A program. 3

Once an employer obtains a temporary labor certification from DOL, it may then file a nonimmigrant visa petition with the Secretary of Homeland Security. See 8 U.S.C. 1184(c). 4 If the employer's petition is approved, the foreign workers whom it seeks to employ must, generally, apply for a nonimmigrant H-2A visa at a U.S. Embassy or consulate abroad. Id. Finally, if the foreign worker is coming from abroad, he or she must apply to U.S. Customs and Border Protection for admission to the United States. 5

The Wagner-Peyser Act of 1933 established the United States Employment Service (ES), a nationwide system to improve the functioning of the nation's labor markets by bringing together individuals seeking employment with employers seeking workers. 29 U.S.C. 49 et seq. Section 3(a) of the Act sets forth the basic responsibilities of the Department in the ES, which include assisting in coordinating the State public employment service offices throughout the country and in increasing their usefulness by prescribing standards for efficiency, promoting uniformity in procedures, and maintaining a system of clearing labor between the States. 29 U.S.C. 49b. The Act further authorizes the Department “to make such rules and regulations as may be necessary to carry out [its] provisions.” 29 U.S.C. 49k.

Consistent with the aims of sec. 3(a), the ES system provides labor exchange services to its participants and has undergone numerous changes to align its activities with broader national workforce development policies and statutory requirements. The Workforce Innovation and Opportunity Act (Pub. L. 113-128), passed in 2014, expanded upon the previous workforce reforms in the Workforce Investment Act of 1998 and, among other things, identified the ES system as a core program in the One-Stop local delivery system, also called the American Job Center network.

In 1974, the case National Ass'n for the Advancement of Colored People (NAACP), Western Region, et al. v. Brennan et al., No. 2010-72, 1974 WL 229 (D.D.C. Aug. 13, 1974), resulted in a detailed court order mandating various Federal and State actions consistent with applicable law (Richey Order). The Richey Order required the Department to implement and maintain a Federal and State monitoring and advocacy system relating to farmworker ES services. In 1977 and 1980, consistent with its authority under the Wagner-Peyser Act, the Department published regulations at 20 CFR parts 651, 653, and 658 to implement the requirements of the Richey Order. Part 653 sets forth standards and procedures for providing services to migrant and seasonal farmworkers (MSFWs) and provides regulations governing the Agricultural Recruitment System (ARS), a system for interstate and intrastate agricultural job recruitment. Part 658 sets forth standards and procedures for the administrative handling of complaints alleging violations of ES regulations and of employment-related laws, the discontinuation of services provided by the ES system to employers, the review and assessment of State agency compliance with ES regulations, and the process the Department must follow if State agencies are not complying with the ES regulations.

Since 1987, the Department has operated the H-2A temporary labor certification program under regulations promulgated pursuant to the INA. Prior to publication of a final rule in 2024, the majority of the Department's regulations governing the H-2A program were published in 2010 and many were updated in a final rule published in 2022. 6 The standards and procedures applicable to the certification and employment of workers under the H-2A program are found in 20 CFR part 655, subpart B, and 29 CFR part 501. In addition, prior to 2015, the Department had issued special procedures for the employment of foreign workers in the herding and production of livestock on the range as well as animal shearing, commercial beekeeping, and custom combining occupations. 7 The Department incorporated the provisions for employment of workers in the herding and production of livestock on the range into the H-2A regulations, with modifications, in 2015. 8 The provisions governing the employment of workers in the herding and production of livestock on the range are now codified at 20 CFR 655.200 through 655.235. In 2022, the Department amended the H-2A regulations by modifying the minimum standards and conditions of employment that employers must offer to workers, revising standards for determining the prevailing wage rate, expanding its enforcement authority to combat program abuse, and codified standards and procedures for employers that employ workers engaged in itinerant animal shearing, commercial beekeeping, and custom combining activities at 20 CFR 655.300 through 655.304. 9 Relatedly, the regulations implementing the Wagner-Peyser Act at 20 CFR parts 651, 653, and 658 establish the ARS, through which employers can recruit U.S. workers for agricultural employment opportunities, and which prospective H-2A employers must use to recruit U.S. workers as a condition of receiving a temporary agricultural labor certification.

In 2024, the Department again amended the ES and H-2A regulations by adopting a number of new requirements associated with the material terms and conditions offered by employers to H-2A workers and workers recruited through the ARS, such as incorporating progressive discipline policies for cause-based employment terminations, anti-retaliation measures for workers engaged in concerted activities, expanding regulatory criteria and procedural requirements permitting a State Workforce Agency to discontinue employment services to an employer, and imposing new data collection requirements related to the use of foreign labor recruiters and personal information associated with all owners of the employers, operators the place(s) of employment, and the supervisor(s) and manager(s) of workers employed under the terms of the work contract. 10

On August 26, 2024, the United States District Court for the Southern District of Georgia issued a preliminary injunction order in the case Kansas v. U.S. Department of Labor, 749 F. Supp. 3d 1363 (S.D. Ga. 2024) (“ Kansas ”) prohibiting DOL from enforcing the entire 2024 H-2A Final Rule in 17 states and with respect to certain entities. 11 The preliminary injunction specifically prohibits DOL from enforcing the 2024 H-2A Final Rule in the states of Georgia, Kansas, South Carolina, Arkansas, Florida, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Tennessee, Texas, and Virginia, and against Miles Berry Farm and the members of the Georgia Fruit and Vegetable Growers Association as of August 26, 2024.

In addition, on November 25, 2024, the United States District Court for the Eastern District of Kentucky issued a preliminary injunction in the case of Barton v. U.S. Department of Labor, 757 F. Supp. 3d 766 (E.D. Ky. 2024) (“ Barton ”), enjoining and restraining the Department from implementing, enacting, enforcing, or taking any action in any manner to enforce certain provisions of the Farmworker Protection Rule in 4 additional states and with respect to certain entities. 12 This preliminary injunction applies to the Commonwealth of Kentucky and the States of Alabama, Ohio, West Virginia, and a large number of individual and association plaintiffs to this proceeding, including Richard Barton; Doug Langley; Benny Webb; Dale Seay; David DeMarcus, II; David DeMarcus, Sr.; Steve Stakelin; Agriculture Workforce Management Association, Inc. (including its shareholders and members); North Carolina Growers' Association, Inc. (including all members of that non-profit association); Workers and Farmer Labor Association (including all members of that non-profit association); USA FARMERS, Inc. (including all members of that non-profit association); and National Council of Agricultural Employers (including all members of that non-profit association). The Barton order prohibits the Department from implementing, enacting, enforcing, or taking any action in any manner to enforce the following provisions of the 2024 H-2A Final Rule: seat belt modifications to enhanced safety requirements including but not limited to 20 CFR 655.122(h)(4); any and all worker voice and empowerment provisions, and provisions allowing workers to invite and accept guests under § 655.135 and any and all parallel provisions under 29 CFR 501.4, including but not limited to 20 CFR 655.135(h), 655.135(m), and 655.135(n); updated information collection requirements including but not limited to § 655.130(a); and new minimum pay requirements including but not limited to §§ 655.120(a) and 655.122(l).

Also on November 25, 2024, the United States District Court for the Southern District of Mississippi issued a nationwide stay pursuant to 5 U.S.C. 705 in International Fresh Produce Association v. U.S. Department of Labor, 758 F. Supp. 3d 575 (S.D. Miss. 2024) (“ IFPA ”) staying the effective date of 20 CFR 655.135(h)(2) and (m) in the 2024 H-2A Final Rule until the conclusion of proceedings in the case, including any appellate proceedings. 13 The additional plaintiffs in this proceeding include a broad coalition of state and national agricultural associations, including the American Farm Bureau Federation, Mississippi Farm Bureau Federation, Stone County Farm Bureau, Chamber of Commerce of the United States of America, AmericanHort, Florida Fruit & Vegetable Association, North American Blueberry Council, Texas International Produce Association, State of Mississippi, and U.S. Apple Association.

On the other hand, on May 5, 2025, the U.S. District Court for the Eastern District of North Carolina upheld the 2024 Final Rule in North Carolina Farm Bureau Federation v. U.S. Department of Labor, 2025 WL 1296245,---F. Supp. 3d.----(E.D.N.C. 2025) (“ NCFBF ”). There, the court concluded that the rule was a lawful exercise of the Department's authority under the INA, that the rule was not arbitrary and capricious, and that the rule did not conflict with other laws.

In these litigations challenging the Department's 2024 H-2A Final Rule, three different district courts recognized that the public had a substantial interest in having agencies act within their congressionally designated authority and concluded that many of the 2024 H-2A Final Rule provisions are contrary to specific Constitutional protections, other laws, or are arbitrary or capricious. These three courts granted the plaintiffs' requests for preliminary relief, concluding that the plaintiffs were likely to succeed on their claims challenging various provisions of the rule and that the evidence weighs in favor of a finding of irreparable harm because, among other considerations, the costs of compliance related to the rule are nonrecoverable. Although the courts in the Kansas and Barton cases noted that “§ 1188 [of the INA] affords the DOL discretion to promulgate regulations that protect American workers from being adversely affected by the issuance of H-2A visas,” the Barton court, citing the Kansas court, when discussing those provisions the court deemed to have conflicted with the National Labor Relations Act (NLRA), affirmed that the Department “cannot create law, and the DOL cannot create rights that Congress has not. The DOL cannot make both executive rules and congressional laws.”  14 For example, the IFPA court, when discussing the worker empowerment provisions, agreed that a plain reading of the statute does not confer a “broad grant of authority as to allow DOL to effectively provide collective action rights to H-2A workers in the name of reducing the adverse effect of the H-2A program on domestic workers” and pointed out that “the language does not support the conclusion that DOL can prescribe these kinds of rights as part of the `criteria for certification[.]' ”  15

In light of these district court decisions and the Administration's policy ( e.g., Executive Order 14192, Unleashing Prosperity Through Deregulation ) to significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen, the Department has determined that the regulatory requirements and policies contained in the 2024 H-2A Final Rule must be reconsidered and proposes revisions in this NPRM. The Department concludes that the proposals outlined in this rulemaking, if adopted, would better ensure that the H-2A program's regulatory framework is a more reasonable balance between the statute's competing goals of providing an adequate labor supply and protecting the jobs of domestic agricultural workers.

The Department proposes to rescind requirements added by the 2024 H-2A Final Rule that were collectively referred to in that rule as “protections for worker voice and empowerment.” Specifically, the Department proposes to: (1) rescind revisions to 20 CFR 655.135(h) and 29 CFR 501.4 that expanded activities protected from retaliation; (2) rescind 20 CFR 655.135(m) that required employers to permit workers engaged in agriculture as defined by 29 U.S.C. 203(f) of the Fair Labor Standards Act (FLSA) to designate a representative of their choosing in investigatory interviews; and (3) rescind the definitions of “labor organization” and “key service provider” added by the 2024 H-2A Final Rule at 20 CFR 655.103(b). The Department proposes to return to language at 20 CFR 655.135(h), and 29 CFR 501.4 in effect as of June 27, 2024, and remove these two definitions from 20 CFR 655.103(b).

The 2024 H-2A Final Rule created new activities that were protected from retaliation at 20 CFR 655.135(h)(1) and (2), and made parallel edits to 29 CFR 501.4(a)(1) and (2). The protected activities in § 655.135(h)(1) and 29 CFR 503.4(a)(1) were applicable to all people, regardless of whether they were engaged in agriculture as defined by the FLSA. These activities remained similar to those protected activities that had existed before the 2024 H-2A Final Rule, but made two important revisions; specifically, the 2024 H-2A Final Rule newly expressly protected (1) consultation with a key service provider on matters related to H-2A, and (2) filing a complaint, instituting, or causing to be instituted any proceeding, or testifying, assisting, or participating (or is about to testify, assist or participate) in any investigation, proceeding or hearing under or related to any applicable Federal, State, or local laws or regulations, including safety and health, employment, and labor law. The Department framed these changes as clarifications of existing rights; the Department noted that workers were already entitled to access and meet with many different key service providers to discuss or assert rights under the H-2A program without fear of retaliation under the Department's previous regulatory framework. Similarly, the 2024 H-2A Final Rule noted that existing 20 CFR 655.135(e) already required employers to comply with all applicable Federal, State, and local laws, and existing § 655.135(h)(1) and (5) already prohibited retaliation against workers who assert their rights under the H-2A program, and therefore the changes were only to make these rights explicit.

However, the protected activities implemented by the 2024 H-2A Final Rule in 20 CFR 655.135(h)(2) and 29 CFR 501.4(a)(2) were significantly different from the previous regulatory scheme. Specifically, these protections were limited to workers who were engaged in agriculture as defined by 29 U.S.C. 203(f) of the Fair Labor Standards Act (FLSA), because these workers were exempt from the protections of the National Labor Relations Act (NLRA), 29 U.S.C. 151 et seq. These new protected activities were directly related to rights applicable to non-exempt workers under the NLRA, specifically: (1) engaging in activities related to self-organization, including any effort to form, join, or assist a labor organization; engaging in other concerted activities for the purpose of mutual aid or protection relating to wages or working conditions; or refusing to engage in any or all of such activities; and (2) refusing to attend an employer-sponsored meeting with the employer or its agent, representative or designee, the primary purpose of which is to communicate the employer's opinion concerning any activity protected by this subpart; or listen to speech or view communications, the primary purpose of which is to communicate the employer's opinion concerning any activity protected by this subpart. The new protection at § 655.135(m), introduced by the 2024 H-2A Final Rule, similarly applied only to those workers who were exempt from the NLRA, but afforded protections similar to those afforded by the NLRA. The 2024 H-2A Final Rule reasoned that these new protections, which were modeled on certain protections in the NLRA, were not preempted by the NLRA, as they applied only to those agricultural workers that are excluded from the NLRA. See 89 FR at 33963.

However, at this point, multiple courts have found the “worker voice and empowerment” provisions unlawful. Specifically, in Kansas, the U.S. District Court for the Southern District of Georgia preliminarily enjoined the Department from enforcing the 2024 H-2A Final Rule in multiple states and against certain entities and members of certain associations, finding that the worker voice and empowerment provisions of the 2024 H-2A Final Rule violated the NLRA, and thus were not in accordance with law, because they created “collective bargaining rights” for workers whom Congress intended to exclude from the NLRA. The Kansas court issued a preliminary injunction specifically prohibiting the Department from enforcing the 2024 H-2A Final Rule in the states of Georgia, Kansas, South Carolina, Arkansas, Florida, Idaho, Indiana, Iowa, Louisiana, Missouri, Montana, Nebraska, North Dakota, Oklahoma, Tennessee, Texas, and Virginia, and against an individual employer and the members of a growers association as of August 26, 2024. Later, the District Court for the Eastern District of Kentucky agreed with this reasoning in Barton, and preliminarily enjoined certain portions of the Final Rule in Alabama, Kentucky, Ohio, and West Virginia, and with respect to a group of individuals and associations. On the same day, the United States District Court for the Southern District of Mississippi ruled in IFPA that the Department had exceeded its statutory authority in promulgating the regulations—specifically those related to worker voice and empowerment. The court issued a Section 705 stay of the effective date of 20 CFR 655.135(h)(2) and (m) in the 2024 H-2A Final Rule nationwide until the conclusion of proceedings in the case, including any appellate proceedings. By contrast, NCFBF concluded that the H-2A Final Rule was a lawful exercise of the Department's authority under the INA. 16

The 2024 H-2A Final Rule also expanded the prohibition of unfair treatment requirements at § 655.135(h) to include as protected activity consultation with “key service providers.” The 2024 H-2A Final Rule also added a definition of that term at § 655.103(b). The present definition includes the following: a health-care provider; a community health worker; an education provider; a translator or interpreter; an attorney, legal advocate, or other legal service provider; a government official, including a consular representative; a member of the clergy; an emergency services provider; a law enforcement officer; and any other provider of similar services.

This provision was intended to apply broadly, and not only to those workers engaged in agriculture under the FLSA. As this provision is not directly related to self-organization and collective action, it is not implicated by court decisions weighing the effect of the NLRA, and was not addressed in the decisions cited above, unlike the provisions in § 655.135(h)(2). The Department believes the definition of “key service provider” within this provision is vague and overly broad and the lack of constraining or limiting language within this definition impermissibly expands the universe of protected activity a person can engage in. Specifically, at § 655.135(h)(1)(v), the provision states that an employer violates the law where there is any “unfair treatment” against any person who has “[c]onsulted with a key service provider on matters related to 8 U.S.C. 1188 or this subpart or any Department regulation in this chapter or 29 CFR part 501 promulgated under 8 U.S.C. 1188.” The provisions then define “key service provider” at § 655.103(b) as “A health-care provider; a community health worker; an education provider; a translator or interpreter; an attorney, legal advocate or other legal service provider; a government official, including a consular representative; a member of the clergy; an emergency services provider; a law enforcement officer; and any other provider of similar services.” The lack of constraining or limiting language in the definition of “key service provider,” most notably with the inclusion of “any other provider of similar services,” is concerning because it impermissibly expands the universe of potential protected activity in which a person can engage in. It further creates a regulatory environment in which an employer has no reasonable understanding of when a person is engaging in protected activity. The Department proposes to rescind this provision. The Department also seeks comment on whether consultation with any of the categories of persons identified in the definition of key service providers should be retained as a protected activity under 20 CFR 655.135(h) and 29 CFR 501.4(a).

The Department also proposes to rescind the regulations at 20 CFR 655.135(h)(1)(vii) and 29 CFR 501.4(a)(1)(vii) prohibiting discrimination against workers who have “[f]iled a complaint, instituted, or caused to be instituted any proceeding, or testified, assisted, or participated (or is about to testify, assist or participate) in any investigation, proceeding or hearing under or related to any applicable Federal, State, or local laws or regulations, including safety and health, employment, and labor laws.” The Department believes that this provision is duplicative of other rights under the H-2A regulations and other Federal, State, and local laws. The Department seeks comment on this proposal, including on whether this provision should be retained for the purpose of clarity.

In light of these decisions, and upon further consideration, the Department has determined that 20 CFR 655.135(h), 655.135(m), and 29 CFR 501.4, as amended by the 2024 Final Rule, may not be authorized by the INA and/or may be inconsistent with the NRLA. The Department further believes granting H-2A workers these worker-empowerment rights is not necessary to ensure that U.S. workers are not adversely affected by H-2A workers, especially given that U.S. workers do not enjoy the same worker-empowerment rights. The Department thus proposes to remove the edits made by the 2024 H-2A Final Rule and revert to the regulations in effect as of June 27, 2024. The Department similarly proposes to rescind the definitions of “key service provider” and “labor organization” added by the 2024 H-2A Final Rule at § 655.103(b). The Department invites comment on all aspects of this proposal, including any alternatives.

The Department proposes to rescind current 20 CFR 655.135(n) relating to guest access to worker housing that was added by the 2024 H-2A Final Rule. This provision requires employers to allow workers residing in employer-furnished housing to invite, or accept at their discretion, guests to their living quarters and/or the common areas or outdoor spaces near such housing during time that is outside of the workers' workday subject only to certain limited restrictions. The 2024 H-2A Final Rule reasoned that these new provisions were needed to protect workers' fundamental First Amendment rights of association and access to information and to prevent adverse effect on the working conditions of workers in the United States similarly employed. To support its reasoning, the Department argued that the isolation of H-2A workers, when combined with these workers' unique vulnerabilities, renders them particularly at risk of being subject to workplace abuses, labor exploitation, and trafficking. The Department noted that the Supreme Court's decision in Cedar Point Nursery v. Hassid, 141 S. Ct. 2066 (2021), did not specifically address the type of provision at issue in § 655.135(n). 89 FR 34021 (citing authorities).

In its decision issuing a preliminary injunction in the Barton case, however, the United States District Court for the Eastern District of Kentucky deemed this provision an infringement on the property rights of employers amounting to a taking of the employers' property. 757 F. Supp. 3d at 789-90 (citing Cedar Point, 141 S. Ct. at 2075).

The Department believes that employers' property rights must be weighed appropriately with agricultural workers' associational rights. Agricultural workers in the United States, including H-2A workers and workers in corresponding employment, enjoy the rights of association and to receive information from those who wish to provide it. 17 Yet, as the Barton court reasoned, the 2024 housing access provision presents effectively imposes a government-mandated right of access to employer-furnished housing by third parties who are invited by an H-2 worker, without the property owners' consent and regardless of the reason for entry. Such a broad right of access appears to be inconsistent with Cedar Point, which struck down a California regulation that was arguably narrower, as it granted access only to a specific type of person for a specific purpose and with specific time limitations. Even the NRLA grants “access to union organizers only when `needed,' ” meaning there is “no other reasonable means of communicating with the employees.” Cedar Point, 141 S. Ct. at 2080-81 (Kavanaugh, J. concurring), cited at 89 FR 34021. The unqualified access granted under the 2024 housing access provision appear to be broader than “needed” and in any event may also lack statutory authority. The Department invites comment on the proposed recission of current § 655.135(n), and specifically invites any proposed alternative provisions that may effectively balance the private property rights of employers with the free speech and association rights of workers. Additionally, the Department proposes to rescind a related provision at § 655.132(e)(1) that requires H-2ALCs using housing provided by fixed-site agricultural businesses to provide proof that such fixed-site agricultural businesses have agreed to comply with the requirements at § 655.135(n). This rescission would leave intact the other requirement of § 655.132(e)(1) that was in place prior to the publication of the 2024 H-2A Final Rule relating to the submission of proof that such housing complies with applicable health and safety standards.

The Department proposes to rescind the regulations, added by the 2024 H-2A Final Rule, expressly requiring that where there is an applicable prevailing piece rate, or where an employer intends to pay a piece rate or other non-hourly wage rate, the employer must include the non-hourly wage rate on the job order along with the highest hourly rate, and must pay workers' wages using the wage rate that will result in the highest wages for each worker in each pay period. The Department proposes to revert to the regulations in effect on June 27, 2024. These changes affected §§ 655.120(a), 655.122(l), 655.210(g), 655.211, and 653.501(c).

Both the prior and current versions of § 655.120(a) require an H-2A employer, in order to comply with its obligation under § 655.122(l), to “offer, advertise in its recruitment, and pay” a wage that is at least the highest of several enumerated wage rates, including the AEWR and any applicable prevailing wage rate. As set forth in the 2024 H-2A Final Rule, where there is an applicable prevailing piece rate, it is usually not possible to determine until the time work is performed whether the prevailing piece rate will be higher than the highest of the applicable hourly wage rates as this will depend on worker productivity. 18 This led to conflicting interpretations of the requirements at §§ 655.120(a) and 655.122(l). The Department's Board of Alien Labor Certification Appeals (BALCA), construing earlier versions of the regulations, concluded that OFLC can only require H-2A employers to list a wage that is at least equal to the highest applicable hourly wage rate—usually the AEWR—on job orders because OFLC does not know at the certification stage whether the prevailing piece rate will be higher than the hourly wage. 89 FR 33957 (citing Golden Harvest Farm, 2011-TLC-00442, at *3 (BALCA Aug. 17, 2011); Dellamano & Assocs., 2010-TLC-00028, at *5-7 (BALCA May 21, 2010); and Twin Star Farm, 2009-TLC-00051, at *4-5 (BALCA May 28, 2009)). Based on these decisions, OFLC did not require employers to list applicable prevailing piece rates on job orders and, in most instances, WHD could not enforce those prevailing piece rates even when these would have resulted in higher earnings for workers. 89 FR 33957. In contrast, the Ninth Circuit, in adjudicating a challenge to OFLC's practice of not requiring that applicable prevailing piece rates be included on job orders, held that the prior version of § 655.120(a) requires that applicable prevailing piece rates be included on job orders because a piece rate wage offers workers “the opportunity to earn more than they might under an hourly wage.” Torres Hernandez v. Su, 2024 WL 2559562, at *1 (9th Cir. 2024). The Ninth Circuit stated that “allowing employers and DOL to ignore piece-rate prevailing wages under § 655.120(a) would largely nullify § 655.120(c), which defines the procedure for determining prevailing wages.” Id. (“There is no reason to think that the regulations contemplate calculating piece-rate prevailing wages under § 655.120(c) but exclude such wages from consideration under § 655.120(a).”).

Anticipating the Ninth Circuit's decision in Torres Hernandez, DOL revised the applicable regulations. The 2024 H-2A Final Rule revised §§ 655.120(a) and 655.122(l) to expressly require that, where there is an applicable prevailing piece rate, or where an employer intends to pay a piece rate or other non-hourly wage rate, the employer must include the non-hourly wage rate on the job order along with the highest hourly rate, and to clarify that, in such instances, an employer must pay workers' wages using the wage rate that will result in the highest wages for each worker in each pay period. The Department made analogous changes to the regulations at §§ 655.210(g) and 655.211, which govern rates of pay for herding and range livestock occupations, as well as corresponding changes to § 653.501(c)(1)(iv)(E).

However, whether an employer is obligated to disclose a piece rate or other non-hourly rate in the job offer and whether that piece rate or other non-hourly rate, once disclosed, must be paid if it results in higher wages than the AEWR, remains contested and is actively being litigated. Following the Department's issuance of the 2024 H-2A Final Rule, the United States District Court for the Eastern District of Kentucky enjoined the Department from enforcing the “new minimum pay requirements including but not limited to §§ 655.120(a) and 655.122(l)” with respect to employers belonging to plaintiff agricultural associations, among others. Barton, 757 F. Supp. 3d at 794. Consistent with this injunction, the Department ceased requiring affected employers to list applicable prevailing piece rates on their job orders, only for a new claim to be filed against it challenging the cessation. Applying the Ninth Circuit's rationale, the United States District Court for the Western District of Washington ordered the Department to resume requiring employers to offer and pay applicable prevailing piece rates for work in Washington State. Familias Unidas Por La Justicia v. DOL, No. 24-cv-00637 (W.D. Wash. Mar. 28, 2025, modified Apr. 24, 2025). To ensure its compliance with both injunctions, the Department is now administering and enforcing the requirements of §§ 655.120(a) and 655.122(l) differently in different jurisdictions, resulting in two distinct regulatory schemes. Employers seeking to hire H-2A workers in most parts of the country are not required to include applicable prevailing piece rates on job orders consistent with the Barton order. However, that order does not affect the versions of §§ 655.120(a) and 655.122(l) that were in place prior to the 2024 H-2A Final Rule. Consistent with the Ninth Circuit's interpretation of the pre-2024 regulations in Torres Hernandez and with the Familias injunction, for work to be performed in Washington State, employers must offer and pay any applicable prevailing piece rates.

In light of this ongoing litigation and the resulting differences in enforcement nationwide, the Department proposes to rescind current § 655.120(a)(1)(vi) and (a)(2) and revert to the version of § 655.120(a) in effect as of June 27, 2024. Similarly, the Department proposes to rescind current § 655.122(l) and replace it with the version of § 655.122(l) in effect as of June 27, 2024. The reasons for rescinding §§ 655.122(l)(3) and (4), relating to productivity standards and overtime disclosure, are discussed later in this NPRM. For the same reasons, the Department proposes to rescind current § 655.210(g) and § 655.211 and replace these provisions with the versions of § 655.210(g) and § 655.211 in effect as of June 27, 2024. The Department also proposes to rescind the current § 653.501(c)(1)(iv)(E) and replace it with the version of § 653.501(c)(1)(iv)(E) in effect as of June 27, 2024 because these corresponding changes were made in the interest of having analogous processes and requirements, where possible, for the review of H-2A (criteria) and non-H-2A (non-criteria) clearance orders.

The Department notes that, given the Familias injunction, as well as the Ninth Circuit's decision in Torres Hernandez, both of which apply to the pre-2024 version of these provisions, the intended effect of the proposed rescission will be to clarify that employers seeking to employ H-2A workers outside of the Ninth Circuit are not required by § 655.120(a) to list applicable prevailing piece rates on job orders.

The Department requests comments on all aspects of this proposal. Specifically, the Department solicits comments from employers who pay piece rates on how and why they choose to pay piece rates, whether they use piece rates in recruiting, and how they track time and productivity on different crops. The Department also solicits comments from employees and advocates on how frequently workers are paid piece rates, and how workers will know that a piece rate will be offered on a job if these provisions are rescinded, and generally the impact of the disclosure on the job order of the availability of a piece rate. Finally, the Department solicits comments on how this proposal interacts with the Department's statutory mandate to prevent adverse effect on similarly employed workers in the United States, and that employers hire H-2A workers only when there are not sufficient workers who are able, willing, qualified, and available to perform the work.

The Department also proposes to rescind the 2024 H-2A Final Rule provisions at § 655.120(b)(2)-(3), which currently designate the effective date of each updated AEWR as the date of publication in the Federal Register and require employers to pay the updated AEWR immediately upon publication of the new AEWR in the Federal Register . Instead, the Department proposes to revert to the regulations that were in effect on June 27, 2024.

The Department reasoned in the 2024 H-2A Final Rule that such a change was necessary in order to ensure H-2A and corresponding workers receive the most current AEWR at the time work is performed, but in doing so it departed from a practice of providing a reasonable adjustment period for employers after publication of updated AEWRs. The Department has long required employers participating in the H-2A program to offer and pay the highest of the AEWR, the prevailing wage, any agreed-upon collective bargaining wage, or the Federal or State minimum wage at the time the work is performed, upon the effective date stated in the notice of new AEWRs in the Federal Register . 19 The 2024 H-2A Final Rule provision at § 655.120(b)(2) constituted “a departure from more recent practice . . . which allowed a minor period for wage adjustment after publication of the FRN.”  20 Prior to the 2024 H-2A Final Rule, the Department “identifie[d] the effective date of the new AEWRs” in “the Federal Register notice publishing the updated AEWRs . . .” and the Department's uncodified practice “provid[ed] employers a short period of time ( i.e., up to 14 days) to update their payroll systems, such that an employer would not be required to adjust a worker's pay in the middle of a pay period, but would be required to promptly implement the adjustment.”  21

The Department has reconsidered the decision to deviate from practice and, similar to the Department's conclusion in the 2022 H-2A Final Rule, the Department has concluded that reinstating the prior practice of providing an AEWR effective date in FRNs that provide a period of up to 14 days for employers to identify AEWR changes and adjust payroll most effectively balances the need to ensure H-2A and U.S. workers receive timely payment of wages necessary to prevent adverse effect with the need to provide employers adequate time to adjust to new AEWRs after the Department publishes notice. 22 The Department proposes to continue to require employers to contractually agree to pay updated wages to H-2A foreign workers and corresponding workers and to make mid-contract updates to the AEWRs upon the effective date stated in the Department's FRNs, but proposes to revert to the policy of setting the effective date of the updated AEWR on a date up to 14 days after publication of the FRN. The Department believes this reinstatement of prior policy, which it previously acknowledged “may alter employer budgets for the season,”  23 would best balance the Department's statutory mandate to ensure the employment of H-2A foreign workers does not adversely affect the wages of workers in the United States similarly employed with the need for sound administration of the H-2A program, by providing a reasonable adjustment period for employers to receive notice of, and make changes to accommodate, updated AEWRs without imposing unnecessary regulatory burdens that may unreasonably subject employers to investigation and enforcement actions.

The Department recognizes that this issue has been the subject of contention and concern, particularly regarding the burden that this requirement would have on employers, including reasonable concerns that employers cannot immediately update payroll or pay structures, and especially cannot do so when they are required to monitor the Federal Register for the Department's notices, and must conduct operational planning, and that a limited adjustment period is necessary to ensure employers receive notice of the new AEWR obligation and to make payroll adjustments that in some cases may be difficult and require a brief period of time to complete. The need for a brief adjustment period is especially pertinent for employers who may be subject to multiple AEWRs—a Farm Labor Survey (FLS)-based AEWR and occupation-specific AEWR based on the Occupational Employment and Wage Statistics (OEWS) survey—under the 2023 H-2A AEWR Final Rule, 24 either one of which may be applicable upon publication of updated AEWRs, depending on which is highest. The 2024 H-2A Final Rule deviation from prior policy also failed to adequately account for the fact that FRN publication dates can be unpredictable, given the Department does not control the dates it receives the underlying FLS or OEWS data on which AEWRs are based, 25 and a reasonable adjustment period provides flexibility to employers to cushion against this predictability. The Department believes reinstating the prior policy of providing a brief adjustment period would most effectively balance the need to provide reasonable flexibility to employers with the need to ensure the wages of workers in the United States similarly employed are not affected.

Therefore, the Department proposes to rescind current § 655.120(b)(2)-(3) and reinstate the § 655.120(b)(2)-(3) AEWR requirements in effect prior to the 2024 H-2A Final Rule. Under this proposal, the Department would revert to the practice that was in place, prior to the 2024 H-2A Final Rule, which allowed a minor period for wage adjustment after publication of the FRN. Under this practice, when publishing the Federal Register notice containing updated AEWRs, the Department would state the effective date of the new AEWRs in the notice and generally set the effective date of the new AEWRs at no later than 14 calendar days from the publication of that notice.

The Department proposes to rescind the additional information disclosure requirements at § 655.130(a)(1)-(4) in the 2024 H-2A Final Rule, which required the employer provide, at the time of filing, the identity, location, and contact information for the owner(s) of each employer, any person or entity who operates a place of employment, and any person who manages or supervises workers employed under the H-2A Application. Additionally, the rule required employers to provide their prior trade/DBA names used in the most recent 3-year period preceding its filing of the H-2A Application. Consistent with these revisions, a new § 655.167(c)(9) included a recordkeeping provision requiring the employer to keep this information up-to-date until the end of the work contract period and retain the information for three years.

The Department anticipated that these revisions would allow the Department to gain a more accurate and detailed understanding of the scope and structure of the employer's agricultural operation and thereby assist the Department in program administration and enforcement, including in determinations of whether an employer has demonstrated a bona fide temporary or seasonal need, or, conversely, whether an employer has, through multiple related entities, sought to obtain year-round H-2A labor. The Department further reasoned that collecting this additional information would enhance the Department's enforcement capabilities by helping the Department identify, investigate, and pursue remedies from program violators and ensure that sanctions, such as debarment or civil money penalties, are appropriately assessed.

The Department has determined collection of owner, operator, manager, and supervisor information at the time of application filing presents legal risks and places extensive burdens on filers while providing limited utility in the stated goals, such as single employer test determinations.

While the collection of the information may result in identifying program violations and allow the Department to seek appropriate sanctions where violations occur, the Department need not collect this information at the time of filing, as it can seek this information when necessary to demonstrate program compliance at the time of an audit or investigation and enforcement action. The Department did not appropriately balance the likelihood of uncovering important information, such as program violations, against the burden on employers of providing such information to the Department at the time of filing. The benefit to the Department is minimal when compared to the burden placed on law-abiding employers to provide this information in every case, and the Department believes the practical utility of collecting the information at the time of filing is significantly outweighed by the burden on the public. The Department has concluded that the more practical approach is to continue to collect pertinent information such as information about owners and operators of worksites when it is necessary for enforcement or investigatory purposes. Therefore, the Department proposes rescinding the enhanced information collection provisions in the 2024 H-2A rule to permit the Department to instead collect such information in other ways as it did prior to the 2024 H-2A Final Rule, as needed, such as from the subject of an investigation rather than from all employers of H-2A workers. 26

Therefore, the Department proposes to rescind the current § 655.130(a)(1)-(4) and reinstate the § 655.130(a) filing requirements in effect prior to the 2024 H-2A Final Rule. Under this proposal, the Department would again require only that the employer disclose information about the identity of the employer and its agent or attorney; the places where work will be performed; and, when requested by the Certifying Officer (CO), the employer's use of a foreign labor recruiter, and provide any necessary supporting documentation required at the time of filing under §§ 655.131 through §§ 655.135. Consistent with this proposal, the Department also proposes to rescind § 655.167(c)(9) governing document retention related to the § 655.130(a) requirements.

The Department proposes to rescind the requirement, added by the 2024 H-2A Final Rule, to require the provision, maintenance, and wearing of seat belts in most employer-provided transportation. The 2024 H-2A Final Rule revised 20 CFR 655.122(h)(4) to prohibit an employer from operating any employer-provided transportation unless all passengers and the driver were properly restrained by seat belts meeting standards established by the U.S. Department of Transportation (U.S. DOT), as long as the transportation was manufactured with seat belts pursuant to U.S. DOT's Federal Motor Vehicle Safety Standards. The Department proposes to return to the language of § 655.122(h)(4) in effect as of June 27, 2024,which prior to the effective date of the 2024 H-2A Final Rule, made no mention of seat belts but required that all employer-provided transportation comply with all applicable local, State, or Federal laws and regulations and provide, at a minimum, the same transportation safety standards, driver licensure, and vehicle insurance as required under 29 U.S.C. 1841, 29 CFR 500.104 or 500.105, and 29 CFR 500.120 through 500.128, and outlined other requirements for disclosure of transportation modes and use of workers' compensation for vehicle transportation purposes. In other words, the Department proposes to rescind current § 655.122(h)(4)(ii), but retain and recombine into a single paragraph § 655.122(h)(4) current § 655.122(h)(4)(i), § 655.122(h)(4)(iii), and § 655.122(h)(4)(iv).

The 2024 H-2A Final Rule reasoned that the provision of seat belts in employer-provided transportation, and the requirement that employers ensure that workers wear seat belts, was necessary to prevent adverse effect on the wages and working conditions of similarly employed workers in the United States because H-2A workers may have more limited recourse than workers in the United States similarly employed when placed in an inherently dangerous situation, such as being transported in a vehicle without seat belts. Additionally, the NPRM reasoned that unbelted passengers posed a grave safety risk to other passengers, including non-H-2A workers, in the event of a crash. 27

The Barton court found the 2024 H-2A Final Rule's provision requiring the wearing of seat belts to be arbitrary and capricious because the Department did not explain how holding employers liable for an employee's failure to wear a seat belt would avoid downgrading worker safety conditions. Barton, 757 F. Supp. 3d at 788-89. Instead, the court reasoned, the requirement would degrade working conditions because employees would find themselves under greater levels of scrutiny and supervision. Id. The court further reasoned that the requirement holds H-2A employers to a higher standard than that to which other agricultural employers are subject, and noted that employers have little control over whether their employees choose to wear seat belts. Id. The court did not specifically address the 2024 H-2A Final Rule's requirement that employers provide and maintain seat belts in most employer-provided transportation, id., yet still enjoined this portion of the rule.

Upon further review, and in light of the court's decision in Barton, the Department no longer believes that these requirements serve the statutory purpose of preventing adverse effect on similarly employed workers in the United States. The transportation safety requirements under the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. 1801 et seq. and 29 CFR part 500 Subpart D, which cover many of the agricultural workers in the United States without H-2A visas, do not specifically require the provision of seat belts nor that employers ensure that workers are wearing seat belts. The current § 655.122(h)(4)(ii), therefore, requires more heightened safety measures for employers employing H-2A workers than those employing only U.S. workers, which does not meaningfully achieve the statutory goal of protecting similarly employed workers from adverse effect from the employment of foreign workers.

This proposed rescission does not affect the Department's perspective on the safety benefits of seat belts. Seat belts continue to be one of the most effective ways to prevent serious injuries and fatalities in vehicle crashes. The Department reminds employers using the H-2A program that they must continue to comply with all applicable local, State, and Federal laws relating to transportation safety, including those relating to seat belts.

The Department invites comment on the recission of current § 655.122(h)(4)(ii). Specifically, the Department seeks comment on the potential effect this proposal may have on similarly employed workers in the United States, the importance of and/or burden posed by current § 655.122(h)(4)(ii), and whether any part of this provision should be retained ( e.g., retaining the requirement that employers provide and maintain seat belts if the vehicle was manufactured with seat belts but not the requirement that employers require their workers to wear seat belts).

The Department proposes to rescind regulations defining termination for cause, establishing five conditions that must be satisfied before an employer may terminate a worker for cause, and setting recordkeeping requirements associated with termination for cause, including requirements for maintaining disciplinary records and termination records. Specifically, the Department proposes to return to the regulatory language of 20 CFR 655.122(n) as of June 27, 2024, prior to the 2024 H-2A Final Rule, which only stated that an employer was relieved of certain obligations if a worker was terminated for cause or abandoned work, and then only if timely required notification of government agencies was made, and established basic recordkeeping requirements related to this notification. In other words, the Department proposes to rescind current 20 CFR 655.122(n)(2), (n)(4)(ii) and (n)(4)(iii) and recombine the remaining language in one paragraph. The Department also proposes to rescind corresponding recordkeeping requirements at § 655.167(c)(10) and (11).

In the 2024 H-2A Final Rule, the Department defined termination for cause and outlined five conditions that must be met before a termination for cause could occur, one of which was that the employer must first correct the worker's performance or behavior using progressive discipline. The 2024 H-2A Final Rule further clarified what situations will never constitute termination for cause. The Department reasoned that these changes were necessary to promote the integrity and regularity of any such processes and to help ensure that employers do not arbitrarily and unjustly terminate workers, thereby stripping them of essential rights under the H-2A program which serve to protect similarly employed workers against any potential adverse effect from the employment of H-2A workers (namely the right to outbound transportation and subsistence, the three-fourths guarantee, and, in the case of U.S. workers, the right to be contacted in subsequent years).

Upon further review, the Department believes that these regulations are overly burdensome and unnecessary. For decades, the Department has enforced the requirement that a worker is owed outbound transportation and subsistence, the three-fourths guarantee, and, if the worker is a U.S. worker, the right to be contacted for employment the subsequent year, unless he or she is terminated for cause or abandons employment. Only in 2024 did the Department determine that it needed a rigid set of criteria and recordkeeping before it would accept any termination as being “for cause.” Indeed, the Department acknowledged in the 2024 H-2A Final Rule that “[h]istorically, when determining whether a worker has been terminated for cause, the Department has reviewed all relevant factors, including, for example, the reasonableness of the rule, consistent application of a rule among employees, and whether the employer fairly reviewed the misconduct or job performance.”  28 Upon further review, the Department believes that previous procedures were sufficient to identify when a worker was terminated for cause and seeks to remove the complicated, burdensome, and overly prescriptive framework in 20 CFR 655.122(n)(2) from the regulations.

Furthermore, certain provisions in current § 655.122(n)(2) have become untethered from the statutory mandate of protecting similarly employed workers in the United States from adverse effect from the employment of foreign workers. Specifically, the requirement that an employer progressively discipline a worker before terminating that worker for cause has no meaningful connection to preventing the employment of H-2A workers from adversely affecting the wages and working conditions of similarly employed workers in the United States. Most workers in the United States are not entitled to progressive discipline (although progressive discipline, or lack thereof, may be instructive in determining whether a reason for termination is pretextual). The Department believes that explicitly requiring an employer using the H-2A program to progressively discipline a worker before terminating them for cause does not meaningfully protect similarly employed workers in the United States; there may be many situations where termination for cause is appropriate even without progressive discipline, and other situations where termination for cause is not appropriate even if the employer has gone through a progressive discipline process. The 2024 H-2A final rule developed a system where any termination for cause required progressive discipline, which is not reflective of the working world for most people in the United States, where progressive discipline is generally not explicitly required by law to effectuate a termination for cause. While the Department continues to emphasize the importance of safeguarding essential and longstanding worker protections in the H-2A program (specifically, the right to outbound transportation and subsistence, the three-fourths guarantee, and, if the worker is a U.S. worker, the right to be contacted for subsequent employment), it no longer believes that explicitly requiring progressive discipline before an employer terminates a worker for cause achieves that goal.

The Department solicits comments on this proposed rescission. Specifically, the Department solicits comments as to potential effect this proposal may have on similarly employed workers in the United States, the importance of and/or burden posed by current § 655.122(n)(2), and whether any part of this provision should be retained either in regulation or in subregulatory guidance ( e.g., retain the definition of termination for cause in § 655.122(n)(2) but remove the five criteria, or retain § 655.122(n)(2)(i)(A)-(D) in subregulatory guidance).

The Department also proposes to rescind current 20 CFR 655.122(l)(3) and reinstate the 20 CFR 655.122(l)(2)(iii) in effect as of June 27, 2024, prior to the 2024 H-2A Final Rule. In order to align the regulations with changes to § 655.122(n)(2), the 2024 H-2A Final Rule required that all employers requiring one or more productivity standards as a condition of job retention disclose those standards in the job order, and set a ceiling on the productivity standards. Prior to the 2024 H-2A Final Rule, § 655.122(l)(2)(iii) only required disclosure and the ceiling if the employer paid by a piece rate and required the productivity standard as a condition of job retention. As the Department proposes to rescind the regulation that necessitated this change (current § 655.122(n)(2)), it similarly proposes to revert to the regulatory text of § 655.122(l)(2)(iii) before the effective date of the 2024 H-2A Final Rule. The Department solicits comments on this proposal, including on whether an employer who has productivity standards as a condition of job retention but does not pay by a piece rate should be required to disclose the productivity standards in the job order.

The Department proposes to rescind all regulatory and related data collection requirements requiring employers to identify any foreign labor recruiters, and to provide copies of the agreements between the employer and such recruiter(s) at the time of filing. Specifically, the Department proposes to rescind § 655.137, Disclosure of Foreign Worker Recruitment, a related assurance at § 655.135(p), and § 655.167(c)(8) that provides applicable document retention requirements.

The regulatory requirements at § 655.137 govern what information and documentation an employer must provide at filing regarding foreign worker recruitment, as well as how it must maintain and update that information. These provisions also address the Department's dissemination or publication of the information it receives. Paragraph (a) requires that if the employer engaged or plans to engage an agent or foreign labor recruiter, directly or indirectly, in international recruitment, the employer, and its attorney or agent, as applicable, must provide copies of all contracts and agreements with any agent or recruiter or both, executed in connection with the job opportunity, a requirement that is also covered by the assurance at § 655.135(p). These agreements must contain the contractual prohibition against charging fees as set forth in § 655.135(k). In paragraph (b), the Department requires that applications must contain all recruitment-related information required in the Application for Temporary Employment Certification, as defined in § 655.103(b), including the identity and location of all persons and entities hired by or working for the recruiter or agent, and any of the agents or employees of those persons and entities, to recruit prospective foreign workers for the H-2A job opportunity. Paragraph (c) of § 655.137 requires that employers must continue to keep the foreign labor recruiter information referenced in paragraphs (a) and (b) up to date until the end of the work contract period, with this updated information available in the event of a post-certification audit or upon request by the Department.

The Department is also proposing to rescind § 655.167(c)(8) governing applicable employer document retention requirements,. Finally, the Department proposes to rescind paragraph (d) of § 655.137, which required the Department to maintain a publicly available list of agents and recruiters (including government registration numbers, if any) who are party to the agreements employers submit, as well as the persons and entities the employer identified as hired by or working for the recruiter and the locations in which they are operating.

Based on a review of the 2024 H-2A Final Rule, the Department has determined it did not adequately address the legitimate concerns raised by commenters regarding the time and burden to collect this information; the need for employers to understand their information disclosure, retention, and production obligations; the ability to access this information and the timing of the collection, including the obligation and burden to update the information. The Department also did not adequately explain why this information must be collected at the time of filing Application for Temporary Employment Certification, in addition to similar collections at the time the employer files a petition with the Department of Homeland Security (DHS). The Department notes that DHS has statutory authority for the admission of foreign beneficiaries under the H-2A visa classification and the United States Citizenship and Immigration Services (USCIS) requires employers to provide identifying information about agents and recruiters, including addresses, at the time of filing the H-2A petition. Specifically, the Form I-129 requires the employer to provide the names and addresses of all agents, facilitators, staff, recruiters, or any person or entity that recruits or solicits prospective beneficiaries of an H-2 petition.

The Department also overstated the value the additional disclosure of information would provide in “aiding enforcement of provisions like § 655.135(k), which prohibits seeking or receiving of recruitment fees,” as well as the value in “better . . . map[ping] international recruitment relationships” to “identify where prohibited fees are collected . . .”  29 The fact that there exists the current practice of collecting this information in the H-2B program does not justify its collection in the H-2A program, especially in light of the significant reporting burden on employers.

The 2024 H-2A Final Rule requirement to disclose contracts and agreements with international recruiters and additionally provide identifying information for the recruiter's employees and anyone within the recruitment chain engaged in foreign worker recruitment, and to maintain these records for a period of three years from certification, imposes significant burdens. The burdens include the completion of paperwork, disclosures at the time of filing, information security related to retention of identifying information, and potential breach of privacy claims, as well as imposing an unnecessarily thorough duty to inquire into every link in the international recruitment chain to ascertain the “identity and location of all persons and entities hired by or working for the recruiter or agent, and any of the agents or employees of those persons and entities . . .”  30 While the additional disclosures may provide H-2A foreign workers a better sense of the foreign labor recruiters used by their employers or prospective employers and “better understand[ing] [of] the roles of recruiters . . . in the recruitment chain . . .”  31 the Department does not think the benefit outweighs the burden. Furthermore, the Department has lacks both the resources and methods to verify, at the time of filing, that the employer provided complete information about the recruiters the employer used independently verify the validity of the data the employer provides at the time of processing, so it cannot be sure that H-2A foreign workers have accurate or complete information to decide whether a recruiter is legitimate. The inability of the Department to verify the completeness or accuracy of the information, and therefore its utility to potential H-2A workers, leads the Department to conclude it cannot justify the burden placed on employers to provide this information.

Therefore, the Department proposes to eliminate §§ 655.135(p), 655.137, and 655.167(c)(8), and maintain the existing provisions like §§ 655.135(j) and (k) that provide measurable value in protecting U.S. and foreign workers through prohibitions against unlawful fees and enforcement of related contractual obligations and provide authority for WHD to enforce compliance with these provisions. The Department believes the regulations in existence prior to the 2024 H-2A Final Rule will provide sufficient protection against exploitation and abuse of foreign workers by foreign labor recruiters and permit the Department to enforce provisions prohibiting imposition of unlawful fees in a framework that is consistent with the scope of the Department's statutory authority. The regulations at § 655.135(j), generally prohibit the employer and its agents from seeking or receiving fees related to H-2A labor certification, including recruitment costs. The regulations at § 655.135(k) more specifically require the employer to contractually prohibit in writing any foreign labor contractor or recruiter (or any agent of such foreign labor contractor or recruiter) whom the employer engages from seeking or receiving payments or other compensation from prospective workers and to provide documentation of the prohibition upon request by the Department or a Federal party. Under these provisions, the Department may, in the course of an audit or investigation, request the employer present documentation demonstrating the contractual arrangement with a foreign labor recruiter and demonstrating compliance with the H-2A provisions and are sufficient to permit WHD to “identify individuals charging fees, connect such individuals' relationships with recruitment agencies contracted by the employer, determine whether all entities had contractually prohibited cost-shifting as required under § 655.135(k), and hold the appropriate parties responsible,” without imposing unnecessary burdens on employers to disclose the identity of every individual within the international recruitment chain to the Department at the time of filing the Application for Temporary Employment Certification. 32

The Department proposes to eliminate § 655.175, including the new delayed start date procedure and related assurances and obligations promulgated in the 2024 H-2A Final Rule. Instead, the Department proposes to revert to the regulatory scheme that governed the delayed start date process for many years prior to the 2024 H-2A Final Rule. Section 655.175, as well as a related recordkeeping obligation at § 655.167(c)(12) and conforming changes to §§ 655.122(i) and 655.145(b), were intended to clarify employer obligations in the event of a delay in the start of work and to distinguish post-certification delays from pre-certification Application amendments under current § 655.145(b). The rule defines a “minor” delay in the start of work as a delay of 14 calendar days or fewer and continues to limit these delays to situations in which unforeseen circumstances require the delay and the employer's crops or commodities would be in jeopardy prior the expiration of an additional, expedited recruitment period. The rule also requires the employer to contact the SWA and workers at least 10 business days prior to the start date and maintains the existing requirement that the employer provide housing and subsistence to any worker already traveling to the worksite. If the employer fails to provide this notice, the rule requires employers to provide compensation to workers for each day work is delayed during the delay period, at the highest hourly rate specified in the applicable regulations, for a period of up to 14 calendar days, and provide this compensation no later than the date workers would have been paid had work begun on time, similar to the Wagner-Peyser Act (WP Act) provision at § 653.501(c), which covers U.S. workers the SWA refers to the employer's job opportunity. This provision also requires employers to send notice to workers of the delay using an electronic method, when possible, and translate the notice into a language workers can understand, similar to the current work contract translation language at § 655.122(q). Consistent with these changes, § 655.167(c)(12) includes a recordkeeping provision requiring the employer to maintain a record that it sent notice of the delayed start of work.

Beginning with the 2010 H-2A Final Rule, OFLC regulations have permitted an employer to request a delay in the start date after submitting a written request to the CO and receiving the CO's approval. Section 655.145(b) in that rule explained that if the request is for a delay in the start date and is made after workers have departed for the employer's place of work, the CO may only approve the change if the employer includes with the request a written assurance signed and dated by the employer that all workers who are already traveling to the job site will be provided housing and subsistence, without cost to the workers, until work commences. Upon acceptance of an amendment, the CO would submit to the SWA any necessary modification to the job order. This provision required the employer to show that the delay was caused by unforeseeable circumstances and demonstrate that the crops or commodities will be in jeopardy prior to the expiration of an additional recruitment period. It also required an employer seeking a post-certification delay in the start of work to provide housing and subsistence to workers who had already begun traveling to the place of employment and comply with the WP Act regulations at § 653.501(c). Similarly, the WP Act regulations pre-dating the 2024 H-2A Final Rule “provide[] a process close to the start date the employer identified in the job order for the employer, the SWA, and referred farmworkers to communicate regarding the actual start date of work.”  33 These provisions “require[ ] an employer to notify the SWA of start date changes at least 10 business days before the originally anticipated start date and require the SWA to notify farmworkers that they should contact the SWA between 9 and 5 business days before the anticipated start date to verify the actual start date of work.”  34

The Department proposes to revert to the delayed start date provisions under the 2010 and 2022 H-2A Final Rules. Consistent with this proposal, the Department proposes to revise § 655.145(b) and, as discussed further below, 653.501(c), to mirror language in place beginning in the 2010 H-2A Final Rule. As under the 2010 and 2022 H-2A Final Rules, this proposed language requires the employer to request CO approval for a minor delay in the start date, demonstrate unforeseeable circumstances that jeopardize crops, and assure the CO that if the employer requests a start date delay after workers have departed for the place of employment, the employer will provide housing and subsistence to all workers who are already traveling to the place of employment, without cost to the workers, until work commences. If the employer fails to comply with its obligations, the Department may pursue revocation of the temporary agricultural labor certification under § 655.181 or debarment of the employer under § 655.182 or 29 CFR 501.20. The Department proposes to reinstate § 655.122(i)(1)(i) and (ii) as effective prior to the 2024 H-2A Final Rule, which reflect that the work contract period can be shortened by agreement of the parties with the approval of the CO. These provisions were removed during the prior rulemaking to ensure consistency with § 655.175(b), which permitted only minor delays to the start date of work and did not require CO approval of the delay. The Department also proposes to remove the recordkeeping obligation at § 655.167(c)(12), as necessary for consistency with the above proposals.

These proposals are consistent with President Trump's E.O. directing the Department to reduce regulatory complexity, reduce burdens on program users, and rescind or revise regulations that are inconsistent with the Department's clear statutory authority. The provision at § 655.145(b) provides similar flexibility to employers as § 655.175, consistent with the Department's acknowledgment that the actual day work begins may vary due to such factors as travel delays or crop conditions at the time the employer expects work to begin. This proposed rule maintains existing emergency filing procedures at § 655.134 to accommodate employers faced with exigent circumstances necessitating a longer delay in the start date of work. The Department has determined workers similarly employed are provided adequate protections in the event of a delayed start date through the pre-2024 WP Act provisions requiring notice of the delay by SWAs and compensation of U.S. workers under § 653.501(c), the requirement that employers guarantee H-2A and corresponding workers a total number of work hours equal to at least three-fourths of the workdays of the total period of employment under § 655.122(i), and the § 655.145(b) language limiting delayed start date requests to a minor period, justified by unforeseeable circumstances that jeopardize crops, and subject to CO approval, as well as a determination that the test of the U.S. labor market will not be impacted, and employer assurances related to provision of housing and subsistence to workers traveling to the worksite at the time of the delay. In contrast, the 2024 H-2A Final Rule provision providing additional notice and recordkeeping burdens and extending the WP Act compensation obligation to H-2A foreign workers was not necessary to prevent adverse effects on the wages and working conditions of similarly employed workers.

Additionally, the Department's elimination of the requirement for employers to obtain CO approval of changes to start dates reduced filing burdens on employers and administrative burdens on the Department and SWAs related to adjudication of requests and notice of delay to workers, but also made it more difficult for the Department to ensure that employers provide notice of delays to workers, provide accurate start dates in filings, and delay start dates only where necessitated by exigent circumstances unforeseeable at the time of filing and only when the Department determined the change would not impact the labor market test and the employer would comply with assurances to provide housing and subsistence to workers already en route to the worksite. The Department believes reversion to the delayed start date provisions implemented prior to the 2024 H-2A Final Rule will best balance the need for agricultural employers to respond to unforeseeable exigent circumstances and the need to ensure U.S. workers are accurately apprised of the start date of work in the event of a minor delay, and do not suffer financial hardship or material changes to terms and conditions of employment as a result of the employer's employment of H-2A foreign workers.

The Department proposes to retain several provisions adopted in the 2024 H-2A Final Rule that merely codified existing practice or streamlined procedures and imposed no additional burdens on employers, the Department, or U.S. or foreign workers. While the Department is proposing to retain these provisions, it seeks public comment to determine if any changes are appropriate or necessary. The Department will consider any comments on the provisions listed below when developing the Final Rule.

First, the Department proposes to retain the definition of single employer and the explanation of the single employer test at § 655.103(e) and 29 CFR 501.3(d). This provision codified the test that the Department had already implemented in practice, but had not included in its regulations prior to the 2024 H-2A Final Rule. The Department believes this provision provides clarity to filers about when and how the Department will determine that two seemingly separate entities will be evaluated to determine whether they are in fact one entity for the purpose of ensuring compliance with H-2A program regulations, including the statutory requirement that an employer have a temporary or seasonal need.

Second, for similar reasons, the Department proposes to retain the streamlined procedures and modified definition relating to successors in interest at § 655.103, as well as conforming edits to §§ 651.10, 655.181, 655.182, and 29 CFR 501.20. These provisions provide greater clarity to filers than the prior regulations without placing any additional burden on them. The provisions articulate a clear methodology for determining whether an employer or agent or attorney is a successor-in-interest to a debarred entity, and whether an entity must be considered debarred from the H-2A program. By clarifying and streamlining this regulatory text, employers and agents and attorneys can make an informed decision as to whether they will be considered a debarred entity prior to preparing and submitting an H-2A application. These changes also reduced burdens on the Department and enhanced the Department's ability to protect program integrity.

Third, the Department proposes to retain the explicit prohibition against passport withholding at § 655.135(o), but redesignate the paragraph as § 655.135(m). The withholding of a worker's passport, visa, or other immigration or government identification documents is an egregious restriction of a worker's movements and may be indicative of labor exploitation or trafficking. The Department does not believe that compliance with this provision represents a significant burden to employers because most employers understand the seriousness of such an action—in some circumstances, the withholding of passports, immigration, or identity documents constitutes a criminal offense—and do not withhold worker passports. Given the minimal burden required to comply, and the importance that workers retain in control of their identity documents, the Department believes that current § 655.135(o) should be retained. Doing so will better enable the Department to combat labor exploitation and trafficking.

Fourth, the Department proposes to retain current 29 CFR 501.33(b)(2), introduced by the 2024 H-2A Final Rule, to state that any issue not raised in a party's request for a hearing before the Office of Administrative Law Judges (OALJ) “ordinarily may be deemed waived” in any further proceedings. In the 2024 H-2A Final Rule preamble, the Department explained that issue exhaustion requirements are applicable and appropriate under the H-2A administrative review procedures and, as a result, issues not raised in a request for hearing to the OALJ may be deemed waived. This regulation codifies the Department's current practice, better informs parties of the potential consequences of failing to raise an issue in a request for review, and better preserves agency and judicial resources.

Fifth, the Department proposes to retain the severability provisions implemented by the 2024 H-2A Final Rule at § 655.190 and 29 CFR 510.10. These regulations reflect the Department's position, based on its experience enforcing and administering the H-2A provisions of the INA, that the regulations can function sensibly in the event that any specific provisions, sections, or applications are invalidated.

Sixth, the Department proposes to retain minor technical fixes made by the 2024 H-2A Final Rule. Specifically, the 2024 Final Rule edited § 655.167(c)(6) to update this paragraph's outdated cross-reference to the regulatory citation for the definition of “work contract.” The 2024 Rule also changed § 655.167(c)(7) to add “to” before “DHS.”

Seventh, the Department proposes to retain clarifying edits made by the 2024 H-2A Final Rule to 20 CFR 655.122(l)(4) and 20 CFR 655.210(g) with respect to overtime compensation. Specifically, current regulations clarify that, if applicable, the employer must state in the job order: (1) that overtime hours may be available; (2) the wage rate to be paid for any such overtime hours; (3) the circumstances under which overtime hours will be paid; and (4) where the overtime pay is required by law, the applicable Federal, State, or local law requiring the overtime pay. The Department believes that this provision is useful for U.S. workers to understand what benefits are being offered so they may make a reasoned decision as to whether they want the job. The Department solicits comments on this provision, including whether U.S. workers consider overtime benefits when considering whether to accept an agricultural job and, if these benefits are not described in the job order, how applicants may learn about the potential for overtime pay.

The retention of these provisions is consistent with President Trump's E.O. 14192, Unleashing Prosperity Through Deregulation, which directs agencies to reduce regulatory burdens and simplify regulations that “are often difficult for the average person or business to understand . . .” and require program users to “synthesiz[e] the collective meaning” of sub-regulatory guidance that was not subject to the Administrative Procedures Act (APA) and for which the Department did not provide notice and opportunity to comment. The rulemaking culminating in the 2024 H-2A Final Rule provided notice and opportunity to comment on long-standing Departmental standards, such as use of the single employer test, and the 2024 H-2A Final Rule responded to those comments and codified the provisions in the regulations, providing clarity to the regulated community and Department's OALJ regarding, for example, the methods the Department uses to determine when two ostensibly distinct employers are, in fact, a single employer, as necessary to maintain program integrity, reduce instances of misrepresentation and fraud in the nonimmigrant labor certification programs, and ensure fairness for law abiding employers seeking foreign labor certification to fill legitimate labor needs. Similarly, § 655.104 streamlined the successor-in-interest provisions the Department uses across programs, including clearly explaining to the regulated community the factors the Department considers in determining successor-in-interest status and the procedures the Department follows when making such a determination in relation to a notice of debarment from the H-2A program. Finally, the provision explicitly prohibiting passport withholding merely reflects existing employer obligations pursuant to certain Federal, State, and local laws and imposes no new burdens or obligations on employers. Retaining the provision that makes this prohibition explicit in the H-2A program regulations also is consistent with the general aims of President Trump's E.O. 14159, Protecting the American People Against Invasion, which declares “it is the policy of the United States to achieve the total and efficient enforcement of [U.S. immigration] laws . . .” and directs agencies to prioritize “enforcement of the provisions of the INA and other Federal laws related to the illegal entry and unlawful presence of aliens in the United States and the enforcement of the purposes of this order,” including “dismantl[ing] cross-border human smuggling and trafficking networks . . .”

The Department proposes to rescind some provisions adopted in the 2024 H-2A Final Rule that are not necessary for the efficient functioning of the ES. The Department proposes to rescind requirements at §§ 658.503 and .504 relating to the ES-system-wide effect of SWA determinations to discontinue services to employers and notification to the ETA Office of Workforce Investment (OW) regarding discontinuation and reinstatement, as well as at § 653.501(b)(4), which requires ES staff to consult the OWI discontinuation of services list prior to placing a job order in intra-state or inter-state clearance. Requirements for this list were established to ensure that a final decision to discontinue services to an employer would prohibit an employer from receiving any services from the ES system, not just from offices in the State that discontinued services, enabling States to meet the requirements of § 658.503(e). Ongoing litigation in multiple jurisdictions prevents this nationally-scoped provision from taking effect, and because each State is responsible for issuing its own discontinuation determinations under part 658, subpart F, the Department believes it is appropriate for these actions to be effective only in the States in which they are issued. The Department proposes to revise § 653.501(b)(4) and paragraphs (i) and (ii) so that the State receiving the clearance order will not provide ES services to an employer for which it has already discontinued services, to remove references to a national OWI discontinuation of services list, and to rescind § 658.504(d) (while retaining clarifying changes to § 658.504 broadly). The Department also proposes to rescind changes to §§ 658.502(b) and 658.503(b) from the 2024 H-2A Final Rule that removed employers' option for pre-final determination hearings and allow employers to request a hearing only after the State makes a final determination. This change was intended to ensure a complete record of decision-making on appeal, but might have limited employers' options for appeal and introduced delay for employers seeking a hearing, and the Department is proposing to restore the option to request a hearing at § 658.502 to provide maximum process to employers using the ES system. Similarly, with regard to the basis for determining the necessity of immediate discontinuation without going through regular procedures, the Department proposes to retain only the basis that existed prior to the 2024 H-2A Final Rule. Any exceptions to a State following regular procedures should be narrow, and a lower threshold for immediate discontinuation raises the risk of insufficiently supported and erroneous decisions adversely impacting employers seeking to recruit workers. The Department invites comments on the balance between State need to act quickly in exceptional circumstances and due process for employers.

The Department proposes to retain certain provisions adopted in the 2024 H-2A Final Rule that clarify long-standing, but previously confusing, discontinuation of services provisions and align standards for foreign workers and U.S. workers rather than disadvantaging U.S. workers, and is soliciting public comment as to whether the following provisions should be retained or modified. As discussed above, the Department proposes to maintain definitions in § 651.10 for “agent,” “farm labor contractor,” and “successor in interest.” The Department also proposes to maintain definitions that make the ES regulations more readable and understandable and that more clearly define concepts that previously were discussed in the ES regulations yet not adequately defined. These include “criteria clearance order,” “discontinuation of services,” “employment-related laws,” “joint employer,” “non-criteria clearance order,” and “week.” The Department sought to align these new definitions with the same or similar definitions throughout the rule.

The Department proposes to retain a provision at § 653.501(b)(4)(i) that requires States to consult the OFLC and WHD debarment lists and discontinue services to any employer debarred from participating in the H-2A or H-2B foreign labor certification programs. Consistent with an America First policy direction, this provision ensures that U.S. workers are protected from the narrow set of employers the Department has already found to have committed significant violations sufficient to justify their debarment from the labor certification program.

The Department proposes to revert requirements in § 653.501(c)(1)(iv)(E) for listing wages on clearance orders, as the change to this provision in the 2024 H-2A Final Rule was made for consistency with H-2A regulations prescribing wage rate requirements, which the Department proposes above to revert. The Department also proposes to revert provisions in § 653.501(c) and (d) relating to employer obligations in the event of a delay in the start of work, from the current provisions to those that were in effect prior to the 2024 H-2A Final Rule. The current provisions require employers to notify workers in the event of a delay, and in the event of less than 10 days' notice, impose requirements on employers relating to the provision of housing, as well as compensation and benefits for up to 14 days. In order to reduce the financial burden that these regulations impose on employers, which is in addition to the burden caused by work delays, the Department proposes to revert to a guarantee of one week's pay for workers recruited through the ES system in the event of a short-notice delay, and to require SWAs to notify workers of delays and other changed circumstances. The prior provisions appropriately allocated the burden-sharing between employers, workers, and the ES system.

Lastly, the Department proposes to retain certain clarifying changes in §§ 658.501 and 658.502, and the changes in § 658.503 related to discontinuation of services. The changes in §§ 658.501(a) and 658.502(a) include clarifying changes related to discontinuing services on the bases of debarment from foreign labor certification programs or, as in § 658.501(b), fraud in those programs. The changes in § 658.502(a) require states to more thoroughly document and communicate the bases for discontinuation and the basic facts of the alleged violation, and they give greater clarity and protection to employers in submitting rebuttal evidence and information to the SWA. Discontinuations of service require a high bar and are rare, yet previous to the 2024 H-2A Final Rule, State discontinuations of service sometimes lacked sufficient documentation to explain to employers the basis of a discontinuation, making it difficult for employers to remedy the violation. These provisions ensure States discontinue services only upon thorough review and documentation of violations. Similarly, the Department proposes to retain 2024 H-2A Final Rule changes in §§ 658.503(a), (c), (d) and (f) that clarify processes States must follow prior to discontinuing services, particularly the full documentation and notification required before a discontinuation can take effect. In § 658.503(b), the 2024 H-2A Final Rule describes previously existing requirements for when immediate discontinuation is appropriate, and adds requirements that the State document the facts that led to the immediate discontinuation and notify employers of the details of the discontinuation and their ability to request a hearing. The Department proposes to retain these provisions, in order to ensure employers have adequate information and opportunity to respond, in furtherance of affording maximum process to employers participating in the ES. However, the Department proposes to rescind changes that limited access to a hearing and supported the OWI discontinuation of services list. In § 658.503(e), the Department proposes to retain provisions that explain what discontinuation of services means operationally, so that States and employers understand the process, and proposes to rescind language that refers to nation-wide impact of discontinuation of services, consistent with rescissions described earlier.

Under E.O. 12866, the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and review by OMB. Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlement, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. OIRA has reviewed this rule and designated it a significant regulatory action under E.O. 12866.

E.O. 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation 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. Improving Regulation and Regulatory Review, 76 FR 3821, 3821 (Jan. 21, 2011), E.O. 13563 recognizes that some costs and benefits are difficult to quantify and provides that, where appropriate and permitted by law, agencies may consider and discuss qualitative values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. Id.

Executive Order 14192, titled “Unleashing Prosperity Through Deregulation,” was issued on January 31, 2025. This rule, if finalized as proposed, is expected to be an E.O. 14192 deregulatory action.

Section III.A.1 describes the need for the rule. Section III.A.2 describes the process used to estimate the cost savings of the rule and the general inputs used, such as wages and number of affected entities. Section III.A.3 explains how the provisions of the rule will result in quantified costs and transfer payments and presents the calculations the Department used to estimate them. Section III.A.4 describes the quantified and unquantified transfer payments and benefits of the rescissions contained within this proposed rule. Section III.A.5 summarizes the estimated first-year and 10-year total and annualized costs and transfer payments of the rule.

The Department estimates that all the rescissions contained in this proposed rule will result in a significant reduction in costs, or otherwise create cost savings, as well as transfers of payments from employees to employers. As shown in Exhibit 1, the proposed rule is expected to have an annualized quantifiable net cost savings of $1.02 million and a total present value 10-year quantifiable net cost savings of $10.18 million, each at a discount rate of 7 percent. 35 The proposed rule is estimated to result in annualized quantifiable transfer payments from H-2A employees to H-2A employers of $12.66 million and present value 10-year transfer payments of $88.92 million at a discount rate of 7 percent. 36

The total quantifiable cost of the rule is associated with rule familiarization and the provisions requiring additional information disclosure on the H-2A Applications. Transfer payments are the results of the elimination of the immediate effective date for the updated AEWRs, as described below. The Department also notes that there are unquantifiable cost savings associated with the rescission of certain provisions of the 2024 H-2A Final Rule. For example, there are unquantifiable cost savings to employers that no longer need to spend time inspecting whether each worker has chosen to use their seatbelt prior to transporting workers and does not have to potentially assign a supervisor to each vehicle to enforce seatbelt usage.

As previously discussed and in light of these district court injunctions and the Administration's policy to significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity and national security and the highest possible quality of life for each citizen, the Department has determined that the regulatory requirements and policies contained in the 2024 H-2A Final Rule must be reconsidered and proposes revisions in this NPRM. Specifically, the 2024 H-2A Final Rule adopted a number of unnecessary, burdensome, and costly requirements on employers. Specifically, these provisions include, but are not limited to, substantial new requirements associated with the material terms and conditions offered by employers to H-2A workers that are not commonly provided to other U.S. workers, including progressive discipline policies for cause-based employment terminations, anti-retaliation measures for certain workers engaged in concerted activities, and expanding the authority and scope for a State Workforce Agency to discontinue employment services to an employer that effectively debars an employer from accessing the H-2A program without sufficient due process.

Further, the final rule imposed extensive data collection requirements on employers related to their use of foreign labor recruiters, including personal names and addresses abroad, and detailed personal information associated with all owners of the employers, operators the place(s) of employment, and supervisor(s) and manager(s) of workers employed under the terms of the work contract, often with limited or no practical utility to agency decision making. Thus, the Department has determined that the proposals outlined below will return the H-2A program's regulatory framework to a more reasonable balance between the statute's competing goals of providing an adequate labor supply and protecting the jobs of domestic agricultural workers.

The Department estimated the cost savings and transfer payments of this proposed rule relative to the existing baseline ( i.e., the current practices for complying, at a minimum, with the H-2A program as currently codified at 20 CFR part 655, subpart B, and 29 CFR part 501).

In accordance with the regulatory analysis guidance articulated in OMB's Circular A-4  37 and consistent with the Department's practices in previous rulemakings, this regulatory analysis focuses on the likely consequences of the proposed rule ( i.e., costs, benefits, and transfer payments that accrue to entities affected). The analysis covers 10 years (from 2025 through 2034) to ensure it captures measurable costs and transfer payments that accrue over time. The Department expresses all quantifiable impacts in 2022 dollars and uses discount rates of 3 and 7 percent, pursuant to Circular A-4 published on October 9, 2003.

Exhibit 2 presents the number of affected entities that are expected to be impacted by this proposed rule. 38 The average number of affected entities is calculated using OFLC H-2A certification data from FY 2016 through FY 2022. Exhibit 3 presents the number of workers who are expected to be impacted by this proposed rule. The exhibit contains the number of certified H-2A workers from FY 2012 through FY 2022.

The Department estimated growth rates for certified H-2A workers based on program data presented in Exhibit 3 and estimated growth rates for unique H-2A employers based on program data presented in Exhibit 2.

The compound annual growth rate (CAGR) for certified H-2A workers using the program data in Exhibit 3 is calculated as 15.9 percent. This growth rate, applied to the analysis timeframe of 2025 to 2034, would result in more H-2A certified workers than projected employment of workers in the relevant H-2A SOC codes by BLS. 39 Therefore, to estimate realistic growth rates for the analysis, the Department applied the growth rate for unique employers, assuming the growth rate for unique employers and workers should be similar. The Department used FY 2016-2022 data on unique employers, where the use of FY 2016 as the first year is due to data availability on calculated unique employers. The Department calculated a CAGR based on FY 2016 unique employers (6,713) and the FY 2022 unique employers (10,571). The result is an estimate of 7.9 percent. 40

The estimated annual growth rates for unique employers (7.9 percent) and workers (7.9 percent) were applied to the estimated cost savings and transfers of this proposed rule to forecast participation in the H-2A program. 41

In Section VIII.A.3, the Department presents the measurable cost savings, including labor, associated with the implementation of the provisions of the rule. Exhibit 4 presents the hourly compensation rates for the occupational categories expected to experience a change in the number of hours necessary to comply with all the rescissions contained in this proposed rule. The Department used the mean hourly wage rate for a private sector HR Specialist (SOC code 13-1701). 42 Wage rates are adjusted to reflect total compensation, which includes nonwage factors such as overhead and fringe benefits ( e.g., health and retirement benefits). We use an overhead rate of 17 percent  43 and a fringe benefits rate based on the ratio of average total compensation to average wages and salaries in 2022. 44 We then multiply the loaded wage factor by the wage rate to calculate an hourly compensation rate. The Department used the hourly compensation rates presented in Exhibit 4 throughout this analysis to estimate the labor costs for each provision.

The Department's analysis below covers the estimated cost savings and transfer payments associated with the baseline requirements ( i.e., 2024 H-2A Final Rule) compared to the rescissions under this proposed rule. In accordance with Circular A-4, the Department considers transfer payments as payments from one group to another that do not affect total resources available to society. This final rule estimated the cost of rule familiarization and application additions and transfer payments associated with the elimination of the delayed effective date for updated AEWRs.

The following sections describe the quantified costs and cost savings associated with employers having to read and understand this proposed rulemaking, not having to read and understand the 2024 H-2A Final Rule, and the rescission of the provisions requiring additional information disclosure on the H-2A Application.

Under this proposed rule, H-2A employers will incur costs to familiarize themselves with the impact of the rescissions of requirements contained in the 2024 H-2A Final Rule. New employers in each subsequent year will now save time and costs trying to familiarize themselves with current requirements relative to the requirements they would have needed to familiarizing themselves with if the 2024 H-2A Final Rule were still in effect.

To estimate the costs and cost savings, the Department applied the growth rate of H-2A employers (7.9 percent) to the number of unique H-2A employers (8,284) to determine the number of unique H-2A applicants impacted in the first year. For subsequent years, the number of new employers was estimated by multiplying the previous year's employer count by the growth rate of H-2A employers (7.9 percent) and then subtracting that value from the previous year's total employer count. Exhibit 5 details the number of new employers for each year of the analysis.

For the initial costs, the number of unique H-2A employers in the first year (8,938) was multiplied by the estimated amount of time required to review this rule (1 hour). This number was then multiplied by the total compensation rate of an HR specialist, as described above in Exhibit 4 ($55.79 per hour). This calculation results in a total undiscounted cost of $498,651 during the first year.

The Department estimated that the 2024 Final Rule would require H-2A employers to incur four hours of rule familiarization costs. Rescinding the 2024 Final Rule will remove those four hours of rule famliarization costs. Accounting for the one hour of rule familiarization associated with this rulemaking, the net effect is a reduction of three hours of rule familiarization costs in FY 2026-2034. Using the same total compensation rate of an HR specialist as above, this produces an undiscounted cost savings of $1,469,509 during FY 2026-2034 and an undiscounted net cost savings of $970,858 over the 10 years after the rule takes effect. Combining the FY 2025 costs with the FY 2026-2034 cost savings, the annualized net cost savings over the 10-year period are $73,188 and $49,478479,217 at discount rates of 3 and 7 percent, respectively.

Under the 2024 H-2A Final Rule, H-2A employers are required to submit additional information on the H-2A Application, which imposed a yearly cost as the time associated with filling out this information is required for every application for certification. The additional information includes the names, addresses, business phone numbers, and dates of birth for the owner(s) of each employer, each operator of the place(s) of employment, and all managers and supervisors of workers employed under the H-2A Application; DBA information; and information about the identity and location of any foreign labor recruiter the employer engaged, directly or indirectly, in international recruitment, as well as all persons and entities hired by or working for the recruiter or agent, and any of the agents or employees of those persons and entities.

To estimate the annual cost savings associated with proposed rescissions of the application additions contained in this rule, the Department applied the growth rate of H-2A employers (7.9 percent) to the current number of unique certified H-2A employers (8,938) to determine the number of unique H-2A employers in the first year (8,938). The number of unique certified H-2A employers in the first year is then multiplied by the growth rate again to determine the number of unique certified H-2A employers in the second year. This process is repeated each year to determine the total number of unique certified H-2A employers every year during the study period. Since it is assumed that only a single HR specialist per employer will incur the additional time investment, the estimated total yearly cost can be calculated by multiplying the total number of unique certified H-2A employers (8,938) by the HR specialist hourly wage rate ($35.13 per hour), the loaded wage factor and the overhead rate for the private sector (1.59), and the estimated additional time taken to gather and enter the information on a yearly basis (2 hours on average). Lastly, this value is multiplied by the growth rate of unique employers (7.9 percent) to the n th power, with n being equal to the period year. The result is $997,302 in cost savings in the first year, an undiscounted average over a 10-year period of $1,437,987 in cost savings, and discounted annualized savings of $1,204,219, and $968,193 at rates of 3 and 7 percent, respectively.

The following section describes the quantified and unquantified transfer payments and benefits of the rescissions contained within this proposed rule and describes the practical utility of the Department's disclosure of unquantified transfer payments and qualitative benefits associated with the 2024 Final Rule.

This section discusses the quantifiable transfer payments related to the elimination of the immediate effective date for the AEWR publication. The Department considers transfers as payments from one group to another that do not affect total resources available to society. The transfers measured in this analysis are wage transfers from H-2A workers to U.S. employers. H-2A workers are migrant workers who will spend some of their earnings on consumption goods in the U.S. economy but likely send a large fraction of their earnings to their home countries. 45 Therefore, the Department considers the wage transfers in the analysis as transfer payments within the global economic system.

Under the 2024 H-2A Final Rule, the Department publishes the AEWR as soon as data are available, typically in the middle of December for AEWRs based on FLS data and which has an immediate effective date. 46 Under this proposed rule, the Department intends to return to its practice of providing a 2-week delay until the AEWR is effective, typically January 1st of the following year. As noted previously, this brief period provides time for employers to adjust their payroll systems and to make business decisions related to these changed costs in labor, which are particularly significant for employers planting, cultivating, and harvesting specialty crops where labor costs are often 30 to 40 percent of total operating cost. Reinstating the 2-week delay until the AEWR is effective means, employers that employ workers during the 2-week period from mid-December to early January will no longer experience a wage transfer to employees due to the elimination of the immediate effective date of the updated AEWRs.

To estimate the transfer associated with wages from employees to H-2A employers, the Department first uses FY 2020 and FY 2021 H-2A certification data to calculate the weighted average increase in AEWR from one year to the next. 47 The Department weights the average by the number of workers in each State with employment between December 14th and the end of the year to account for regional differences in employment during December. The result is an average increase in the AEWR by $1.09. 48 The Department then calculates the average number of days worked between December 14th and the end of the year (11.87) using the FY 2020 and FY 2021 H-2A certification data. The Department estimates the average annual number of workers with work during this period using the H-2A certification data (89,208). 49

The Department determines the total amount of the transfers by multiplying the 2-year weighted AEWR difference for end-of-year employment (1.09), the 2-year average number of days worked between December 14th and the end of year (11.87), the average number of work hours in a day (7.4), 50 and the number of H-2A workers during this period (89,208). To determine the transfers for every year in the 10-year period, the total number of H-2A workers during the period is multiplied by the growth rate of H-2A workers (7.9 percent). The same process is repeated each year in the period. The total undiscounted average annual transfers associated with this provision is $12,342,109 and the discounted annualized transfers are $12,480,377 and $12,660,319 at discount rates of 3 and 7 percent, respectively. The Department also conducted a sensitivity analysis using the CAGR of 15.9 percent for H-2A workers. The resulting total undiscounted average annual transfers is $18,135,595, and the discounted annualized transfers are $18,037,709 and $17,901,328 at discount rates of 3 and 7 percent, respectively.

In the 2024 H-2A Final Rule, the Department did not provide any measurable estimates of benefits associated with the major regulatory requirements impacting employers who seek to employ H-2A workers. The Department consistently noted that it lacked any data regarding the prevalence of certain conditions ( e.g., number of workers impacted by work start date delays, frequency of employers paying higher piece rates, transportation related accidents) to make measurable determinations regarding the benefits of certain provisions of the 2024 H-2A Final Rule. In fact, no measurable wage transfers were estimated for employers who would otherwise have to compensate workers based on untimely notifications of a change in the work start date or even payments of piece rate wages, because no evidence was presented that such requirements were necessary due to any prevalence of employer non-compliance with the regulatory requirements in effect before the 2024 Final Rule was promulgated.

Rather, the Department made general and unsubstantiated qualitative statements noting that certain provisions ensure workers are not “deprived of their rights using inconsistent or unfair practices” ( i.e., due to unjustified terminations for cause) or “should increase workers' dignity and safety” or “should help ensure that workers under the H-2A program can assert their rights without the unique risks associated with retaliation” ( e.g., protection for worker advocacy and self-organization) or “safeguards the health, safety, and dignity of those workers and also prevents the depression of working conditions for the local agricultural workforce.” Thus, in the absence of benefits that can offer some degree of measurable balance to the quantified costs, the Department initially concludes that the expected unrecoverable compliance and transfer costs associated with the 2024 H-2A Final Rule far outweigh its expected unquantifiable transfers and benefits, which this proposed rule seeks to better balance based on the clear statutory mandates enacted by Congress for the Secretary of Labor.

Exhibit 6 summarizes the estimated total quantifiable cost savings and transfer payments of this final rule over the 10-year analysis period. The Department estimates the annualized net cost savings from the rescissions in this proposed rule $1.02 million and the annualized transfer payments (from employees to H-2A employers) at $12.66 million, each at a discount rate of 7 percent.

The Department considered two alternatives to this proposal. First, the Department considered the alternative of preserving the current regulations at 20 CFR parts 651, 653, 655, and 658, and 29 CFR part 501, as modified by the 2024 H-2A Final Rule, until litigation is resolved. This alternative was rejected because of the multiple court decisions preventing the Department from enforcing parts of the regulations as currently codified. The different court orders place different limitations on the Department's enforcement scheme ( e.g., some provisions are enjoined in some localities but not in others), which results in a confusing patchwork of regulatory requirements throughout the country. Retaining current 20 CFR parts 651, 653, 655, and 658, and 29 CFR part 501, as modified by the 2024 H-2A Final Rule, would be confusing and cumbersome for employers using the H-2A program to understand which provisions apply to them. Second, the Department considered reverting back to the regulations in 20 CFR parts 651, 653, 655, and 658, and 29 CFR part 501, as of June 27, 2024. This option would remove all changes effectuated by the 2024 H-2A Final Rule, regardless of their utility. The Department rejected this option because it believes that some of the provisions adopted in the 2024 H-2A Final Rule that merely codified existing practice, streamlined procedures and imposed no additional burdens on stakeholders may be worth retaining. The Department invites comments on these two regulatory alternatives, as well as other regulatory alternatives that commenters may propose.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, requires agencies to determine whether regulations will have a significant economic impact on a substantial number of small entities. The Department certifies that the recission proposed in this rulemaking does not have a significant economic impact on a substantial number of small entities. The Department presents the basis for this certification in the analysis below.

The RFA defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used the entity size standards defined by the Small Business Administration (SBA), in effect as of December 19, 2022, to classify entities as small. 51 SBA establishes separate standards for individual 6-digit North American Industry Classification System (NAICS) industry codes, and standard cutoffs are typically based on either the average number of employees, or the average annual receipts. Small governmental jurisdictions are another noteworthy exception. They are defined as the governments of cities, counties, towns, townships, villages, school districts, or special districts with populations of less than 50,000 people. 52

Given that the 2024 H-2A Final Rule was promulgated and became effective on June 28, 2024, only one year ago, the Department initially concludes that the employment and annual revenue data from the business information provider Data Axle, 53 which was merged with the H-2A labor certification records maintained by OFLC for FY 2020 and FY 2021, remains valid for analytical use in this proposed rulemaking. This process allows the Department to identify the number and type of small entities in the H-2A certification data as well as provide reasonable estimates of their annual revenues. Based on these data sources, the Department determined the number of unique employers in the FY 2020 and FY 2021 certification data based on the employer name and city. The Department identified 9,927 unique employers (excluding labor contractors). Of those 9,927 employers, the Department was able to obtain data matches of revenue and employees for 2,615 H-2A employers in the FY2020 and FY2021 labor certification data.

Of those 2,615 employers, the Department determined that 2,159 were small (82.5 percent). These unique small entities had an average of 11 employees and average annual revenue of approximately $3.6 million. Of these small unique entities, 2,139 of them had revenue data available from Data Axle. The Department's analysis of the impact of this proposed rule on small entities is based on the number of small unique entities (2,139 with revenue data).

To provide clarity on the agricultural industries impacted by this proposed rule, Exhibit 7 shows the number of unique H-2A small entities employers with certifications in the FY 2020 and FY 2021 labor certification data within each NAICS code at the 6-digit level.

The Department also collected employment and annual revenue data for the NAICS Agricultural major industry  54 from SUSB  55 and merged those data into the estimated costs for small businesses from the H-2A certification data for FY 2020 and FY 2021. The Department assumes that NAICS sectors related to H-2A employment (1112, 1113, 1114, 1121, 1122, 1123, 1124, 1125, and 1129) have similar representation in size distribution as the broader 2-digit industry. The Department believes it is a reasonable assumption for the analysis because the broader 2-digit industry completely covers the 4-digit NAICS industries (1112, 1113, 1114, 1121, 1122, 1123, and 1129). The size distribution in the broader 2-digit industry mirrors the average size distribution in the 4-digit NAICS industries (1112, 1113, 1114, 1121, 1122, 1123 and 1129). No small businesses are left out for estimating impact on small entities in the affected NAICS industries. This assumption allows the Department to conduct a robust analysis of the most inclusive set of small businesses, which includes the number of firms, number of employees, and annual revenue by firm size. Using this data allows the Department to estimate the per-provision cost of this final rule as a percent of revenue by firm size.

The Department estimated the incremental impacts on small entities from the baseline ( i.e., the current practices for complying, at a minimum, with the H-2A program as currently codified at 20 CFR part 655, subpart B) to this proposed rule. As discussed in previous sections, the Department estimates impacts using historical certification data and therefore simulates the impacts of the proposed rule to each actual employer in the H-2A program rather than using representative data for employers within a given sector. The Department estimated the costs of (a) time to read and review this proposed rule, (b) time and cost savings associated with rescinding requirements for employers to collect and maintain additional information for the application additions provision and add that information to H-2A applications, and (c) wage transfers associated with rescinding the immediate effective date from the AEWR publications and reinstituting the agency's practice of permitting a 2-week delay in the effective date. The estimates included in this analysis are consistent with those presented in the E.O. 12866 section.

The Department estimates that 2,139 unique small entities will incur a one-time cost of $55.79 to familiarize themselves with this proposed rule, based on one hour of an HR Specialist's time, as described above in Exhibit 4. This is an estimated one-time net savings of $167.37, compared to reading and understanding the 2024 H-2A Final Rule if it once again became effective, which would have required four hours of an HR Specialist's time. Small entities will experience another estimated annual savings of $111.58 due to the recission of unnecessary and burdensome requirements to collect and maintain information due to the additional disclosure requirements associated with the 2024 final rule, which had required two hours of an HR Specialist's time.

In addition to the cost of rule familiarization and the cost of information and record keeping due to application additions, each small entity may have savings in wage costs due to the rescission of the immediate effective date requirement of the AEWR. To estimate the savings associated with this rescission for each small entity, we followed the methodology presented in the E.O. 12866 section. For each certification of a small entity, the Department calculated total wage impacts of this final rule in calendar year (CY) 2020 and CY 2021 based on each certification for employment between December 14th and the end of the year and the annual increase in the AEWR. The Department estimates the wage savings to all small entities at $826, on average, in the first year. 56 The Department initially concludes that many small entities will not experience an impact related to this rescission from this final rule because they do not have workers employed at the end of December.

Exhibit 8 shows the estimated cost savings per small entity for each year of the analysis due to this proposed rule. The first-year cost savings per small entity is estimated at $1,087 at a discount rate of 7 percent. The annualized cost savings per small entity is estimated at $979 at a discount rate of 7 percent. These estimates are average costs, meaning that some small entities will have higher cost savings while other small entities will have lower cost savings, regardless of firm size.

The Department used the cost per employer analysis in the 2024 H-2A Final Rule as the basis for estimating the cost savings of the rescissions ( i.e., or cost avoidances) in this proposed rule per small entity as a percentage of annual receipts. First, the Department used SBA's Table of Small Business Size Standards to determine the size thresholds for small entities within the agricultural industry. 57 Next the Department obtained data on the number of firms, number of employees, and annual revenue by industry and firm size category from SUSB. 58 The Department used the Gross Domestic Product deflator to convert revenue data from 2017 dollars to 2022 dollars. 59 Then, the Department divided the estimated first-year cost and the annualized cost per small business (discounted at a 7-percent rate) by the average annual receipts per firm to determine whether this final rule will have a significant or substantial economic impact on small businesses in each size category. The Department used a total cost estimate of 3 percent of revenue as the threshold for a significant individual impact and set a total of 20 percent of small entities incurring a significant impact as the threshold for a substantial impact on small entities. A threshold of 3 percent of revenues has been used in prior rulemakings for the definition of significant economic impact. 60 This threshold is also consistent with that sometimes used by other agencies. 61

Finally, when examining the impact of the rescissions contained in this proposed rule on small entities by the proportion of revenue, of the 2,139 unique small entities with revenue data in the FY 2020 and FY 2021 certification data, only 0.7 percent of employers are estimated to have more than 3 percent of their total revenue saved in the first year based on 2020 data and another 2.0 percent of employers are estimated to have more than 3 percent of their total revenue saved in the first year based on 2021 data due to the rescission of these unnecessary regulatory requirements. In addition, no individual NAICS code sector has 20 percent or more of small entities with an impact greater than 3 percent of revenue. Thus, based on this initial analysis, the Department certifies that this final rule will not impose a significant economic impact on a substantial number of small entities. Rather, the rescissions contained in this proposed rule will provide some cost “relief” to small entities who otherwise would have to absorb additional and unrecoverable compliance costs associated with the requirements, data collection, and record retention mandates imposed by the 2024 H-2A Final Rule.

The purpose of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., includes 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 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 it is approved by the Office of Management and Budget (OMB) under the PRA and it 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).

This rulemaking potentially affects specific information collections Criteria and Non-Criteria Agricultural Clearance Order Forms and H-2A Application for Temporary Employment Certification in States and by Employers Covered by Injunction of the Farmworker Protection (OMB 1205-0562), H-2A Temporary Agricultural Labor Certification Program (OMB 1205-0466), and Agricultural Recruitment System Forms Affecting Migratory Farm Workers (OMB 1205-0134)). Any changes the Department might contemplate making to these collections will be communicated through an upcoming 60-day Federal Register Notices. Through these notices, the Department will request public comments that will be later addressed by publishing 30-day Federal Register Notices and submitting information collection requests to OMB.

E.O. 13132, Federalism, 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The E.O. requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The E.O. also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.

The Department has examined this proposed rescission and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

The Department has reviewed this proposed rule in accordance with E.O. 13175 and has determined that it does not have tribal implications. This proposed rule does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and tribal governments.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of E.O. 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, (3) provide a clear legal standard for affected conduct rather than a general standard, and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of E.O. 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies the preemptive effect, if any, (2) clearly specifies any effect on existing Federal law or regulation, (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction, (4) specifies the retroactive effect, if any, (5) adequately defines key terms, and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General.

Section 3(c) of E.O. 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOL has completed the required review and determined that, to the extent permitted by law, this proposed rescission meets the relevant standards of E.O. 12988.

The Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4, codified at 2 U.S.C. 1501 et seq. ) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. UMRA requires Federal agencies to assess a regulation's effects on State, local, and tribal governments, as well as on the private sector, except to the extent the regulation incorporates requirements specifically set forth in law. Title II of the UMRA requires each Federal agency to prepare a written statement assessing the effects of any regulation that includes any Federal mandate in a proposed or final agency rule that may result in $100 million or more expenditure (adjusted annually for inflation) in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. A Federal mandate is any provision in a regulation that imposes an enforceable duty upon State, local, or tribal governments, or upon the private sector, except as a condition of Federal assistance or a duty arising from participation in a voluntary Federal program.

The Department examined this proposed rescission according to UMRA and its statement of policy and determined that the rescission does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. As a result, the analytical requirements of UMRA do not apply.

Pursuant to E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, 53 FR 8859 (Mar. 18, 1988), the Department has determined that this proposed rescission would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This proposed rescission would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, the Department has concluded that it is not necessary to prepare a Family Policymaking Assessment.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002). The Department has reviewed this proposed rescission under the OMB and has concluded that it is consistent with applicable policies in those guidelines.

For the reasons stated in the preamble, the Department of Labor proposes to amend 20 CFR parts 651, 653, 655, and 658 and 29 CFR part 501 to read as follows:

The additions and revisions read as follows:

The revision reads as follows:

The additions and revisions read as follows:

The additions and revisions read as follows:

The additions and revisions read as follows:

On September 10, 2019, the Department of the Treasury (Treasury Department) and the IRS published a notice of proposed rulemaking (REG-125710-18) in the Federal Register (84 FR 47455) under section 382(h) (2019 proposed regulations) that would have modified §§ 1.382-2 and 1.382-7 of the Income Tax Regulations (26 CFR part 1). On January 14, 2020, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-125710-18) in the Federal Register (85 FR 2061) under section 382(h) (2020 proposed regulations) that modified certain provisions in the 2019 proposed regulations.

The 2019 proposed regulations would have adopted as mandatory, with certain modifications, (i) the safe harbor net unrealized built-in gain (NUBIG) and net unrealized built-in loss (NUBIL) computation provided in Notice 2003-65, 2003-40 I.R.B. 747, based on the principles of section 1374 of the Code, and (ii) the “1374 approach” (as described in Notice 2003-65) with respect to the identification of recognized built-in gain (RBIG) and recognized built-in loss (RBIL).

The 2019 proposed regulations would have modified the rules in §§ 1.382-2 and 1.382-7: (i) to eliminate the treatment of depreciation deductions on certain built-in gain assets as RBIG, in the absence of actual gain or income recognized by the loss corporation; (ii) to exclude adequately secured nonrecourse liabilities and all recourse liabilities from the initial NUBIG/NUBIL calculation, and treat post-change cancellation-of-indebtedness income as RBIG only in certain circumstances; (iii) to introduce a “consistency rule” in order to exclude certain change-date items allocated to the pre-change period (as defined in § 1.382-6(g)(2)) from the calculation of NUBIG and NUBIL; (iv) to exclude prepaid income as an item of RBIG; (v) to exclude dividends paid on stock during the recognition period (as defined in section 382(h)(7)) as RBIG; and (vi) to exclude section 382 disallowed business interest carryforwards (as defined in § 1.382-2(a)(7)) as items of RBIL under section 382(h)(6)(B).

The 2019 proposed regulations reflected the view that the certainty provided by the 1374 approach would streamline the calculation of built-in gains and built-in losses for taxpayers and the administration of section 382(h) for the IRS. In developing the 2019 proposed regulations, the Treasury Department and the IRS also considered the “338 approach” (as described in Notice 2003-65) to be more complex than the 1374 approach and to result in overstatements of RBIG and RBIL.

The Treasury Department and the IRS received several comments in response to the 2019 proposed regulations, many of which were critical of the foregoing view. In response to the comments received, the Treasury Department and the IRS are withdrawing the 2019 proposed regulations and the 2020 proposed regulations.

The Treasury Department and the IRS are continuing to study the issues addressed in the 2019 proposed regulations and expect to issue a revised notice of proposed rulemaking regarding such issues. By the terms of Notice 2003-65, taxpayers may continue to rely on the approaches set forth therein for purposes of applying section 382(h) to an ownership change that occurs prior to the effective date of temporary or final regulations under section 382(h). See Notice 2003-65, Part V.

The principal author of this notice is Brian R. Loss of the Office of Associate Chief Counsel (Corporate). However, other personnel from the Treasury Department and the IRS participated in its development.

Under the authority of 26 U.S.C. 7805, the notices of proposed rulemaking (REG-125710-18) that were published in the Federal Register on September 10, 2019 (84 FR 47455), and January 14, 2020 (85 FR 2061), are withdrawn.

For nearly a century, registered apprenticeship has stood as a foundational, employer-led model of workforce development anchored in private sector leadership and real-world skill development that accelerates the recruitment, training, and retention of highly proficient workers in the skilled occupations employers need. This training model supports the development of high quality, skilled workers without the high cost or inefficiencies often associated with traditional academic pathways. Registered apprenticeship offers a high-quality, industry-driven career pathway in which employers can develop and prepare their future workforce, and individuals can obtain paid work experience with a mentor and receive progressive wage increases; classroom instruction; and a portable, nationally recognized credential. Registered apprenticeship programs are industry-vetted and are approved and validated by DOL or a State Apprenticeship Agency (SAA).

Employers and industry stakeholders continuously refine the registered apprenticeship model to meet the changing workforce system demands and emerging skills needs. Apprentices gain affordable, hands-on training while earning wages and receiving guidance from qualified journeyworkers. Program sponsors use registered apprenticeship to build a skilled, job-ready workforce that enhances their competitiveness and yields strong returns on investment. According to the Common Reporting Information System, individuals who complete registered apprenticeship programs earn an average annual salary of approximately $84,000, exceeding the average earnings of associate degree holders, which range from $50,000 to $56,000 per year. 1 Employers also report positive outcomes resulting from their participation in registered apprenticeship; for example, an Abt Associates report that surveyed employers who participate in registered apprenticeship found that registered apprenticeship programs delivered a return on investment of 44 percent, reduce staff turnover, boost productivity, and strengthen the talent pipeline. 2

Registered apprenticeship programs also yield a 90 percent employment retention rate, indicating that most graduates remain in the workforce after completing their training. 3 Over the course of their careers, registered apprenticeship completers earn more than $300,000 (including benefits) above what their non-apprentice peers earn on average, highlighting the long-term economic advantage of this training model. 4

Registered apprenticeship programs are voluntarily sponsored by a wide range of organizations, including employers of all sizes—among them Federal, State, and local governments, employers groups, associations, joint labor-management organizations, workforce intermediaries, and educational institutions. Together, these stakeholders comprise the National Apprenticeship System, a voluntary network of registered apprenticeship programs and their sponsors, SAAs, and industry leaders who design apprenticeship training to meet their workforce needs. 5

On April 23, 2025, President Trump issued Executive Order (E.O.) 14278, Preparing Americans for High-Paying Skilled Trade Jobs of the Future, directing the Secretaries of Labor, Education, and Commerce to strengthen the nation's workforce development system. The E.O. affirms the Administration's commitment to expanding access to high-quality, skills-based career pathways aligned with emerging labor market demands and national economic priorities, including the nationwide goal of reaching and surpassing one million active apprentices. E.O. 14278 positions registered apprenticeship as a key workforce development strategy by promoting expansion into “new industries and occupations, including high-growth and emerging sectors” and by enhancing alignment with career and technical education.

As of Fiscal Year (FY) 2025, the registered apprenticeship system supports 678,014 active apprentices nationwide. This represents an 88.45% increase in participation since FY 2015. The data reflects sustained long-term growth in registered apprenticeship participation across industries and geographies, with Texas and Ohio among the leading states by apprentice volume. The data shows that registered apprenticeship programs are scalable, and an effective workforce development model aligned with both industry demand and national economic goals. 6

Despite the growth it has achieved over the past decade, registered apprenticeship remains an underutilized approach for developing the skills of America's workforce. In the United States, the proportion of workers who have participated in registered apprenticeship programs constitutes approximately 0.2 percent of the labor force; this is a significantly lower figure than the percentage of apprentices in the labor force seen in several other nations with highly developed apprenticeship systems, including Canada (2.2 percent), Britain (2.7 percent), Australia (3.7 percent), and Germany (3.7 percent). 7 The Department is currently seeking ways to promote greater uptake of registered apprenticeship in the United States, including removing unnecessary administrative barriers to the registration of new apprenticeship programs that have inhibited the accelerated adoption of this proven workforce development model. Broader adoption of registered apprenticeship by employers across industries and occupations will be necessary to achieve the Administration's goal of one million active apprentices. More importantly, widespread adoption of the registered apprenticeship model will ensure that more American workers possess the occupational skills and competencies that employers require to drive innovation and economic expansion.

The National Apprenticeship Act of 1937 (NAA) authorizes the Department to formulate and promote labor standards necessary to safeguard the welfare of apprentices. 8 Within the Department, this responsibility falls to the Employment and Training Administration's (ETA) Office of Apprenticeship (OA). OA registers apprenticeship programs that meet the regulatory requirements set forth in the Code of Federal Regulations (CFR) at 29 CFR parts 29 and 30. The original version of the regulation at 29 CFR part 29 (part 29), titled “Labor Standards of Apprenticeship,” was issued in 1977, and amended in 2008. Part 29 implements the NAA by establishing minimum labor standards necessary to safeguard the welfare of apprentices. These include: policies and procedures for the registration, cancellation, and deregistration of apprenticeship programs; safety requirements; progressive wage standards; apprentice-to-journeyworker ratios; apprenticeship agreement content; and the criteria for the recognizing SAAs as Registration Agencies. 9

The first version of the regulation at 29 CFR part 30 (part 30), titled “Nondiscrimination in Apprenticeship and Training,” was published in December of 1963, 10 more than six months before President Lyndon B. Johnson signed the Civil Rights Act into law in July of 1964. Title VII of the Civil Rights Act contains landmark protections for workers against employment discrimination, and its protections extend to apprentices. 11 The 1963 version of the Department's part 30 regulation prohibited discrimination based on race, creed, color, or national origin in all phases of a registered apprenticeship program. In the preamble of the NPRM that preceded the publication of the 1963 version of the part 30 final rule, the Department declared that “discrimination based on race, creed, color, or national origin has no place in American life today, particularly in the programs by which young people acquire the skills that determine their future employment prospects,” (see 28 FR 11313).

In 1971, the Department revised part 30, renaming it Equal Employment Opportunity in Apprenticeship and Training. The 1971 amendments to the regulation prohibited program sponsors from discriminating against apprentices on the basis of sex and religion (thus bringing the regulation into alignment with Title VII of the Civil Rights Act of 1964) and introduced a new requirement for apprenticeship programs with five or more apprentices to establish a written affirmative action program (AAP). 12 The 1971 revision also clarified that such AAPs must include female apprentices.

In 2016, the Department again revised the content of part 30 by expanding the scope of protected characteristics covered by the nondiscrimination provision of the regulation to include, among other things, age, disability, and genetic information. The 2016 version of the part 30 regulation  13 (2016 final rule) also subjected apprenticeship program sponsors to an expanded set of administratively burdensome requirements, such as: mandating that sponsors provide anti-harassment training to apprentices and to all personnel connected with the administration of their apprenticeship program; imposing a highly complex scheme of demographic and utilization analyses on sponsors to determine whether apprenticeship programs with five or more apprentices were meeting their respective AAP goals; and requiring program sponsors subject to the AAP provision of the regulation to review their personnel practices on an annual basis to determine their continuing compliance with the foregoing requirements.

The 2016 final rule imposed excessive administrative requirements—as well as affirmative action obligations that are legally vulnerable (which are described in greater detail below)—upon apprenticeship program sponsors. In the Department's view, the imposition of such onerous and burdensome regulatory mandates on sponsors impede the goal of apprenticeship expansion. Such governmental overreach can serves to undermine the establishment, development, and expansion of innovative, high-quality apprenticeship programs. At a time when the rapid expansion of high-quality apprenticeship training is urgently needed to equip Americans of all backgrounds with the occupational skills they need to succeed in a competitive global marketplace, it is imperative that the Department revise and rescind outdated, burdensome, and legally vulnerable regulatory provisions that prevent the accelerated expansion of registered apprenticeship. The Department invites public comments from all interested parties on this proposal to significantly revise the part 30 regulation. The Department is particularly interested in comments from registered apprenticeship stakeholders about any reliance interests that may be impacted by this proposed rule.

The Department has determined that revising part 30 is necessary to remove regulatory requirements that impose unnecessary administrative burdens on registered apprenticeship program sponsors and hinder the continued growth of this successful workforce development model. In addition to advancing the Department's broader goal of expanding registered apprenticeship, the proposed changes are intended to bring the regulation into alignment with nondiscrimination law. These revisions would eliminate a duplicative and outdated equal employment opportunity framework that applies only to registered apprenticeship and would instead adopt a streamlined approach consistent with the Administration's directive to reduce regulatory burdens. By simplifying compliance obligations and focusing on core legal protections, the Department anticipates that this proposed deregulatory action will support broader program participation and expand registered apprenticeship opportunities for all Americans.

Recent U.S. Supreme Court decisions have clarified the legal limitations on race- and sex-conscious measures under the Equal Protection Clause and Federal civil rights laws. These developments raise serious questions about the validity of certain affirmative action-related provisions in part 30, particularly those that incentivize or induce sponsors to make decisions based on protected characteristics. In light of recent court decisions, the Department has determined that revising part 30 is necessary to ensure the regulatory framework for registered apprenticeship is fully aligned with nondiscrimination standards and legal precedent. 14

Part 30 was last revised in 2016 and contained an expanded range of nondiscrimination and affirmative action requirements for registered apprenticeship program sponsors. The prescriptive affirmative action planning and recordkeeping requirements, among others, have proven burdensome, duplicative, and—following recent legal decisions—potentially unlawful. For example, the protected characteristics contained in § 30.3(a) of the current part 30 rule are duplicative of the nondiscrimination requirements contained in a number of Federal civil rights statutes, including Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA). In addition, the Department believes that the affirmative action requirements found throughout the existing part 30 regulation conflict with merit principles, may potentially induce the illegal selection of apprentices based on race and sex, and likely will no longer withstand legal scrutiny.

This rulemaking would streamline the part 30 regulation to reduce administrative complexity and compliance burdens, especially for small and mid-sized employers, while preserving core protections against unlawful discrimination. The Department has determined that part 30, as currently structured, is overly prescriptive and unnecessarily restrictive, characteristics which impede the diversification of industries within the registered apprenticeship ecosystem and are not necessary to safeguard the welfare of apprentices. The Department believes that establishing a clear and concise requirement to comply with all Federal and State laws and regulations prohibiting discrimination aligns more closely with the Department's fundamental statutory mandate to safeguard the welfare of apprentices under the NAA.

Finally, the proposed revision to the part 30 regulation would align with and effectuate the directives contained in recent Executive Orders issued by the current Administration. E.O. 14278, Preparing Americans for High-Paying Skilled Trade Jobs of the Future (90 FR 1525, April 28, 2025), directs Federal agencies to identify barriers that prevent the acceleration of the workforce system, including the expansion of registered apprenticeship. Additionally, E.O. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (90 FR 8633, Jan. 31, 2025), directs Federal agencies to “terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” This NPRM provides clarity to registered apprenticeship stakeholders on the Department's plans to implement and align with these Executive Orders and the Administration's priority to promote economic prosperity.

In the Department's view, imposing an elaborate set of affirmative action requirements upon registered apprenticeship program sponsors (particularly those that enroll five or more apprentices) is not only administratively burdensome and vulnerable to legal challenge under the laws governing nondiscrimination; it also tends to promote the development of pernicious and divisive group-based preferences within our society, thereby undermining the goal of ensuring equality of opportunity for every individual that participates in the labor force. The Department holds to a more egalitarian vision that is consistent with longstanding American values: that all applicants for registered apprenticeship programs should be evaluated and selected strictly on the basis of individual merit and demonstrated potential, and that a person's race, color, religion, national origin, sex, or age must never be considered by a sponsor as a basis for either rejecting or granting preferential treatment to anyone seeking admission to a registered apprenticeship program.

Accordingly, this proposed revision to part 30 seeks to ensure genuine equality of opportunity for all persons enrolled in (or seeking admission into) an apprenticeship program by restoring the original focus and purpose of the 1963 version of the regulation: namely, to require that all registered apprenticeship programs be operated on a nondiscriminatory basis. To realize this goal, the proposed revision to part 30 would reaffirm the obligation of sponsors to conduct their apprenticeship programs in accordance with all applicable Federal and State laws governing nondiscrimination in the workplace, while also rescinding the provisions of the current regulation that obligate sponsors to engage in legally questionable affirmative action practices. This proposed rebalancing of the regulation would thus bring the content of part 30 into alignment with the governing law on nondiscrimination and, at the same time, substantially reduce the administrative burdens placed on program sponsors.

In light of recent Supreme Court decisions addressing the use of racial preferences in admission selections, the Department believes that the affirmative action obligations in part 30 imposed on registered apprenticeship sponsors with five or more apprentices are legally vulnerable, and should be rescinded. As the Court stated in Students for Fair Admissions (SFFA) v. President and Fellows of Harvard College, “[d]istinctions between citizens solely because of their ancestry are by their very nature odious to a free people whose institutions are founded upon the doctrine of equality.” 600 U.S.181, 208 (2023) (hereinafter SFFA ). This principle, according to the Supreme Court, “cannot be overridden except in the most extraordinary case.” Id. While the current version of the part 30 regulation requires that apprentice selections be made on a nondiscriminatory basis, other provisions within the regulation may incentivize and induce sponsors with five or more apprentices in their programs to consider characteristics like race, ethnicity, and sex when making employment decisions concerning apprentices. This creates an untenable legal conflict where sponsors are required to operate their programs on a nondiscriminatory basis, while being simultaneously incentivized and induced to engage in the disparate treatment of applicants.

The affirmative action provisions currently found in part 30 require covered sponsors to establish specific numerical goals for the inclusion of women and racial and ethnic minorities in the program based on their prevalence in the local labor force. These statistical goals are imposed without regard to the many nondiscriminatory factors that may explain demographic disparities between an employer's workforce and the demographics of the available local labor market—and without any finding that the sponsor has engaged in unlawful discrimination. Sponsors that fail to demonstrate a “good faith” effort to meet these goals may face enforcement actions, including the possible deregistration of the apprenticeship program by a Registration Agency. However, part 30's regulatory mandate that a program sponsor adopt placement goals based on race and sex could be considered, in the absence of a finding of discriminatory conduct, vulnerable to legal challenge.

In the Department's view, the non-remedial affirmative action requirements in part 30 effectively place a finger on the scale for certain apprenticeship applicants based on their race, ethnicity, or sex—without any showing that a given sponsor has engaged in discriminatory conduct warranting remedial action. These provisions raise legal concerns similar to those addressed by the Supreme Court in SFFA, where the Court rejected college affirmative action programs that “concluded, wrongly, that the touchstone of an individual's identity is not challenges bested, skills built, or lessons learned but the color of their skin.” 600 U.S. at 215-216, 231. Regulations that incentivize and induce the adoption of certain practices that can lead to disparate treatment in employment decisions based on race, color, ethnicity, or sex “cannot be reconciled with the guarantees of the Equal Protection Clause.” Id. at 230. As such, they must be rescinded.

A similar principle was affirmed in Ames v. Ohio Department of Youth Services, 605 U.S. _, (2025) (slip op.), where a unanimous Supreme Court held that, “[a]s a textual matter, Title VII's disparate-treatment provision draws no distinctions between majority-group plaintiffs and minority-group plaintiffs. Rather, [42 U.S.C. 2000e-2(a)(1)] makes it unlawful `to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin' (emphasis added).” Thus, even if the use of placement goals or action-oriented measures could potentially be justified on a theory of underutilization under Ames, there is no legal justification for limiting the placement goals and action-oriented measures to only women and minorities. As Justice Jackson's opinion in Ames explains, Supreme Court caselaw has long been “clear that the standard for proving disparate treatment under Title VII does not vary based on whether or not the plaintiff is a member of a majority group.” Id. at *6. Similarly, nothing in the NAA justifies creating different standards or regulatory requirements for women or minorities or treating race and sex differently from the other protected categories of religion and national origin. If men, whites, or persons of a particular religion or national origin were also being underutilized based on the DOL's statistical regulatory formula, the regulations failed to impose any affirmative action measures or require placement goals to ensure persons with those characteristics were entitled to equal opportunity in employment.

Moreover, the Department's prior rationale for establishing non-remedial affirmative action requirements on employers and sponsors rested on the abstract premise that an employer's or sponsor's workforce should mirror the demographic composition of the available local labor force—even in the absence of any evidence that disparities were caused by unlawful discrimination. This theory relied on a set of unsupported assumptions. In reality, there are numerous nondiscriminatory factors that may explain differences between a sponsor's workforce and the available local labor force, including applicant interest, qualifications, geography, industry-specific dynamics, and other variations on an individualized basis. Nevertheless, the current regulation imposes demographic utilization goals and compliance obligations on sponsors without accounting for these legitimate variables. And apart from the flawed foundational premise of the rationale, the statistical analyses that sponsors are required to undertake in determining whether utilization goals are required by regulation rely on inconsistent line drawing in determining what is the relevant recruitment area against which to compare the sponsor's apprenticeship program workforce. That sponsors and not the registration agency are the ones who determine the relevant recruitment area pursuant to the regulations does not make this exercise any less inconsistent. It is actually more inconsistent given that two similarly situated apprenticeship sponsors in the same geographic area could select different geographic lines for the relevant recruitment area analysis—and as a result, one sponsor could conclude that utilization goals are regulatorily required and the other sponsor could conclude those measures are not regulatorily required. The potential unlike outcomes between similarly situated sponsors violates the fundamental principle that regulations should lead to like outcomes between regulated entities.

The Department's proposal to significantly streamline the part 30 regulation and focus on compliance with existing nondiscrimination laws also reflects its conclusion that a separate oversight, investigative, and enforcement framework specific to registered apprenticeship is not necessary. While the current part 30 regulation imposes substantial administrative burdens—which may deter employers from registering apprenticeship programs—it has not demonstrated clear benefits in terms of improved protections against unlawful discrimination for apprentices. The Department has determined that the costs and disadvantages of maintaining this duplicative and complex regulatory framework—including complex burdens, stakeholder confusion, and a chilling effect on program participation—outweigh any potential benefits. As such, if finalized as proposed, this rule would eliminate redundant requirements while preserving core legal protections through existing Federal and State nondiscrimination enforcement systems.

Part 30 was originally intended to ensure that registered apprenticeship programs operated on a nondiscriminatory basis, with deregistration available as a remedy for noncompliance. However, the Department's historical records show that it has never initiated deregistration proceedings against a sponsor based on a violation of part 30. Although the Department has received a relatively small number of complaints over the years from apprentices alleging instances of discrimination, its longstanding practice has been to refer such complaints to the Equal Employment Opportunity Commission (EEOC), the Federal agency with primary authority to enforce Federal laws that prohibit discrimination against employees and job applicants.

Regardless of part 30, any employee of, or job applicant for employment with, a covered employer in the United States—including apprentices—may file a charge of unlawful discrimination with the Equal Employment Opportunity Commission (EEOC) against covered employers. Apprentices may also seek relief through other established enforcement entities, such as State fair employment practice agencies or State attorneys general offices. These enforcement bodies are better positioned than Registration Agencies (OA or SAAs) to investigate discrimination allegations and facilitate appropriate resolution. Under the Department's proposal, OA would retain the authority to deregister an apprenticeship program if a competent enforcement agency or court issues a final determination of unlawful discrimination.

As discussed above, part 30 not only imposes significant administrative burdens on registered apprenticeship program sponsors, but also creates legal uncertainty in light of applicable nondiscrimination law. Many of its requirements—such as establishing utilization goals based on race and other demographic characteristics—closely resemble policies that have been struck down by the Supreme Court for inserting impermissible racial preferences into selection processes ( e.g., SFFA ). As a result, the Department has concluded that part 30 regulation is increasingly misaligned with, and in some respects contrary to, current nondiscrimination law.

Moreover, part 30 regulation reflects a static and prescriptive framework that lacks the flexibility to evolve and adapt. Its requirements are duplicative of existing Federal and State protections provided in nondiscrimination law, ineffective in achieving their intended goals, and in some cases, legally questionable. To address these concerns, the Department proposes replacing the current part 30 regulatory structure with a simplified standard: that all registered apprenticeship sponsors must comply with applicable Federal and State laws prohibiting discrimination based on race, color, religion, national origin, sex, age (40 or older), genetic information, or disability. By anchoring the nondiscrimination obligation to existing legal authorities concerning nondiscrimination, the proposed approach ensures that registered apprenticeship programs remain aligned with the full scope of civil rights protections—without the need for continual regulatory revisions.

With respect to the requirement contained in § 30.7 of the current regulation that establishes a 7 percent utilization goal for the employment of qualified individuals with disabilities as apprentices, the Department's experience in administering the disability AAP provisions has shown them to be overly burdensome for sponsors who struggle to understand the complex steps of conducting the workforce and utilization analyses, as well as the requirements surrounding the request for and maintenance of self-identification information. In line with the directives of Executive Orders 14192 and 14278, the Department is proposing to remove these regulatory burdens that impose costs on stakeholders and serve as barriers inhibiting broader sponsor participation in the registered apprenticeship system. The Department is therefore proposing to remove these requirements.

The utilization goal also raises the risk that employers will engage in pre-employment disability-related inquiries of apprentice applicants before a conditional job offer is made, which is generally not allowed by the Americans with Disabilities Act.

President Trump has recently issued a number of Executive Orders intended to advance the Administration's goals of building a skilled workforce, unleashing prosperity, removing restraints on national economic growth through deregulation, and restoring merit-based opportunity. The Department is committed to developing strategies and enacting bold changes to align its programs and policies with the Administration's policy directives. The Department's proposal to streamline the part 30 regulation for registered apprenticeship represents a critical, strategic policy change that addresses policy directives across several of the Administration's Executive Orders, as discussed below.

In E.O. 14192, Unleashing Prosperity Through Deregulation, 90 FR 9065 (issued on January 31, 2025), the President directed Federal agencies to assess their regulations and pursue deregulatory actions to eliminate regulations that impose costs, create confusion, hamper innovation, or otherwise restrain economic growth and opportunities for Americans. The Department has applied this lens to its programs and their governing regulations and has identified a wide range of deregulatory actions to support the Administration's deregulatory policy priorities, including this proposal to substantially revise and streamline the part 30 regulation. The proposed rule would eliminate eleven entire sections of the part 30 regulation, including sections on affirmative action plans that contain various burdensome requirements for program sponsors. The Department's proposed part 30 regulation would only contain one straightforward requirement for program sponsors—that they comply with all applicable Federal and State nondiscrimination laws—which would not impose any additional costs for sponsors. The Department's analysis of the potential cost savings associated with its proposal to remove all part 30 requirements beyond the streamlined nondiscrimination requirement estimates that sponsors and Registration Agencies would save over $65 million per year. 15 This significant cost savings, along with the increased clarity for the regulated community that would result from streamlining the part 30 regulation, aligns with the Administration's deregulatory policy directives as stated in E.O. 14192.

In E.O. 14173, Ending Illegal Discrimination and Restoring Merit Based Opportunity, 90 FR 8633 (Jan. 31, 2025), the President maintained that his Administration was committed to enforcing, for the benefit of all Americans, the protections contained in longstanding civil rights laws that prohibit discrimination based on race, color, religion, sex, and national origin. At the same time, the President stated in the E.O. that the utilization of pernicious race- and sex-based preferences and policies by the Federal Government and other influential institutions of American society not only contravenes the letter and spirit of these civil rights laws, but also operates to undermine the traditional American values of individual initiative, excellence, and hard work. Accordingly, section 2 of E.O. 14173 directs all executive departments and agencies “to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements” which operate to undermine the protections against discrimination afforded to individual Americans by longstanding Federal civil rights laws.

In E.O. 14278, Preparing Americans for High-Paying Skilled Trade Jobs of the Future, 90 FR 17525 (April 28, 2025), President Trump directed the Secretaries of Labor, Commerce, and Education to develop a plan to reach and surpass 1 million new active apprentices in Registered Apprenticeship programs. The President's E.O. also expressed the Administration's commitment to further protecting and strengthening Registered Apprenticeships as a means of unlocking the limitless potential of the American worker.

To facilitate the accomplishment of the Administration's important policy goals described in the foregoing Executive Orders, the Department is determined to rescind legally questionable regulatory mandates and to reduce, to the extent feasible, any existing administrative and regulatory burdens on employers, apprenticeship program sponsors, SAAs, workforce intermediaries, and other stakeholders. In particular, the Department's proposed revisions to the part 30 regulation are targeted to remove regulatory requirements that impose onerous administrative burdens and costs on stakeholders, that are misaligned with emergent policy priorities, that unnecessarily expose stakeholders to legal risk, and that inhibit the accelerated establishment and growth of high-quality registered apprenticeship programs.

In evaluating the regulations for registered apprenticeship programs under part 30, the Department has identified provisions that conflict with recent presidential directives and raise legal concerns. Specifically, the requirement that sponsors with five or more apprentices develop affirmative action plans contravenes the directive in E.O. 14173 to “terminate all discriminatory preferences” embedded in federal regulation. Similarly, the reference to “gender identity” that appears in the “equal opportunity pledge” at 29 CFR 30.3(c) of the current regulation is at odds with the policy directives contained in E.O. 14168.

The Trump Administration has identified registered apprenticeship as a cornerstone of its strategy to build a demand-driven, skilled workforce. As labor market demands continue to evolve, the need for an apprenticeship system that is simultaneously scalable and employer-responsive has become increasingly urgent. In facing that reality, the Department is committed to the exponential expansion of registered apprenticeship—a feat that can only be accomplished through the promulgation of thoughtful regulations free of unnecessary administrative burden.

This rulemaking addresses key structural and regulatory barriers that have long inhibited broader participation in the registered apprenticeship system. Among deterrents to participation in the voluntary system cited by employers, in particular small businesses, are barriers related to compliance with the Equal Employment Opportunity (EEO) regulations at part 30. The simplification of regulatory obligations, while maintaining a strong baseline commitment to nondiscrimination, preserves key protections that serve to safeguard the health and welfare of apprentices. This action serves as a recalibration that will foster expansion, drive employer interest, and bolster registered apprenticeship as the premier workforce development model.

The expansion of registered apprenticeship is predicated on the voluntary participation of employers across a wide range of industries. Stakeholders have long held that the prescriptiveness of part 30 poses a substantial barrier to employer entry and program sustainability. It is certainly understandable how such challenges might be particularly acute for small businesses, which comprise the majority of American employers and figure prominently in the Administration's economic development agenda. Absent sufficient legal or human resources capacity, many employers have suggested that compliance with part 30 constitutes a significant barrier to participation in registered apprenticeship. In light of these sentiments, DOL is concerned that the continued imposition of the extensive administrative requirements contained in part 30 could restrain the system's full growth potential and undermine the Department's ambitious goals to expand the system.

The Department concedes that prescriptive regulatory mandates are antithetical to the promotion and support of an employer-centric model. Creating a compliance environment that is both responsive and adaptive while eliminating unnecessary burden will not only serve to attract additional employers in sectors that have long held strongholds in the registered apprenticeship system but will also be a beacon to employers in new and emerging sectors. By proactively demonstrating an understanding of the operational priorities of employers, the Department increases the likelihood of increased employer buy-in and long-term registered apprenticeship system participation.

As mentioned previously, the registered apprenticeship system has seen consistent growth over the last decade while maintaining strong outcomes, suggesting that the model's continued growth would provide even more opportunities for Americans to access high-skilled and high-paying jobs.

While construction remains the largest sector for apprenticeships, accounting for approximately 244,858 active apprentices (about 36% of the national total), there has been notable diversification. As of FY 2025, more than 430,000 apprentices are now training in non-construction sectors, including public administration (149,782), educational services (83,777), manufacturing (30,479), and health care and social assistance (18,824). These trends point to growing interest across a wider range of industries—but also highlight where barriers to entry may be limiting broader adoption.

Despite these advancements, a barrier to the further growth and occupational diversification of the apprenticeship model has been the onerous and time-consuming requirements for sponsors to initially receive and consistently maintain registration for an apprenticeship program. In a survey of employers participating in the Department's American Apprenticeship Initiative (AAI), 16 the mean registration cost per apprentice was found to be over $1,000, with one employer reporting a cost of over $12,000 per apprentice.

The current part 30 requirements, such as requiring the development of an affirmative action plan, require substantial staff time and contribute to these significant costs. Many of these costs are also ongoing instead of one-time costs associated with the initial registration of a program. These ongoing costs under part 30 include the requirements to establish an equal employment opportunity (EEO) coordinator (29 CFR 30.3(b)(1)), conduct anti-harassment training (29 CFR 30.4(i)), meet record-keeping requirements (29 CFR 30.12), and (for programs with more than five apprentices) conducting workforce and utilization analyses (29 CFR 30.5(b)). 17 The Department estimated that the current part 30 regulations cost over $65 million annually. These costs create burdens for the sponsors of apprenticeship programs and disincentivize registering an apprenticeship program.

The current requirements under part 30 also create a perverse incentive to enroll fewer apprentices. Since sponsors with fewer than five apprentices are exempt from the affirmative action plan requirements under part 30, the current regulation creates a disincentive for sponsors to recruit further apprentices and grow the size of their program. A sponsor may avoid further growing their program to more than five apprentices to avoid having to dedicate staff time and resources to meet the requirements of an affirmative action plan if the program exceeds five apprentices. These costs imposed on sponsors under part 30 are likely more significant for smaller firms who have fewer staff and resources or less expertise in human resource management.

The costs and disincentives created by the current part 30 regulations may also be greater in new and emerging industries that are less familiar with the requirements of registered apprentices. Without familiarity of the registered apprenticeship system or contacts within their industry to demystify the process, potential sponsors in these newer industries may need to spend more time to research the existing requirements and how to comply with the highly complex regulatory requirements mandated by part 30. Sponsors and employers in these newer industries may also overestimate the time and resources needed to comply with the requirements under part 30 because of their unfamiliarity and may forgo developing or registering an apprenticeship program altogether because of concerns about the compliance burden and resources needed.

Streamlining part 30 to focus on ensuring registered programs to comply with existing laws would eliminate these burdens and program registration barriers for sponsors and employers and remove perverse incentives that may artificially limit the number of apprentices served by each program. These proposed changes to part 30 would ultimately help further accelerate the overall growth of the registered apprenticeship model and allow it to spread to additional industries less familiar with the system, and with fewer barriers.

To further its commitment to building a modern and cohesive National Apprenticeship System that delivers high-quality training and career pathways to all American workers, this proposed rulemaking also aims to actively address the key challenge of bifurcation between states operated under the direction of the OA States and those operated by federally recognized SAA States. While this dual structure has been foundational to increased flexibility throughout the system, it has also led to divergent standards and operational inconsistencies that hamper compliance due to varying interpretations of part 30 regulatory requirements.

By revising part 30 to prioritize nondiscrimination and remove both legally suspect and burdensome reporting requirements, the Department will strengthen standards alignment and reduce systemic fragmentation while promoting universal participation. Streamlining the existing part 30 requirements—particularly those that have proven difficult to implement uniformly across State systems—will lessen the regulatory disparities that have driven bifurcation and uneven access across the national system.

The NAA allows for both federal and state-level administration of registered apprenticeship programs. In OA States, direct oversight of the state's registered apprenticeship system is the exclusive responsibility of the Department, including the enforcement of the requirements outlined in current part 30. In SAA States, State entities recognized by the Department are responsible for oversight of registered apprenticeship programs, in accordance with State-specific laws or regulations that conform with Federal regulation, including the registration of programs for both State and Federal purposes.

In practice, variances in application of the complex part 30 requirements have persisted between OA States and SAA States. In some SAA States, different constructions of State laws and regulations pertaining to EEO in apprenticeship have resulted in divergent sets of rules and requirements for registered apprenticeship program sponsors, particularly as it relates to affirmative action plans, collection of demographic information for apprentices, and targeted outreach strategies. Resistance from registered apprenticeship stakeholders compounds those challenges, resulting in registration delays and limited or uneven compliance enforcement. These divergences exacerbate negative perceptions of the registered apprenticeship system—particularly among sponsors operating in multiple jurisdictions—which has negatively impacted apprenticeship expansion.

Through this proposed rulemaking, the Department articulates a unified approach to nondiscrimination in registered apprenticeship and eliminates the requirement for SAA States to establish complex EEO State laws specific to registered apprenticeship that reach beyond nondiscrimination and impose administratively burdensome and legally suspect mandates on apprenticeship sponsors. Adoption of the proposed text will result in OA States and SAA States adhering to identical regulations that align the nondiscrimination standards for apprenticeship sponsors, registered for federal purposes, to all applicable Federal and State nondiscrimination laws, while facilitating the removal of State apprenticeship regulations, laws or policies that impose additional mandates on registered apprenticeship sponsors, and that fail to conform to or exceed what is required under the proposed revision of part 30. The Department recognizes that SAA States have developed their State apprenticeship regulations, laws or policies to conform with the administratively burdensome and legally suspect requirements imposed under the current part 30, and that achieving conformity with the proposed revision of part 30 will require States to update their policies to align with the streamlined regulatory approach to nondiscrimination in registered apprenticeship. While the proposed part 30 will establish an identical regulatory approach to nondiscrimination across the National Apprenticeship system by tying the nondiscrimination standard to compliance with Federal and State nondiscrimination laws, the proposed regulation will achieve the deregulatory goals of this rulemaking while recognizing States' ability to establish general nondiscrimination laws that apply to entities operating in their jurisdiction. This proposed regulatory approach is intended to promote the cohesion of and prevent unnecessary fragmentation within the National Apprenticeship System, while also encouraging the accelerated adoption of registered apprenticeship by potential sponsors as a proven model for upskilling the workforce.

Existing § 30.4 requires non-exempt sponsors to adopt affirmative action programs, the components of which are captured at existing §§ 30.4, 30.5, 30.6, 30.7, 30.8, 30.9, and 30.11, and to set forth that program in a written plan.

The affirmative action program requirements include conducting utilization analyses and setting goals if underutilized on the basis of race, sex, and ethnicity. As part of their affirmative action programs, sponsors are also required to review their personnel processes on an annual basis and conduct targeted outreach, recruitment and retention activities. There are also specific requirements related to individuals with disabilities, including measuring progress towards meeting a utilization goal set by OA and inviting applicants for apprenticeship to self-identify as individuals with disabilities.

As a general matter, the Department has determined that the affirmative action components of existing part 30 are unnecessarily burdensome, ineffective, and, in some cases, legally vulnerable. The specific rationale for rescinding each affirmative action component is discussed in the respective sections, below. The Department solicits comments from all interested parties, including registered apprenticeship stakeholders, regarding its proposal to rescind the AAP requirements from the part 30 regulation, particularly the extent to which the administrative burdens associated with AAP requirements have impacted the operation of their program or their decision to participate in registered apprenticeship.

Existing § 30.5 requires sponsors maintaining AAPs to assess and compare the racial, sex, and ethnic representation within each major occupation group of their program to the racial, sex, and ethnic representation available in the sponsor's relevant recruitment area. Pursuant to this section, when the sponsor's utilization of women, Hispanics or Latinos, or a particular racial minority group is significantly less than would be reasonably expected, the sponsor is required to establish a utilization goal for the affected group in accordance with § 30.6.

As discussed above, the Department believes that these provisions that cause sponsors to focus on the race, sex and ethnicity composition of the apprentice workforce are legally vulnerable because they may induce sponsors to engage in illegal race and/or sex-based decision-making in apprenticeship. The AAP requirements to set race, sex, and ethnicity-based goals may have the effect of pressuring sponsors to engage in impermissible discrimination in favor of underutilized groups. The Supreme Court's decision in SFFA v. Harvard makes clear that race-conscious selection decisions would be subject to exacting scrutiny, and an apprenticeship system that incentivizes such improper preferences would not survive legal challenge. Furthermore, the Supreme Court's recent decisions in Ames v. Ohio and Muldrow v. St. Louis held that the standard for proving disparate treatment under Title VII does not vary based on whether or not the plaintiff is a member of a majority group. No. 23-1039, 605 U. S.__ , (2025) (slip op. at 6). Thus, any individual can bring a discrimination suit under Title VII by demonstrating, as a threshold matter, that he or she suffered “some harm” in relation to an allegation of unlawful discrimination in employment (such as being adversely impacted by an employer's affirmative action policy).

For these reasons, the Department proposes to rescind the affirmative action provisions requiring utilization analysis on the basis of race, sex, and ethnicity.

Pursuant to existing § 30.6, sponsors maintaining AAPs are required to set a utilization goal equal to availability for any racial, sex, or ethnic group that is underutilized in the apprenticeship program. While § 30.6 further states that these goals are not to be used as quotas, preferences, set-asides, or as a basis for departure from merit principles, the Department has determined that the incentive created by this goal-setting provision creates too great a risk that, in practice, sponsors may use impermissible race and sex-based preferences to meet the utilization goal. Accordingly, the Department is proposing to rescind these requirements.

Existing § 30.7 requires sponsors maintaining AAPs to compare the representation of individuals with disabilities in their program to the 7% benchmark set by the Administrator. Where sponsors determine that their utilization of individuals with disabilities is less than the 7% goal, they must take steps to determine whether and/or where impediments to equal opportunity exist and undertake action-oriented programs designed to correct any problem areas.

The Department's experience in administering the disability AAP provisions (including §§ 30.7 and 30.11, discussed further below) has shown them to be overly burdensome for sponsors who struggle to understand the complex steps of conducting the workforce and utilization analyses, as well as the requirements surrounding the request for and maintenance of self-identification information. Combined with the fact that only approximately 25% of sponsors are required to maintain AAPs, the Department does not feel that these requirements have moved the needle in a meaningful way in terms of data collection or advancing equal opportunity for all apprentices. The Department is also concerned that this requirement may improperly incentivize employers to make unlawful disability-related inquiries prior to extending a conditional job offer.

The Department notes that all sponsors with 15 or more employees remain covered by title I of the Americans with Disabilities Act, 42 U.S.C. 12101, et seq., which provides robust protections against unlawful discrimination of individuals with disabilities in all terms, conditions and privileges of employment. 42 U.S.C. 12112; 29 CFR 1630.4.

In line with the directives of Executive Orders 14192 and 14278, the Department is proposing to remove these regulatory burdens that impose costs on stakeholders and serve as barriers inhibiting broader sponsor participation in the registered apprenticeship system. The substantial staff time required to collect the self-identification information and conduct the accompanying utilization analyses are ongoing costs and creates a disincentive for sponsors to recruit further apprentices and grow the size of their program. Accordingly, the Department is proposing to remove these requirements.

Existing § 30.8 requires sponsors that have found underutilization to undertake targeted outreach, recruitment, and retention activities that are likely to generate an increase in applications for apprenticeship and improve retention of apprentices from the targeted group or groups and/or from individuals with disabilities, as appropriate. As these activities are targeted to be race and/or sex-conscious, the Department believes that these required activities present the same legal risks as those posed by the utilization goals based on race, sex, and ethnicity. These requirements may put “official pressure” upon sponsors to recruit candidates of a particular race, sex, or ethnicity and thus subject persons of different races to unequal treatment by inducing sponsors to use limited recruiting resources only to the benefit of certain minority groups. MD/DC/DE Broadcasters Ass'n v. FCC, 236 F.3d 13, 15, 20-21 (D.C. Cir. 2001), cert. denied, 534 U.S. 1113 (2002).

Thus, for the same reasons discussed in § 30.5, the Department is proposing to rescind these requirements.

Existing § 30.9 requires sponsors maintaining an AAP to engage in an annual review of their personnel processes related to the administration of their apprenticeship program to ensure that the program is free from unlawful discrimination.

Similar to other AAP provisions, the Department has found this requirement to be unnecessarily burdensome and confusing to sponsors. Most sponsors are subject to federal and State nondiscrimination laws and likely already have their own mechanisms and reviews in place to ensure compliance with those laws. The Department does not need to prescribe an overly detailed and onerous method for doing so; rather, the Department trusts sponsors to determine the best means of ensuring compliance with nondiscrimination laws for their program. This approach will allow for sponsor innovation, avoids a one-size-fits-all scheme, and would align with the Administration's policy to “significantly reduce the private expenditures required to comply with Federal regulations to secure America's economic prosperity . . . .” E.O. 14192. This flexibility will also prevent duplication of nondiscrimination compliance efforts already being made by employers that participate in registered apprenticeship programs.

Existing § 30.11 requires sponsors maintaining an AAP to invite applicants and current apprentices to identify as an individual with a disability.

For the reasons discussed above at § 30.7, the Department has found this requirement to generate confusion among sponsors and SAAs, and has resulted in greater burden than expected on sponsors as they attempt to comply while simultaneously maintaining apprentice confidentiality and engaging with the Registered Apprenticeship Partners Information Data System (RAPIDS) system. Because the Department has concluded that the burden and confusion caused by this requirement outweighs any benefit from the invitation—due to limited and unreliable data collection—the Department now proposes to rescind it.

The Department proposes to rescind § 30.10, which governs how sponsors may select apprentices. The section provides that sponsors may use any method of combination of methods for selection of apprentices provided the method(s) meet the criteria set out in the section. These provisions are duplicative of Title VII's prohibition against discrimination in selections, and thus are unnecessary. Title VII contains detailed prohibitions against unlawful employment practices, including practices related to selection. See 42 U.S.C. 2000e-2. Additionally, current § 30.10 contains requirements that exceed what is required by Title VII. Specifically, the Uniform Guidelines on Employee Selection Procedures (UGESP)—with which current § 30.10 requires compliance—only provides guidance for EEOC and employers regarding the validity of selection procedures. See 29 CFR 1607.1 (“These guidelines incorporate a single set of principles which are designed to assist employers . . . to comply with the requirements of Federal [nondiscrimination] law”); Equal Emp. Opportunity Comm'n v. Crothall Servs. Grp., Inc., No. CV 15-3812, 2016 WL 3519710, at *7 (E.D. Pa. June 28, 2016) (internal citations omitted) (courts have found nonbinding “UGESP's discretionary principles for determining the validity of selection procedures,” in contrast to its recordkeeping requirement). This inconsistency between OA and Title VII standards, which sponsors also currently must follow, has created confusion for sponsors. This proposal removes the conflicting framework that was created by existing § 30.10.

The Department's proposed approach eliminates § 30.10 in favor of a single, consistent requirement that sponsors comply with applicable federal and State nondiscrimination laws. The proposal eliminates the requirement that employers use a more proscriptive selection procedure for apprentices than they would for other employees. This will reduce compliance complexity and legal uncertainty while preserving strong protections against discriminatory selection practices. It will also reduce confusing and burdensome requirements that deter sponsors from participating in registered apprenticeship, in line with the Department's goal of growing high-quality, skills-based career pathways, including apprenticeship opportunities in new sectors.

The Department proposes to rescind § 30.17, which prohibits intimidation, and retaliation against individuals exercising rights under part 30. While the Department supports protections against retaliation, similar protections are already well-established and enforceable under existing federal and State civil rights laws.

Maintaining a separate, apprenticeship-specific retaliation provision is both duplicative and legally unnecessary. The Department believes it is more appropriate and effective for such allegations to be addressed by agencies with jurisdiction and enforcement authority under those statutes, such as the EEOC.

Accordingly, the Department proposes to remove § 30.17 and instead require sponsors to comply with all applicable laws prohibiting retaliation and interference, thereby streamlining the regulatory framework while preserving robust protections for apprentices.

The “Purpose and Applicability” introductory section of the proposed rule would substantially revise and streamline the content of the corresponding “Purpose, applicability, and relationship to other laws” provision that is found at section 1 of the current part 30 regulation. Among other things, the revised § 30.1 would, consistent with the policies and rationales outlined and described above, remove all references to affirmative action efforts and would also dispense with redundant and repetitive language pertaining to protected bases and complaint processes, each of which are addressed fully in later sections of the updated regulatory text. The revised § 30.1 states clearly that the purpose of the part 30 regulation is to “establish a uniform Federal standard prohibiting illegal discrimination against apprentices (including applicants for apprenticeship) in registered apprenticeship programs,” as well as assert that the nondiscrimination requirements are applicable to program sponsors and SAAs. The revised purpose section also notes that the revised rule seeks to provide clarity to the foregoing interested parties regarding the scope and content of compliance reviews, compliance assistance, and enforcement actions by Registration Agencies.

This section of the proposed rule would delete all of the definitions that are set forth in the current part 30 regulation and would adopt by reference each of the applicable existing definitions found in the labor standards of apprenticeship regulation at 29 CFR part 29. The Department has determined that each of the definitions contained in 29 CFR 30.2 are either duplicative of existing definitions found at 29 CFR 29.2 or have been rendered unnecessary or obsolete by the extensive revisions to the substantive provisions of part 30 made in this proposal. The Department believes that the resulting consolidation of all apprenticeship-related definitions within the existing regulatory text of 29 CFR part 29 will lessen the administrative burdens on registered apprenticeship program sponsors and other interested parties by providing a single definitional reference point within the Federal apprenticeship regulations. The Department invites comments from all interested parties on the proposed consolidation of definitions in part 29, including whether the Department should include any additional definitions based on the content of this proposed rule.

Section 30.3 of the proposed rule obligates every sponsor of a registered apprenticeship program to comply with all applicable Federal and State laws and regulations that prohibit illegal discrimination on the basis of race, color, religion, national origin, sex, age (40 or older), genetic information, or disability. The Department notes that the foregoing list of protected bases upon which registered apprenticeship sponsors may not discriminate is fully consistent with the content and scope of currently applicable Federal civil rights statutes, including Title VII of the Civil Rights Act of 1964 and its subsequent amendments, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, as amended, and the Genetic Information Non-Discrimination Act of 1998. This proposed regulatory provision further stipulates that a failure by a registered apprenticeship program sponsor to comply with applicable Federal and State nondiscrimination laws may constitute grounds for enforcement action or deregistration proceedings by a Registration Agency pursuant to § 30.5 of the proposed rule, provided that such non-compliance is related to illegal discrimination against an apprentice (or an applicant for apprenticeship) with respect to any benefit, term, or condition of employment associated with an apprenticeship. The Department has an interest in only conferring the benefit of registration upon sponsors that operate in a manner fully compliant with the applicable laws governing nondiscrimination. Accordingly, the Department is confident that this straightforward and streamlined regulatory provision will facilitate the realization of this fundamental policy objective.

The Department proposes to rescind the provisions covering complaints in the existing part 30 regulation. In its place, the Department proposes a significantly streamlined complaints framework at proposed § 30.4, which would clarify that the Registration Agency will refer any individuals alleging unlawful discrimination to an enforcement agency with appropriate jurisdiction over, and expertise in, investigating compliance with Federal or State nondiscrimination laws or regulations. Such entities include the EEOC, the U.S. Attorney General or a State Attorney General, or an applicable State enforcement agency ( e.g., a Fair Employment Practices Agency).

The Department has determined that the existing regulatory requirements for part 30 complaints represent a cumbersome, confusing, and ineffective framework that is much less capable of investigating or resolving issues arising from apprentice complaints alleging discrimination than the enforcement entities outlined in proposed § 30.4 and described in this NPRM.

Based on its experience overseeing the National Apprenticeship System and implementing the part 30 regulatory requirements over the past eight years, the Department has determined that maintaining a separate and unique discrimination complaint framework for apprenticeship does not serve apprentices' interests and does not align with the Administration's explicit directive to remove burdensome regulatory requirements and promote flexibility for stakeholders of programs overseen by Federal agencies. The Department recognizes that requiring that apprentices file complaints through an official form unique to the apprenticeship system (the OMB-approved ETA Form 9039) is overly prescriptive, limiting, and may cause confusion for apprentices in knowing the agency from which to seek relief. The Department further recognizes that prescribing other requirements for complainants (such as dictating who may file and the time period for filing) and program sponsors (such as the requirement that sponsors communicate their program's complaint policy using specific “notice” language prescribed at 30.14(b)) only serves to delay and dilute any potential relief for apprentices alleging violations pertaining to illegal discrimination. Accordingly, the Department proposes to rescind the existing complaint provisions at 30.14(a) and (b) which prescribe complaint requirements for apprentices and sponsors.

The existing part 30 regulation also established an extensive set of requirements for the Registration Agencies in the part 30 complaints framework. In response to complaints received, the Department has either referred or investigated each complaint according to the process set forth at current 30.14(c)(1). The Department acknowledges that Registration Agency staff lack the capacity and expertise to investigate workplace discrimination and is unaware of any evidence that their involvement in apprenticeship-related complaints has provided meaningful protections for apprentices. Accordingly, the Department proposes to rescind the existing requirements for Registration Agencies at current 30.14(c). Instead, the Department proposes to replace the existing, extensive requirements for part 30 complaints with a simple and clear requirement explaining what Registration Agencies are to do if they receive discrimination complaints ( i.e., refer the individual to an appropriate enforcement agency with jurisdiction over the complaint, such as the EEOC).

The Department believes such a streamlined and simplified approach to discrimination complaints in registered apprenticeship would preserve Federal and State enforcement, oversight, and investigative resources, and would align with the Administration's directives to undertake deregulatory actions where existing regulations impose unnecessary and burdensome requirements. Most importantly, the Department believes that clarifying the most appropriate and effective avenue for filing discrimination complaints and pursuing relief from any discriminatory actions would be in apprentices' best interests and would align with the Department's guiding statutory mandate to protect apprentices' welfare.

In addition to the proposed removal of the extensive EEO and affirmative action requirements found in the current version of part 30, the Department proposes to modify the compliance and enforcement framework that is set forth in § 30.13 and § 30.15 of the existing regulation by streamlining and consolidating these provisions under a new provision (§ 30.5) of the proposed rule. Currently, the Department conducts regular “EEO compliance reviews” to assess sponsors' compliance with the extensive requirements found throughout the existing part 30 regulation, with a particular focus on the development and implementation of an AAP that is required for programs with five or more apprentices under current § 30.4 (the specific contents of which are set forth in § 30.5 through § 30.9 and in § 30.11 of the current rule). The existing part 30 regulation also includes various additional requirements applicable to all sponsors that the Department proposes to rescind, including the obligation that sponsors maintain extensive records pertaining to the full suite of current part 30 requirements, invite apprentices to self-report their disability status at registration and annually thereafter, and post an “EEO Pledge” with specific wording in a visible location at the program's worksite(s), among others. As discussed at length in this preamble, the Department has determined that it is unnecessarily burdensome and confusing, to impose an extensive set of nondiscrimination, EEO, and affirmative action requirements on registered apprenticeship sponsors, and that the perpetuation of such onerous regulatory requirements will only serve to inhibit the accelerated expansion of registered apprenticeships. Accordingly, the Department proposes to revise and consolidate the content of the existing § 30.13 and § 30.15 by combining the compliance reviews and enforcement actions elements of the proposed part 30 regulation within a new section—“Nondiscrimination compliance reviews and enforcement.” The subjects covered by this new section of the proposed rule would align closely with the overarching policy focus of the streamlined part 30—that sponsors must operate their program in a completely nondiscriminatory manner.

In the context of registered apprenticeship, the Department is committed to focusing its resources—including staff expertise—on matters pertaining to the quality of apprenticeship programs. As subject-matter experts in the various apprenticeship program-related topics that are set forth in the “Labor standards for the registration of apprenticeship programs” regulation at 29 CFR part 29, Registration Agency staff have the knowledge and experience to assess registered apprenticeship program quality. Registration Agency staff, who are focused primarily on matters pertaining to apprenticeship quality, are not well-positioned, and are not suitably equipped, to make the legal determinations  18 necessary to assess registered apprenticeship programs' adherence to the elaborate nondiscrimination, EEO, and affirmative action requirements found in the existing part 30 regulation. Accordingly, the Department proposes eliminating these extensive requirements and substituting in their place a clear, universal standard of compliance with applicable Federal and State nondiscrimination laws for all registered apprenticeship programs.

To assess program compliance with this revised and consolidated regulatory provision, the Department proposes to rely solely on final determinations made by courts. These entities are equipped with the necessary competencies and resources, along with the applicable authority and jurisdiction, to investigate, adjudicate, and impose remedial actions in response to allegations of discrimination in employment. The Department expects that relying on the expertise and authority of such entities to determine whether sponsors (or other apprenticeship stakeholders, such as an employer participating in a registered apprenticeship program) have engaged in illegal discrimination in violation of applicable Federal or State statutes or regulations will lead to a more efficient compliance and oversight framework, improved accountability, greater clarity for stakeholders, and more relevant and effective relief for any victims of unlawful discrimination, harassment, or other illegal treatment in the registered apprenticeship context.

Under proposed § 30.5(a), the Department proposes that compliance reviews for the streamlined part 30 nondiscrimination requirement would occur concurrently with a registered apprenticeship program's normal program review to assess compliance with part 29. At proposed § 30.5(b), the Department sets forth the process for determining sponsors' compliance with the streamlined nondiscrimination requirement and the threshold for initiating enforcement actions. The Department proposes that Registration Agencies may only initiate enforcement actions over a violation of the part 30 nondiscrimination requirement when a final determination of a violation of applicable nondiscrimination laws or regulations is made pertaining to an apprentice or applicant for an apprenticeship, without any remaining right to appeal, by a court with jurisdiction over allegations of discrimination in employment (including alleged discrimination against apprentices or an applicant to apprenticeship program). Such an approach is intended to ensure that a Registration Agency does not act on any complaints while such matters are being adjudicated, which is consistent with due process principles. Proposed § 30.5(c) describes the process for Registration Agencies to initiate enforcement, which includes working with the sponsor to develop a compliance action plan that aligns with the remedy for the alleged discrimination prescribed by the court, and brings the program into compliance with the part 30 nondiscrimination requirement. Under proposed § 30.5(c), Registration Agencies may pursue further enforcement actions, including the suspension of the sponsor's right to register new apprentices or the initiation of formal deregistration proceedings (set forth at 29 CFR 29.8), if the Registration Agency determines that the sponsor is not implementing the compliance action plan according to the remedy prescribed by the court.

The Department believes that this streamlined approach to compliance and enforcement of the part 30 regulation would preserve Registration Agencies' critical role in conferring the benefit of program registration, and in rescinding registration when such enforcement is necessary.

The Department proposes to retain the “Reinstatement of program registration” provision from the existing part 30 regulation at current § 30.16. The Department has determined that its proposal to streamline and simplify the part 30 regulation should retain a provision allowing sponsors to seek and receive reinstatement of their program registration if they demonstrate, to the satisfaction of the Registration Agency and the relevant court which issued a final determination confirming a violation of an applicable nondiscrimination statute or regulatory requirement that the apprenticeship program is being operated in accordance with this part. The Department retains the existing provision's language that sponsors must present “adequate evidence” that they are operating in compliance with part 30. Under the framework proposed in this NPRM, any violations of part 30 would be confirmed by acourt of competent jurisdiction over nondiscrimination in employment statutes or regulations; accordingly, the Department would require sponsors to provide adequate evidence that they have alleviated any issues giving rise to the nondiscrimination complaint to the satisfaction of the court, including implementing any remedial actions. The Department has determined that keeping a regulatory provision on the reinstatement of a program's registration aligns with the proposed compliance framework and the Department's goal, in streamlining the regulation, to promote regulatory flexibility for registered apprenticeship stakeholders.

The Department proposes to rescind parts of current § 30.18, the provision covering State Apprenticeship Agencies in the existing part 30 regulation. Existing regulatory requirements for SAAs under part 30 have been ineffective in setting a consistent standard for nondiscrimination in registered apprenticeship. As evidenced by varying degrees of conformity with existing § 30.18, the current part 30 regulation has not been fully successful in achieving a uniform national standard for nondiscrimination in registered apprenticeship and equality of opportunity. For instance, existing § 30.18(a) requires that an SAA have a State EEO Plan that “at a minimum” includes “draft State apprenticeship language corresponding to the requirements of this part.” This language has created inconsistencies across SAAs. In its place, the Department proposes a new § 30.7 that would eliminate burdensome and legally suspect administrative requirements for SAAs, including the requirements for State-specific laws that exclusively apply to nondiscrimination in registered apprenticeship; the Department believes that such State laws specific to registered apprenticeship only serve to complicate and splinter the National Apprenticeship System. Accordingly, § 30.7 would facilitate the establishment of a uniform standard governing nondiscrimination in registered apprenticeship and reduce SAA administrative burdens by stipulating that compliance with applicable federal and State nondiscrimination laws is sufficient to conform with the requirements of the updated part 30.

Proposed § 30.7(a) requires that, within one year of the effective date of the final rule, all SAAs seeking to obtain or maintain recognition under current § 29.13 must ensure that their apprenticeship laws, regulations, policies, and procedures exclusively pertaining to nondiscrimination and equality of opportunity for apprentices “conform only to the requirements of this part [30].” This proposed provision would relieve SAA States from having to impose the complex, burdensome, and legally suspect set of regulatory obligations that are found in current version of part 30 and would substitute a straightforward requirement that such states conform to the nondiscrimination requirements found in applicable federal and State laws. Accordingly, the purpose of this proposed provision is to establish a nationally uniform standard for nondiscrimination protections across all States participating in the National Apprenticeship System. The establishment of such a uniform standard at proposed § 30.7(a) seeks to ensure that State laws and regulations concerning nondiscrimination and equality of opportunity in registered apprenticeship are coextensive in their substance and scope with the requirements of revised part 30 and consistent with federal and State nondiscrimination laws; the attainment of such a result would be particularly helpful for sponsors that register and operate their programs in multiple States, and would foster an environment that is conducive to accelerating the expansion of registered apprenticeship programs. In addition, the allowance of a “good cause” extension stipulated by proposed § 30.7(a) would allow needed flexibility for States with differing legislative or regulatory processes to enact and implement laws that conform only to the requirements stipulated herein.

Proposed § 30.7(b) and related subsections set forth the elements of State Plans for nondiscrimination in apprenticeship for States seeking new or continued SAA recognition. Proposed § 30.7(b)(1)(i) stipulates that State plans include all of a State's statutes, regulations, and policies pertaining exclusively to nondiscrimination in apprenticeship, and that they conform only to the requirements of the proposed part 30. This language helps to prevent operational fragmentation within State-registered programs and ensures consistent application of nondiscrimination standards. Proposed § 30.7(b)(1)(ii) further stipulates that all State-registered programs comply with a State's DOL-approved State plan within 180 days from the date that the Department approves the State Plan submitted under proposed (a). The Department believes that a 180-day compliance window ensures an orderly and timely transition to full implementation at the program level, particularly since sponsors must already be operating their apprenticeship program in compliance with the applicable Federal and State nondiscrimination laws. The Department invites comments from all interested parties, and from SAAs in particular, about the proposed timeline for compliance with the revised part 30 requirements.

Proposed § 30.7(b)(2) mirrors the purpose of existing § 30.18(a)(2)(i-iii) as it outlines the review process that OA will undertake upon receipt of the State plan, including provision of technical assistance to support conformity with Federal regulations. Similarly, proposed § 30.7(b)(3) stipulates that if an SAA State does not submit a revised State plan that adequately responds within 90 days to OA's provision of technical assistance on nonconformity issues, OA may initiate derecognition proceedings set forth in § 29.14 and proposed § 30.7(e) to formally derecognize the SAA. This provision is intended to provide both due process and accountability for the State. Proposed § 30.7(b)(4) reaffirms the requirement of existing § 30.18(a)(4) by proposing that any subsequent amendments to the State Plan for nondiscrimination in apprenticeship are submitted to the OA Administrator for review and approval prior to implementation. This requirement is intended to promote alignment between State plans and the Federal nondiscrimination framework described herein.

The recordkeeping requirements stipulated by proposed § 30.7(c) largely replicate the SAA recordkeeping obligations currently found in § 30.18(b), which require a recognized SAA to keep only records pertaining to program compliance reviews, complaint investigations, and any other records pertinent to a determination of compliance with this part. These records must be maintained for five years from the date of their creation. The proposed provision supports OA's ability to continue overseeing and auditing compliance over time. It also ensures that there is adequate documentation to make informed decisions about SAA recognition status.

Proposed § 30.7(d)(1) states that OA retains full authority to conduct compliance reviews of all registered programs for Federal purposes, even programs registered by an SAA. Similarly, proposed § 30.7(d)(2) reiterates that any SAA that fails to comply with the requirements of this proposed rulemaking is subject to deregistration proceedings as provided in existing §§ 29.8(b) and 29.10. The recission of existing § 30.18(c)(2) and (c)(4)(i) through (iii) is in accordance with proposed § 30.4 which proposes a significantly streamlined complaints framework. The purpose of these revisions is to more efficiently deploy agency resources while preventing duplication of investigatory efforts with those civil rights enforcement agencies that possess the statutory authority and expertise to conduct such inquiries. Accordingly, under this proposal, the Department would not retain any authority to independently investigate or resolve complaints of discrimination in registered apprenticeship. However, OA retains the authority to refer complaints to appropriate civil rights enforcement agencies (under proposed § 30.4), and to take appropriate enforcement action (under proposed § 30.5) based on another agency's findings regarding discriminatory conduct by apprenticeship program sponsors.

Proposed § 30.7(e) replicates the content of current § 30.18(d). This derecognition provision may be utilized by the Department in appropriate circumstances to assure full conformity by SAA states with federal nondiscrimination obligations contained in this part.

The Department proposes to retain the Exemptions provision from the existing part 30 regulation at current § 30.19. The Department's proposed revisions are intended to provide relief to registered apprenticeship stakeholders from burdensome regulatory requirements, and the Department has determined that preserving the part 30 Exemptions provision serves this goal and retains the regulatory flexibility built into the current part 30 regulation. Under the existing provision, which the Department proposes to retain, sponsors must submit requests for an exemption from part 30 requirements in writing to the Registration Agency, which may issue the exemption for good cause. The Department also proposes to retain the requirement that SAAs in receipt of any exemption requests from sponsors in their State must receive approval from OA before granting the exemption. Accordingly, proposed § 30.8 reflects identical regulatory language to the existing provision at § 30.19.

The Department proposes technical and conforming edits to 29 CFR part 29. The scope of the proposed changes would be narrow and primarily confined to necessary adjustments to align with proposed changes to 29 CFR part 30.

First, the Department proposes to amend various provisions in part 29 to update cross-references and terminology to reflect the proposed revisions to part 30. For example, the Department proposes to revise § 29.3(b)(2) and § 29.5(b)(21) to refer explicitly to the revised nondiscrimination requirements set forth in 29 CFR part 30, as amended. These edits ensure that all registered apprenticeship programs will be subject to the new streamlined nondiscrimination obligations.

Second, the Department proposes revisions to § 29.12 (Complaints) to clarify that complaints alleging illegal discrimination—on the basis of race, color, religion, national origin, sex, age, disability, or other protected characteristics—must be referred by the Registration Agency to the appropriate enforcement authority, as specified in proposed § 30.4. This edit conforms to the proposed part 30 regulatory structure, under which enforcement actions related to discrimination are handled by agencies with jurisdiction under applicable nondiscrimination statutes, such as the Equal Employment Opportunity Commission (EEOC), the U.S. Department of Justice, or equivalent State-level enforcement agencies.

Third, the Department proposes edits to § 29.7 (Apprenticeship Agreement) to reflect the current statutory language and legal standards governing nondiscrimination. Specifically, § 29.7(j) is revised to prohibit discrimination in apprenticeship on the basis of race, color, religion, national origin, sex, age (40 or older), genetic information, or disability. This ensures consistency with Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act.

The Department also proposes to modify the text of the current Section 29.7(l), by removing the specific references to the apprentice's race, sex, ethnicity, and disability status, and replacing these references with a more general request to collect demographic data about the apprentice. The Department has determined that requesting specific types of demographic data, such as the apprentice's disability status, in the Apprenticeship Agreement is not consistent with the Department's proposal. In addition, the Department believes that a more general authorization to request “demographic information” about apprentices would provide greater flexibility for apprenticeship stakeholders and the Registration Agency. Accordingly, the Department proposes a conforming edit to modify section 29.7(l) to replace the specific demographic categories and instead require that the Apprenticeship Agreement simply contain a “request for demographic data about the apprentice.”

The Department also proposes edits to provisions governing SAA recognition and operation. Sections 29.13 and 29.14 are revised to require State apprenticeship laws, nondiscrimination plans, and enforcement procedures conform to the streamlined federal requirements in revised part 30. These edits are intended to reduce regulatory bifurcation between OA and SAA states, eliminate inconsistent nondiscrimination standards across jurisdictions, and promote uniformity in the application and enforcement of apprenticeship regulations nationwide.

Finally, conforming changes are proposed throughout part 29 to update outdated references and clarify that nondiscrimination enforcement responsibilities lie with appropriate civil rights agencies. These include proposed revisions to § 29.11 (Limitations) to reflect applicable law and Executive Orders, and updates to recordkeeping provisions in §§ 29.13 and 29.14 to ensure continued access to compliance-related documents by the Department.

Under E.O. 12866, the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) determines whether regulatory action is significant and, therefore, subject to the requirements of the executive order and review by OMB. See 58 FR 51735 (Oct. 4, 1993). This proposed rule is an economically significant regulatory action under section 3(f)(1) of E.O. 12866, and OIRA has reviewed it.

E.O. 13563 directs agencies to propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; the regulation 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.

The Department derives benefit and cost estimates for this proposed rule by comparing the baseline (the benefits and costs of the current part 30 regulation) with the benefits and costs of implementing the provisions in the proposed rule. Only the additional benefits and costs that are expected to be incurred due to the changes in this regulation are included in the analysis.

The Department sought to quantify and monetize the benefits and costs of the proposed rule where feasible. Where we were unable to quantify benefits and costs—for example, due to data limitations—we describe them qualitatively. This analysis covers a 10-year period (2026 through 2035) to ensure it captures major benefits and costs that accrue over time. In this analysis, we have sought to present benefits and costs both undiscounted and discounted at 7 and 3 percent, respectively. 19

All costs from the proposed rule are incurred in the first year and total $9.11 million. The 10-year monetized benefits of the proposed rule range from $748.76 million to $ 891.95 million (with 7 and 3 percent discounting, respectively). The annualized monetized benefits of the Final Rule are $74.88 million (with 7 percent discounting) and $89.19 million (with 3 percent discounting).

After considering both the quantified and non-quantified benefits of the proposed rule, the Department has concluded that the estimated benefits would justify the costs of the proposed rule. Below, we present an analysis of the costs and benefits of the proposed rule in the first year and over the 10-year analysis period.

The Department has examined this proposed rule and has determined that it is consistent with the policies and directives outlined in E.O. 14192, “Unleashing Prosperity Through Deregulation.” This rulemaking is expected to be an E.O. 14192 deregulatory action.

The Department's analysis considers the expected benefits and costs of the changes to part 30. This analysis measures the costs and benefits as they accrue to sponsors and State partnering agencies. It is estimated that the number of sponsors will grow over time and our annual cost calculations reflect this growth. The Department based its estimate of the number of sponsors in each year using data from RAPIDS regarding the number of registered apprenticeship programs and based its estimate of the annual growth in registered apprenticeship programs on the average annual growth rate from FY2020 to 2024. The Department also used the same RAPIDS data to develop an estimate of the number of registered apprenticeship programs that have five or more apprentices in each year of the analysis. 20 While the Department expects that the number of registered apprentices will increase after part 30 is streamlined, we used prior data to estimate future growth because it is common practice in cost-benefit analysis, it is difficult to quantify how much the streamlining of part 30 will increase the growth of apprenticeship programs. 21

This analysis primarily discusses how the first-year costs were calculated and indicates that the analysis repeats that calculation across the 10-year time frame using the appropriate number of sponsors in any given year. Exhibit 1 presents the estimated number of total active and new active program sponsors, and the estimated number total and new active sponsors with five or more apprentices projected for each year in the analysis.

The Department first presents the benefits that accrue under the proposed rule. Most of these benefits arise from cost-savings to the sponsors of registered apprenticeship programs because the proposed rule eliminates several requirements of the current part 30 regulations. The savings from eliminating these requirements are discussed in greater detail below.

In addition to the savings discussed below, there are several other benefits from streamlining the nondiscrimination requirements under part 30 that are not included in the Department's analysis. Under the proposed rule, sponsors will benefit from a more streamlined and less complex part 30 regulation, reducing confusion and the time required to answer questions or address confusion regarding compliance requirements. The proposed rule would also benefits sponsors by removing the legally questionable components of the current part 30 regulations, thereby eliminating legal risk that sponsors could be sued or legally challenged for actions taken to comply with part 30, such as setting utilization goals regarding the race or sex of program participants.

Since the proposed rule reduces the barriers for sponsors to create and operate registered apprenticeship programs, it may also lead to the registration of additional apprenticeship programs. The enhanced growth of registered apprenticeship programs could improve access for individuals to enroll in apprentices and receive high-quality job training—boosting their long-term earnings and having spill-over effects in the local economy. The increased proliferation of registered apprenticeship programs could also benefit local employers, as the creation of additional skilled apprentices could expand local talent pools and allow employers to more easily fill in-demand occupations.

Finally, chief among these benefits is the elimination of regulatory provisions that have the effect of encouraging the use of race- and gender-based preferences in apprenticeship selection and advancement decisions. By removing these requirements, the proposed rule promotes a return to individual, merit-based evaluation, consistent with the principle that all Americans should be treated as individuals rather than as members of demographic groups. The Department believes this shift will strengthen public confidence in the fairness of the apprenticeship system, reduce legal uncertainty, and encourage broader participation by sponsors who may have been deterred by the prior rule's prescriptive and group-based mandates.

While these benefits could be substantial, the Department did not include these benefits in its analysis because of data limitations that raise concern about our ability to accurately quantify these benefits. Collectively however, these benefits reinforce the Department's conclusion that the advantages of this proposal outweigh any potential costs.

Under the current part 30 regulation, sponsors must post their equal opportunity pledge on bulletin boards and through electronic media, such that it is accessible to all apprentices and applicants to apprenticeship programs. This requirement imposes costs on sponsors operating a registered apprenticeship program for the first time, as they are required to take staff time to post this pledge. Under Title VII (42 U.S.C. 2000e-10) and the ADA (42 U.S.C. 12115), employers are already required to post a notice summarizing Federal laws prohibiting discrimination in employment. Removing this comparable requirement from part 30 would therefore lead to savings for new sponsors of registered apprenticeship programs without depriving apprentices of crucial information about their employment rights.

The Department assumes that new sponsors choose to put up a physical copy of the pledge and also post it on their website. The Department assumes it takes a sponsor 5 minutes (0.08 hours) to post the pledge and that this task is performed by an administrative assistant. To calculate the hourly compensation rate, the Department used the median hourly wage rate for Secretaries and Administrative Assistants, Except Legal, Medical, and Executive (SOC code 43-6014) of $22.26, 22 and assumed a 17% overhead cost  23 and a 42-percent benefit cost. 24 The total hourly compensation rate is [$22.26 + ($22.26 × 42%) + ($22.26 × 17%)], or $35.39. We multiplied the time estimate for this provision by the hourly compensation rate to obtain a total labor cost per sponsor of $2.83 ($35.39 × 0.08). To estimate the materials cost, the Department assumed that the pledge is one page, and that the cost per page for photocopying is $0.10, resulting in a materials cost of $0.10 ($0.10 × 1) per sponsor. The total cost of putting up a physical copy of the pledge per sponsor is therefore $2.93 ($2.83 + $0.10). Additionally, the Department also assumes it takes a sponsor 10 minutes (0.17 hours) to post the pledge on its website and that this task is performed by a web developer at an hourly compensation rate of $69.51. 25 The cost of posting the pledge on the sponsor's website is $11.82 ($69.51 × 0.17). In total, the current provision requiring the posting of physical copy of the pledge and the posting of the pledge on the sponsor's website costs $14.75 ($2.93 + $11.82) per new sponsor.

The Department estimates that there are 1,781 new sponsors in the first year (see Exhibit 1) that would incur these costs. Multiplying this sum ($14.75) by the estimate of new sponsors (1,781) in the first year (2026) results in a cost- benefit of $26,270 from eliminating this provision. Looking over the full ten-year period, the annualized savings from eliminating the cost of posting the EEO pledge are $25,534 (with 7 percent discounting) and $30,430 (with 3 percent discounting).

The current part 30 regulations also require that each sponsor conduct orientation and periodic information sessions for apprentices, journeyworkers who directly supervise apprentices, and other individuals connected with the administration or operation of the sponsor's apprenticeship program to inform and remind such individuals of the sponsor's equal employment opportunity policy with regard to apprenticeship (current § 30.3(b)(2)(iii)). Under current § 30.3(b)(4)(i), sponsors are also required to provide anti-harassment training, which we assume are incorporated into periodic orientation and information sessions. This training must include active participation by trainees, such as attending a training session in person or completing an interactive training online and includes, at a minimum, communications to apprentices and journeyworkers who directly supervise apprentices that harassing conduct will not be tolerated, the definition of harassment and types of conduct that constitute harassment, and the right to file a harassment complaint.

Using data from RAPIDS, the Department calculated that there are on average 25.4 apprentices per sponsor, so we round down to 25 apprentices per program. 26 The Department further assumes a one-to-one ratio between an apprentice and journeyworker in estimating the cost of orientations and periodic information sessions. The Department first estimated that the 29,969 programs in the first year (2026) will hold one 45-minute regular orientation and information session with an average of 25 apprentices ($33.39 per hour)  27 and 25 journeyworkers ($52.47 per hour)  28 per sponsor. The Department estimated that a human resource manager ($107.04)  29 will need to spend 2 hours to develop and prepare written materials for the session in the first year, and 2 hours to cover maintaining the training materials that were already saved on the computer in subsequent years.

This calculation results in a total cost-saving benefit for removing this provision of approximately $54.66 million in the first year (2026). It is assumed that all sponsors would hold one 45-minute regular orientation and information session annually if this requirement was not eliminated by the rule. This calculation is therefore repeated in subsequent years. The annualized savings from the elimination of this cost ranges from $53.13 million (with 7 percent discounting) to $63.31 million (with 3 percent discounting).

Additionally, under the current part 30, all sponsors are required to reach out to a variety of recruitment sources, including organizations that serve individuals with disabilities, to ensure universal recruitment (current § 30.3(b)(3)). Sponsors are required to develop a list of recruitment sources that generate referrals of women, minorities, and persons with disabilities with contact information for each source. Further, sponsors are required to notify these sources in advance of any apprenticeship opportunities and while a firm deadline is not set, the part 30 regulations suggest 30 days' notice if possible. This current outreach protocol may lead employers to incur costs due to the additional delay in the hiring process resulting from this rule. The Department, however, does not have enough information to estimate the potential costs sponsors currently incur from these delays.

The kinds of activities sponsors engage in to satisfy this requirement include distributing announcements and flyers detailing job prospects, holding seminars, and visiting some of the sources who are likely able to provide access to designated groups. The Department assumed that the cost to sponsors to distribute information to designated groups will be the labor cost to comply with this provision. We also assumed that the activity to satisfy this provision will be performed by a human resource manager and an administrative assistant with hourly compensation rates of $107.04 and $35.39, respectively. We assumed this task takes 30 minutes (0.5 hour) of a human resource manager's time and 30 minutes (0.5 hour) of an administrative assistant's time per targeted source. We calculated the cost of this provision per affected sponsor by multiplying the time each staff member devotes to this task by their associated hourly compensation rates. We then multiplied the total labor cost by the assumed number of outreach sources (5) and by the total number of sponsors. All sponsors are assumed to conduct this outreach in all years. The resulting savings from eliminating this outreach provision are therefore $10.67 million in the first year, with an annualized savings from the elimination of this cost for sponsors ranging from $10.37 million (with 7 percent discounting) to $12.36 million (with 3 percent discounting).

The current part 30 regulations require sponsors with five or more apprentices to establish utilization goals for women and minorities (current §§ 30.5 through 30.7). First, sponsors conduct a workforce analysis to identify the racial, sex, and ethnic composition of their apprentices. Second, an availability analysis will establish a benchmark against which the existing composition of apprentices will be compared. Sponsors establish utilization goals and engage in targeted outreach, recruitment, and retention efforts when the sponsor's utilization of women, Hispanics or Latinos, or individuals in racial minority groups are “significantly less than would be reasonably expected given the availability of such individuals for apprenticeship.” Registration Agencies work closely with sponsors during compliance reviews to assist in the development of an availability analysis and setting or reassessing utilization goals for race, sex, and ethnicity. The Department also provides a data tool to assist in the collection and analysis of relevant demographic data for the purposes of goal setting.

The Department has determined that eliminating the utilization goal requirement will create three types of cost-savings benefits: Savings from the elimination of costs associated with the familiarization with the data tool for new sponsors, savings from the elimination of costs associated with the workforce analysis, and savings from the elimination of costs associated with the utilization analysis.

To quantify the savings from the elimination of costs associated with new sponsors' familiarization with the data tool, the Department assumes that new sponsors with five or more apprentices (401 in 2026) will incur one hour of HR manager labor ($107.04 per hour) to familiarize the organization with the tool. This is estimated to create $42,876 in savings from the elimination of these tool familiarization costs in the first year of 2026. We repeated this calculation for the following years. Removing the utilization goal requirement from part 30 therefore creates an annualized savings of $40,004 (with 7 percent discounting) and $47,537 (with 3 percent discounting) from the elimination of new sponsors' tool familiarization costs.

To calculate the savings from removing the workforce analysis requirements from part 30, the Department determined that the methodology for conducting workforce analyses under the current part 30 results in 2 hours of HR manager labor ($107.04 per hour) for all sponsors with five or more apprentices (7,902 in 2026). Under the current part 30 regulations, all sponsors with five or more apprentices must conduct workforce analysis every 2.5 years. In calculating the savings for each year, the Department divided the number of applicable sponsors in each year by 2.5 to reflect the assumption that sponsors would have conducted the analysis per the 2.5-year timeline. This means that in any given year 40 percent of these sponsors would have conducted the workforce analysis or that it would have taken 2.5 years to have these sponsors conduct new workforce analyses. The cost-savings from eliminating the requirement to conduct workforce analyses in the first year is therefore $676,642 (7,902 × 0.4 × $107.04 × 2 hours). We repeated this calculation for the following years using the appropriate number of sponsors in any given year, resulting in an annualized savings from the removal of the workforce analysis requirement of $631,313 (with 7 percent discounting) and $750,187 (with 3 percent discounting) for sponsors.

To calculate the savings from the removal of the utilization analysis requirement, the Department determined that the utilization analysis results in 0.5 hour of HR manager time ($107.04 per hour) for all sponsors with five or more apprentices (7,902 in 2026) every 5 years. The cost-savings from removing the requirement to conduct utilization analyses in the first year is $84,580 (0.5 hour × $107.04 × (7,902/5 years)). We repeated this calculation for the following years, and the savings to sponsors from not having to conduct utilization analyses has an annualized benefit of $78,914 (with 7 percent discounting) and $93,773 (with 3 percent discounting) for sponsors.

In addition to the normal outreach, recruitment, and retention activities required of all sponsors under current part § 30.3(b), the current part 30 regulations require a sponsor of an apprenticeship program, whose utilization analyses revealed underutilization of a particular designated group or groups of individuals pursuant to current § 30.6 and/or who has determined pursuant to current § 30.7(e) that there are impediments to EEO for individuals with disabilities, to engage in targeted outreach, and retention for all underutilized groups in current § 30.8. We assumed that this additional outreach happens in the same manner as the universal outreach discussed above.

We assumed that the current cost to sponsors to distribute information about apprenticeship opportunities to organizations serving individuals with disabilities is the labor cost. We also assumed that the labor for this provision will be performed by a human resource manager and an administrative assistant with hourly compensation rates of $107.04 and $35.39, respectively. The Department estimated that this dissemination task takes 30 minutes (0.5 hour) of a human resource manager's time and 30 minutes (0.5 hour) of an administrative assistant's time per targeted source. The cost of the current provision per affected sponsor is the time each staff member devotes to this task multiplied by their associated hourly compensation rates. This calculation resulted in a labor cost of $71.22 (($107.04 × 0.5) + ($35.39 × 0.5)) per source.

We estimated that the number of sponsors who need to engage in targeted outreach and recruitment for at least one relevant demographic group is 95 percent of the total sponsors with five or more apprentices. We understand this is likely an over-estimate of the number of sponsors that must conduct this outreach, as more than 5 percent of sponsors may meet their utilization goal for all demographic groups and may not have to conduct outreach, however the Department does not have complete or reliable data to produce an alternative estimate. We then multiplied this total labor cost by the share of sponsors with five or more apprentices (7,902), the share of sponsors that undertake a utilization analysis in any given year (20 percent  30 ) and the share of sponsors that are estimated to identify underutilization and/or problem areas in one or more of the relevant demographic groups—(95 percent). This calculation ($71.22 × 7,902 × 0.20 × 0.95) results in a total cost of the current outreach provision of approximately $106,928 in 2026. The benefit from eliminating this requirement is equal to these estimated costs since sponsors will no longer need to conduct this outreach. We repeated this calculation for the following years using the appropriate number of sponsors in any given year. The annualized savings to sponsors from not having to conduct this additional outreach ranges from $99,755 (with 7 percent discounting) to $118,538 (with 3 percent discounting).

Affirmative action program reviews in the current part 30 regulations result in three additional costs for sponsors: personnel process reviews, written affirmative action plan updates during compliance reviews, and written affirmative action plan updates within three years of compliance reviews (estimated to occur 2.5 years later in this analysis). The current part 30 requires sponsors with five or more apprentices to review personnel processes annually (§ 30.9). The Department estimated the current costs of each of these components and summed them to estimate the savings to sponsors from eliminating affirmative action program reviews.

To calculate the current costs imposed on sponsors from personnel process reviews, the Department calculated the cost for all sponsors in 2026 with five or more apprentices (7,902) to spend 8 hours of HR manager labor ($107.04 per hour) conducting the review. This provision is estimated to result in an undiscounted cost of $6.77 million in 2026 (7,902 × 8 hours × $107.04).

To determine the current cost of the written affirmative action plan update at the time of the compliance review, the Department calculated the cost for all sponsors in 2026 with five or more apprentices (7,902) to spend 12 hours  31 of HR manager labor every 5 years at the time of the compliance review. With the existing compliance review rate at 20 percent, this means that approximately one in five of these sponsors undergo a compliance review every year. This provision currently results in an undiscounted cost of approximately $2.03 million in 2026 (7,902 × 12 hours × (1 ÷ 5) × $107.04).

To determine the cost of the written affirmative action plan update within three years of the compliance review, the Department calculated the cost for all sponsors in 2026 with five or more apprentices (7,902) to spend 6 hours  32 (estimated to be less because of the lesser workload from not overlapping with the compliance review) of HR manager time every 5 years. This provision results in an undiscounted cost of $1.01 million in 2026 (7,902 × 6 hours × (1/5) × $107.04). We repeated this calculation for the following years using the appropriate number of sponsors in any given year.

The total cost of the current affirmative action plan program provision, and therefore the savings from it being eliminated, is approximately $9.8 in 2026 (6.77 million + $2.03 million + 1.01 million). The annualized savings from eliminating affirmative action program reviews ranges from $9.15 million to $10.88 million at 7 percent and 3 percent, respectively.

The current part 30 regulations under § 30.11 require sponsors with five or more apprentices to invite applicants for apprenticeship to voluntarily self-identify as an individual with a disability protected by this part at two stages: (1) At the time they apply or are considered for apprenticeship; and (2) after they are accepted into the apprenticeship program but before they begin their apprenticeship. Each year, all sponsors with five or more apprentices are required to administer the invitation to self-identify twice: Once to all applicants prior to the offer of apprenticeship, and once after the offer of apprenticeship to those who were extended offers. The Department estimated that sponsors post 42 positions in 2026 and receive 15 applicants per posting. 33 Of those positions, the Department estimated that 42 offers of enrollment are made and 42 apprentices choose to enroll in 2026. The Department estimated that it would take an apprentice ($33.39 per hour) 5 minutes (0.08 hours) to complete the form. Furthermore, an administrative assistant ($35.39 per hour) would need to spend 0.5 hour annually to record and keep the forms. As a result, this requirement has an undiscounted cost in 2026 of $1.42 million (7,902 × ((15 applications × 42 job listings × .08) + (42 offers of apprenticeship × .08)) × $35.39 + 7,902 × 0.5 × $35.39). For the 10-year analysis period, this provision has an annualized cost of $1.33 million and $1.58 million (at 7 percent and 3 percent discounting, respectively). 34 In addition, sponsors with five or more apprentices are required to remind apprentices yearly that they can update their invitation to self-identify. The Department assumed that these sponsors send out an annual reminder email at the cost of $22,372 (7,902 × 0.08 hour × $35.39). We repeated this calculation for each remaining year in the analysis period using the estimated number of sponsors for each year. This provision in total has an annualized cost of $20,873 and $24,803 (at 7 percent and 3 percent discounting, respectively).

Below, the Department presents the costs incurred on relevant stakeholders, mainly program sponsors and SAAs, from this proposed rule. These costs are broken into two major categories: costs to sponsors of familiarizing themselves with the regulatory change, and the cost to SAAs. These two main costs of the proposed rules and other provisions of the proposed rule the Department found to have minimal to no costs compared to the current part 30 are discussed below. This provision in total has an annualized cost of $20,873 and $24,803 (at 7 percent and 3 percent discounting respectively).

To estimate the cost of initial rule familiarization, we multiplied the number of apprenticeship sponsors in 2026 (26,512)—the first full year in which the change will be in effect—by the amount of time required to read the new rule (1 hour) and by the average hourly compensation of a private-sector human resources manager ($107.04). This cost is only incurred in the first year of the change, so the total cost to sponsors for time spent on familiarization amounts is approximately $3.21 million in labor costs. There are no familiarization costs for future years because sponsors will already be complying with nondiscrimination laws.

Pre-existing sponsors of registered apprenticeship programs will also need to develop language or make adjustments and updates to existing standards to comply with the proposed changes to part 30. This will be a one-time cost only imposed on pre-existing sponsors that already had standards prior to the publication of final rule. The Department estimates that updating standards to comply with part 30 will mainly be removing items currently required by part 30 and therefore estimates the burden will be minimal. Accordingly, the Department estimates the average response time for the projected 28,188 pre-existing apprenticeship programs in FY2026 to ensure standards comply with part 30 is 20 minutes (0.33 hours). 35 The estimated annual burden is 9,301 hours (28,188 × 0.33). The Department assumes the standards will be updated by an administrative assistant. Therefore, the Department estimates that the annualized cost is $329,194 (9,301 × $35.39).

Registration agency staff are responsible for reviewing and providing input on a sponsor's apprenticeship program standards to ensure compliance with the requirements in part 30. Registration agencies will therefore incur a one-time cost to review updated standards for pre-existing programs. The Department estimates that the review and input provided by registration agency staff for program sponsors will take 10 minutes, which results in 4,792 annual burden hours (28,188 × 0.17 hours). Using the State employee wage calculated above, the total cost to registration agency of this one-time review is $412,342 (4,792 hours × $86.05).

The process of updating a State equal opportunity plan may potentially involve various different people at different stages of implementation. Updating the plan will include drafting the new plan, ensuring conformity and that State laws and practices do not exceeding the proposed rule, and completing all administrative procedures that may apply, such as revisions to a State's apprenticeship law or policy that may require a public notice and comment period, training for SAA staff on the revised State plan, and outreach to program sponsors to inform them of the relevant aspects of the revised State plan once it has been approved by the Department. The updates to State equal opportunity plans include changing language and existing requirements such that they align with the regulatory changes herein. To calculate the costs, the Department assumed that the process to revise the State plan will take a full year of effort (2,080 hours) to complete. 36 This is the Department's best estimate for updating the existing State plan. For simplicity, we assumed that an SAA human resource manager will complete the task at an hourly compensation rate of $86.05. 37 This amounts to a one-time cost of $5.9 million in the first year (2,080 hours × $86.05 × 33 SSA States). 38 Complaint Referral Procedures § 30.4 within the proposed rule directs the Registration agencies to refer complainants alleging illegal discrimination to the appropriate enforcement agency. Since the complaint process is not a new process, the Department does not expect that these provisions will add significantly to the burden on Registration Agencies as these agencies are currently required to refer complaints to other EEO agencies under current § 30.14(c)(3).

The proposed rule generally aligns part 30 with part 29 procedures for deregistration of apprenticeship programs, derecognition of SAAs, and hearings (§§ 30.6 through 30.7). These provisions are not expected to impose a burden because SAAs are already following these procedures in part 29.

Exhibit 2 presents a summary of the first-year benefits and costs of the proposed rule, as described above. As shown in the exhibit, the total first-year benefit of the proposed rule is $77.51 million and the total first year costs are $9.86 million.

Exhibit 3 presents a summary of the monetized costs and benefits associated with the final rule over the 10-year analysis period. The monetized costs and benefits displayed are the yearly summations of the calculations described above. Costs and benefits are presented as undiscounted 10-year totals, and as present values with 7 and 3 percent discount rates.

As mentioned above, due to data limitations, the Department did not quantify several important benefits to society provided by the proposed rule. The proposed rule is expected to result in several overarching benefits to apprenticeship programs and specific benefits resulting from a less legally ambiguous, and more streamlined rule. The proposed rule will reduce barriers to register and operate a registered apprenticeship program, allowing the creation of additional programs that allow more individuals to receive training and benefiting businesses in meeting their skills needs.

In addition to the proposed rule, the Department has considered three regulatory alternatives: (a) Repeal Part 30 entirely; (b) Only eliminate the additional affirmative action requirements pertaining to sponsors with five or more apprentices while retaining the reminder of the 2016 final rule; (c) Take no action, that is, to leave the 2016 final rule intact.

The Department conducted economic analyses of the three alternatives to better understand their costs and benefits and the implied tradeoffs (in terms of the costs and benefits that would be realized) relative to the proposed rule. Below is a discussion of each alternative along with an estimation of their costs and benefits. All costs and benefits use the 2016 final rule as the baseline for the analysis.

This alternative yields many of the same benefits as the proposed rule but would also remove the cost to Registration Agencies (the Department of Labor's Office of Apprenticeship (OA) or SAAs) related to the referral of complaints, leading to additional cost-saving benefits.

The Department assumed that, when a Registration Agency receives a complaint, it takes 15 minutes (0.25 hours) for a public-sector human resource manager (86.05 per hour) to refer the complaint to the correct entity. The Department estimates that 421 apprentices file a complaint in the first year and the number of complaints rises by 9 percent each year. 39 Based on this assumption, the Department estimated that the savings to registration agencies from not having to refer complaints is $36,227 in the first year. The Department estimates that this has an annualized savings benefit of $39,413 and $47,337 (at 7 percent and 3 percent discounting, respectively).

The Department assumes sponsors would still have to refer complaints to the relevant agencies that oversee nondiscrimination laws to comply with those laws and therefore would receive minimal to no cost savings from not having to refer these complaints to the registration agency as well.

Additionally, removing part 30 would remove the costs associated with deregistering programs and derecognizing SAA that are violating part 30. However, as mentioned in the preamble, the Department is unaware of any instance in which a program or an SAA has been deregistered or derecognized because of failure to comply with part 30 (current § 30.15, § 30.16, and § 30.18(d)). The Department therefore assumes that removing the deregistration or derecognition components of the current part 30 rule would create minimal to no cost savings. The benefits of this alternative would therefore be the same in each year as the proposed rule, with additional cost-savings from the elimination of referral requirements.

In estimating costs, the Department believes that the elimination of part 30 entirely would remove conformity across the registered apprenticeship system by creating an inconsistent regulatory framework across states. If some states left their current apprenticeship affirmative action laws in place, it would be harder for sponsors to navigate and comply with this system. This lack of conformity would therefore create confusion and hinder the deregulatory goals of the rulemaking from being achieved on a nationwide basis. Additionally, if some states retained the use of race- and gender-based preferences in apprenticeship selection and advancement decisions, the apprenticeship system in these states would continue to conflict with the merit-based principles that the apprenticeship system, and overall American workforce, should represent.

While the Department believes these costs from a lack of conformity and conflict with merit principles could be substantial, these costs are largely intangible and would be difficult to estimate. As a result, the Department estimates that the only monetized costs would be the one-time cost of removing references to Part 30 in apprenticeship program standards, which was estimated to be $741,536, due to data and other limitations referenced above, there would be no quantifiable costs to repealing part 30 entirely because states would not have to submit updated State plans and sponsors would not need to familiarize themselves with the rule change. Exhibit 4 presents a summary of the monetized costs of this alternative option over the 10-year analysis period. Costs are presented as undiscounted 10-year totals, and as present values, using 7 percent and 3 percent discount rates.

This alternative yields only the cost-savings that come from eliminating the provisions under the current part 30 that require sponsors with five or more apprentices to take additional affirmative action steps. This more limited change would therefore eliminate the following costs: new sponsors' familiarization with apprenticeship utilization data tool, cost of the workforce analysis, cost of the utilization analysis, the additional dissemination of resources for designated demographic groups if a sponsor is found to be underutilizing said group, costs related to Affirmative Action Program reviews, and the cost of inviting apprentices to self-identify as an individual with a disability (as well as sending email reminders about this self-identification). Sponsors would still incur the costs of orientation and information sessions and universal outreach. New sponsors would also continue to incur the cost of posting EEO pledges.

Under this alternative, the Department assumes that sponsors would still incur the same rule familiarization costs and SSAs would still have to submit revised State plans under current § 30.18. Only pre-existing programs with five or more apprentices would incur costs from updating standards. The Department estimates that there will be 7,501 pre-existing programs with more than 5 apprentices in FY2026. 40 Based on the methodology described above, we estimated sponsors with five or more apprentices will incur $87,605 from the cost of updating standards and registration agencies will incur $109,732 in costs from reviewing updated standards, for a total cost of $197,337 of updating standard for programs with five or more apprentices. This cost is lower because fewer sponsors ( i.e., only those with five or more apprentices) would need to update standards. The total cost of this option is therefore $9.31 million.

Exhibit 5 presents a summary of the monetized costs of this alternative option over the 10-year analysis period. Costs are presented as undiscounted 10-year totals, and as present values, using 7 percent and 3 percent discount rates.

This alternative yields no additional costs or benefits to society because it does not deviate from the baseline, that is, the 2016 final rule. However, the Department notes that taking no action would prevent the benefits that would accrue from this proposed rule. In addition to decreasing the burden on sponsors and registration agencies, chief among the benefits from the proposed rule is the elimination of regulatory provisions that have the effect of encouraging the use of race- and gender-based preferences in apprenticeship selection and advancement decisions. By removing these requirements, the proposed rule promotes a return to individual, merit-based evaluation, consistent with the principle that all Americans should be treated as individuals rather than as members of demographic groups. Without this change, the Department believes the public's confidence in the fairness of the apprenticeship system could be undermined, that legal uncertainty would remain for current sponsors, and that prospective sponsors may be deterred by the prior rule's prescriptive and group-based mandates.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., as amended by Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Public Law 104-121 (Mar. 29, 1996), hereafter jointly referred to as the RFA, requires agencies to prepare an initial regulatory flexibility analysis (IRFA) when proposing, and a final regulatory flexibility analysis (FRFA) when issuing, regulations that will have a significant economic impact on a substantial number of small entities.

The Department conducted the analysis below of the burden on small entities from the proposed rule and, based on that analysis, certifies that this rule will not have a significant economic impact on a substantial number of small entities.

The Department has determined that the proposed deregulatory action is necessary to remove administrative barriers to participation in registered apprenticeship. As described throughout the preamble for this NPRM, in the Department's view, the proposed changes to the regulation at 29 CFR part 30 would significantly reduce administrative burdens for existing registered apprenticeship sponsors, and could alleviate concerns expressed by employers (including small businesses) regarding the amount of administrative burden they would have to take on to participate in registered apprenticeship. The Department is considering this deregulatory action because these outcomes would help accelerate the expansion of registered apprenticeship, in line with the Administration and the Department's ambitious goals to grow the system, including in industries and sectors where registered apprenticeship is not currently widespread. In addition, the Department is considering this deregulatory action in light of the Administration's call for Federal agencies to review their regulations and remove regulations that impose undue or unnecessary burdens on stakeholders.

The primary objective of the proposed rule is to alleviate administrative burden for registered apprenticeship stakeholders and promote a more straightforward framework for the regulated community to participate in the system and maintain compliance with the governing regulations (at 29 CFR parts 29 and 30). In addition, this proposed rule seeks to eliminate a duplicative and ineffective (and, in light of recent case law, legally questionable) regulatory framework for antidiscrimination protections in registered apprenticeship. These objectives align with the broader goals of the Administration and the Department to identify and modify burdensome regulations, preserve limited enforcement resources, and keep pace with evolving issues in antidiscrimination law. The National Apprenticeship Act of 1937 stands as the Department's statutory basis for promulgating regulations on apprenticeship.

A small entity is one that is independently owned and operated and that is not dominant in its field of operation. 5 U.S.C. 601(3); 15 U.S.C. 632. The definition of small entity varies from industry to industry to properly reflect industry size differences. 13 CFR 121.201. An agency must either use the SBA definition for a small entity or establish an alternative definition for the industry. Using SBA size standards, the Department has conducted a small entity impact analysis on small entities in the five industry categories with the most registered apprenticeship programs and for which data were available: Construction, Educational Services, Manufacturing, Other Services, and Healthcare. 41 These top five industry categories account for 57 percent of the total number of apprenticeship sponsors who had active apprenticeships in FY 2018. 42

One industry, Public Administration, made the initial top-five list but is not included in this analysis because no data on the revenue of small local jurisdictions were available. Local jurisdictions are classified as small when their population is less than 50,000. 5 U.S.C. 601(5).

Registered apprenticeship program sponsors may be employers, employer associations, industry associations, or labor management organizations and, thus, may represent businesses, multiple businesses, and not-for-profit organizations. The requirements of the proposed rule, however, fall on the sponsor, and therefore we used sponsor data to create industry breakdowns.

The Department has estimated the incremental costs for small entities from the baseline of the 2016 Final Rule. 43 This analysis reflects the incremental cost of the proposed rule, as it adds to the requirements of the 2016 Final Rule. Using available data, we have estimated the costs to sponsors of familiarizing themselves with the rule change. A significant economic burden results when the total incremental annual cost as a percentage of total average annual revenue is equal to or exceeds 3 percent. 44 Because the estimated annual burden of the proposed rule is less than 1 percent of the average annual revenue of each industry category, the proposed rule is not expected to cause a significant economic impact to small entities. These entities include individual employers, groups of employers, labor management organizations, or industry associations that sponsor apprenticeships. As explained in detail below, the total impact amounts to approximately $118.89 per affected small entity in the first year. All costs are incurred in the first year. Because all the proposed rule provisions will have a similar impact on entities across economic sectors, we calculated impacts to a representative single entity. 45

During the first year after implementation of the eventual final rule, sponsors will need to learn about the new regulatory requirements. We estimated this cost for a hypothetical small entity by multiplying the time required to read the new rule (1 hours) by the average hourly compensation rate of a human resources manager ($107.04, as calculated above). Thus, the resulting cost per small entity is 107.04 ($107.04 × 1). This cost occurs only in the year after the final rule is published.

Sponsors of registered apprenticeship programs will also need to develop language or make adjustments and updates to existing standards to comply with the proposed changes to part 30. The Department estimates that updating standards to comply with part 30 will mainly be removing items currently required by part 30 and therefore estimates the burden will be minimal. The Department assumes news sponsors will take a similar amount of time to ensure the standards they develop do not conflict with part 30. Accordingly, the Department estimates the average response time for sponsors to ensure standards comply with part 30 is 20 minutes (0.33 hours). Thus, the resulting cost per small entity is $11.85 (0.33 × $35.91).

For a hypothetical small entity in the top five industry categories, the first-year cost of this rule is $118.89 ($107.04 + $11.85). There are no costs in subsequent years.

For a hypothetical small entity in the top five industry categories, the first-year cost of this rule is $118.89 ($107.04 + $11.85). There are no costs in subsequent years.

The total cost impacts, as a percentage of revenue, are all well below the 3 percent threshold for determining a significant economic impact.

The Department used the following steps to estimate the cost of the proposed rule per registered apprenticeship program sponsor as a percentage of annual receipts. First, the Department used the Small Business Administration's Table of Small Business Size Standards to determine the size thresholds for small entities within each major industry. 46 Next the Department obtained data on the number of firms, number of employees, and annual revenue by industry and firm size category from the Census Bureau's Statistics of U.S. Businesses. 47 Then, the Department divided the estimated first-year cost per sponsor by the average annual receipts per firm to determine whether the proposed rule would have a significant economic impact on sponsors in each size category. 48 Finally, the Department divided the number of firms in each size category by the total number of small firms in the industry to determine whether the proposed rule would have a significant economic impact on a substantial number of small entities. 49

The results are presented in the following five tables, one for each major industry sector with the most registered apprenticeship programs and for which data are available: Construction, Educational Services, Manufacturing, Other Services, and Healthcare. As shown in the five tables below, the first-year costs for sponsors in these five industries are not expected to have a significant economic impact (3 percent or more) on small entities of any size. Therefore, the Department certifies that the proposed rule is not expected to have a significant economic impact on a substantial number of small entities.

The Department has not identified any federal rules that may duplicate, overlap, or conflict with this proposed rule. Instead, this proposed rule is removing duplication that currently exists because sponsors will no longer have to refer complaints to the SAAs. Requiring sponsors to refer complaints to the SAAs is duplicative because, in practice, SAAs referred complaints to the appropriate non-discrimination enforcement agencies and employers are already required to refer such complaints to the relevant non-discrimination enforcement agency.

Regarding significant alternatives to the proposed rule that accomplishes the objectives of applicable statutes and minimizes any significant economic impact of the proposed rule on small entities, the Department believes there are limited options. Repealing part 30 entirely would still require sponsors who are small entities to update their standards to remove reference to part 30, costing $11.85 per sponsor. There could be lower to no rule familiarization costs for small entities if part 30 was repealed entirely, since there would be no rule that entities would have to be familiarized with, however sponsors would still need to be informed of the change and may review the Federal Register notice. However, the Department believes that removing part 30 entirely would prevent conformity across the Registered Apprenticeship System, as some states may choose to impose additional requirements for sponsors to conduct legally questionable affirmative action or other EEO activities that expand beyond the scope of the Department's proposed part 30 rule. If part 30 was repealed entirely and states were to impose additional EEO requirements, these new requirements and the resulting confusion from a patchwork of different requirements across jurisdictions could ultimately lead to greater costs for small entities. 50

Alternatively, the Department considered publishing a direct final rule or an interim final rule to make changes to the part 30 regulation. However, the Department determined that these approaches to rulemaking would have given smaller entities no advanced notice of changes to the part 30 regulation, given that the changes would take effect immediately upon (or soon after) publication, and would have denied small entities the opportunity to provide robust feedback on the changes. Accordingly, the Department believes a proposed rule is more appropriate and will allow the Department to better account for small businesses' viewpoint and needs.

The purpose of the PRA, 44 U.S.C. 3501 et seq., includes 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 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). Furthermore, the PRA requires all Federal agencies to analyze proposed and final regulations for potential time burdens on the regulated community created by provisions in the regulations that require any party to obtain, maintain, retain, report, or disclose information. The ICRs also must be submitted to OMB for approval. Such submissions often accompany a proposed and final rulemaking that seeks to modify an existing IC, introduce new ICs, or both.

A Federal agency may not conduct or sponsor a collection of information unless it is approved by OMB under the PRA and displays a currently valid OMB control number. The public also is 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. See 44 U.S.C. 3512.

This rulemaking affects specific information collections (OMB Control Number 1205-0223, which includes OMB-approved forms ETA-671, ETA-9186, and ETA-9039). Changes to these collections will be communicated through an upcoming 60-day Federal Register Notice.

Agency: DOL-ETA.

Title of Collection: Labor Standards and Equal Employment Opportunity for Registered Apprenticeship Programs—Registration and Reporting Requirements.

Type of Review: Revision.

OMB Control Number: 1205-0223.

Description:

Affected Public: State, Local, and Tribal Governments; Private Sector; Individuals or Households.

Obligation to Respond: Required to Obtain or Retain Benefits.

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Estimated Total Annual Burden Hours: placeholder.

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Estimated Total Annual Other Burden Costs: placeholder.

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As required by 5 U.S.C. 801, if finalized, DOL will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is a “major rule” as defined by 5 U.S.C. 804.

The Department has reviewed this proposed rule in accordance with E.O. 13132 and found that it will have Federalism implications because it will have substantial direct effects on States. Although matters of Federalism in the National Registered Apprenticeship System are primarily established through part 29, Labor Standards for Registration of Apprenticeship Programs, which establishes the requirements for the recognition of SAAs as Registration Agencies, the proposed revisions to part 30 also have direct effect on a State's method of administering registered apprenticeship for Federal purposes. In particular, the proposed rule requires an SAA that seeks to obtain or maintain recognition as the Registration Agency for Federal purposes, submit State apprenticeship legislation, regulations, policies, and operational procedures related to the nondiscrimination obligation conformity requirements of part 30, and requires all program sponsors registered with the State for Federal purposes to comply with the State plan. This NPRM also requires OA's Administrator to provide written concurrence on any subsequent modifications to the State plan, as provided in proposed § 29.13(b)(9).

The Department has determined that these requirements are essential to ensure that SAAs conform to the new requirements of part 30, as a precondition for recognition. OA regularly consults and collaborates with State partners and organizations, including when developing and promulgating updates to parts 29 or 30 impacting the National Apprenticeship System. The Department and OA will continue consulting and collaborating with State partners, which the Department views as central to OA's role in promoting and maintaining quality registered apprenticeship programs.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1532, requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a final rule that may result in $100 million or more in expenditures (adjusted annually for inflation) in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. The current threshold after adjustment for inflation is $177 million, using the most current (2022) Implicit Price Deflator for the Gross Domestic Product.

This proposed rule does not meet or exceed the expenditure threshold in any one year when adjusted for inflation. The requirements of title II of UMRA, therefore, do not apply, and the Department has not prepared a statement under the Act.

The Department has reviewed this proposed rule in accordance with E.O. 13175 and has determined that it does not have Tribal implications. The proposed rule does not have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

For the reasons stated in the preamble, the Employment and Training Administration proposes to amend 29 CFR parts 29 and 30 as follows:

The FLSA requires that most employees in the United States must be paid at least the federal minimum wage (currently $7.25 per hour) for all hours worked and overtime pay at not less than time and one-half the employee's regular rate of pay for all hours worked over 40 hours in a workweek. 1 The FLSA also requires covered employers to “make, keep, and preserve” certain records regarding employees, 2 though recordkeeping requirements are relaxed for employees who are exempt from the Act's wage and hour provisions. 3

Prior to 1974, the FLSA's minimum wage and overtime compensation provisions did not apply to domestic service workers unless those workers were employed by covered enterprises (generally those that had at least a certain annual dollar threshold in business). In 1974, Congress amended the FLSA to extend coverage to all domestic service workers, including those employed by private households or small companies previously not covered by the Act. 4 At the same time, Congress created FLSA exemptions for two categories of domestic service employees. First, in section 13(a)(15), Congress added an exemption from the Act's minimum wage and overtime compensation requirements for “any employee employed on a casual basis in domestic service employment to provide babysitting services or any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).”  5 Second, in section 13(b)(21), Congress added an exemption from the overtime requirement (but not the minimum wage requirement) for “any employee who is employed in domestic service in a household and who resides in such household.”  6 Finally, Congress authorized the Department “to prescribe necessary rules, regulations, and orders with regard to the [1974 FLSA Amendments],”  7 and specifically instructed the Department to “define and delimit” the terms “domestic service employment” and “companionship services.”  8

In 1975, the Department promulgated regulations applying the FLSA to domestic service employment at 29 CFR part 552, including provisions addressing the companionship and live-in domestic service employee exemptions. 9 These regulations defined companionship services as “fellowship, care, and protection for a person who . . . cannot care for his or her own needs,” which included “household work related to the person's care such as meal preparation, bed making, washing of clothes, and other similar services” and could include other general household work not exceeding “20 percent of the total weekly hours worked.”  10 Additionally, the 1975 regulations permitted third party employers, or employers of home care workers other than the individuals receiving care or their families or households, to claim both the companionship services and live-in domestic service employee exemptions. 11

These regulations remained substantially unchanged for almost 40 years. In 2007, the Supreme Court issued a unanimous decision affirming the validity of the third-party employer provision at 29 CFR 522.109 (1975), holding in relevant part that neither the statute nor the legislative history provides a definitive answer as to whether third-party employers may avail themselves of these exemptions and that the third-party employer regulation fell within the Department's broad scope of delegated rulemaking authority. 12

In 2013, the Department published a final rule that revised its companionship services and live-in employee regulations. 13 Among other changes, the 2013 rule significantly narrowed the scope of the exemptions in two ways.

First, the 2013 rule altered the definition of exempt “companionship services” to include the provision of “fellowship” (such as social, physical, and mental activities), “protection” (meaning to be present with the person to monitor their well-being), and “care” (meaning assisting with activities of daily living, such as dressing, grooming, feeding, bathing, toileting, and transferring, and instrumental activities of daily living, such as meal preparation, light housework, managing finances, assistance with daily taking of medications, and arranging medical care), but only if such “care” does not exceed 20 percent of the total hours worked per person and per workweek. 14 These changes significantly reduced the scope of permissible job duties for exempt companion workers; whereas under the 1975 rule an exempt companion could engage in limitless care activities and the 20 percent limitation applied only to “general household work,” under the 2013 rule a worker subject to the exemption could only engage in “the provision of care” for a maximum of 20 percent of their weekly worktime. To justify these changes, the Department reasoned that “companionship” should be primarily focused on the provision of fellowship and protection, with a limited allowance for care, because dictionary definitions of the term “companionship” generally do not contemplate care, and because the legislative history included descriptions of exempt companions to “someone to be there and watch an older person,” or “elder sitter.”  15 The preamble to the 2013 rule further asserted that allowing for a 20 percent limitation on care achieved Congressional intent that an exempt companion's primary purpose should be watching over the individuals receiving services, while also recognizing a limited allowance for selected tasks as a matter of practicality. 16

Second, the 2013 rule precluded any third party employers (like home care agencies) from claiming the exemption for companionship services or live-in domestic service employees. 17 Here, the Department reasoned that its interpretation under the 1975 rule improperly ignored the Congressional intent of the 1974 Amendments, which was to extend minimum wage and overtime protections to direct care workers engaged in this work as a vocation, as opposed to on a casual basis, and that workers employed by a third-party agency were not employed on a casual basis. 18

Following the promulgation of the 2013 rule, associations representing third-party home care agencies sued the Department, asserting that the rule misinterpreted the FLSA and violated the Administrative Procedure Act. The United States District Court for the District of Columbia initially enjoined and subsequently vacated the 2013 rule's revisions to 29 CFR 552.6 (defining companionship) and 29 CFR 552.109 (prohibiting third-party employers from claiming the exemptions). 19 In its orders, the court asserted that these provisions contravened statutory intent, characterizing the 2013 rule as an attempt to “redefin[e] a 40-year-old exemption out of existence.”  20 The Department appealed to the United States Court of Appeals, District of Columbia Circuit, which reversed the District Court's vacaturs on August 21, 2015, concluding that the 2013 Rule was a valid exercise of the Department's delegated rulemaking authority to interpret the section 13(a)(15) and 13(b)(21) exemptions under Chevron deference. 21

The 2013 rule became effective on October 13, 2015, when the D.C. Circuit issued the mandate for its decision upholding the rule. The Department began enforcing the rule on November 12, 2015.

The Department proposes to rescind the 2013 rule in its entirety and return to the 1975 regulations which were promulgated soon after the amendments to the FLSA and were in place for nearly 40 years. The Department has reviewed the 2013 regulations and now questions whether the 1975 regulations better comport with the statute and Congress's intent to exempt home care employees from FLSA coverage. Returning to the 1975 regulations would also significantly reduce regulatory burden for the consumers and providers of home care services, which in turn could help to expand access to home care services. The Department welcomes comment on these preliminary assessments. While the discussion below focuses on the two major proposed changes to 29 CFR 552.6 and 29 CFR 552.109, returning to the 1975 regulations would result in other changes to 29 CFR part 552, such as 29 CFR 552.109 concerning live-in domestic service employees. The Department invites comment on the proposal to return to the 1975 regulations in their entirety.

The Department is proposing to return to 1975 regulations' application of the companionship services and live-in domestic service employee exemptions to third party employers. As noted earlier, section 13(a)(15) exempts from minimum wage and overtime requirements “any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary),” while section 13(b) exempts from the overtime compensation requirements “any employee who is employed in domestic service in a household and who resides in such household.”  22 These statutory provisions do not explicitly or implicitly exclude third party employers of employees engaged in companionship services or live-in domestic service from the exemptions. While other FLSA exemptions specify employer-related exemption criteria, 23 nothing in the statutory language exempting companion workers and live-in domestic service employees suggests that third party employers are treated differently from other employers. The Department is considering whether the best interpretation of this language is that if Congress intended to narrow the exemption, it would have said so explicitly, as it has done for many other categories in the FLSA. For example, babysitters are exempt from minimum wage and overtime, but only if they are “employed on a casual basis.”  24

Permitting third party employers to claim the companionship services exemption would be consistent with the Department's contemporaneous understanding of the 1974 FLSA Amendments. 25 In 1975, the Department concluded after notice-and-comment rulemaking that the new exemptions for companions and live-in domestic service workers should be available to third party employers “since these exemptions . . . apply to `any employee' engaged `in' the enumerated services,” remarking that this interpretation would be “consistent with the statutory language and prior practices concerning other similarly worded exemptions.”  26 In 2007, when the U.S. Supreme Court unanimously upheld the legality of the 1975 Rule's third party employer provision, the Court concluded that “more than 30 years later [this reasoning] remains a reasonable, albeit brief, explanation.”  27

The Department acknowledges that it adopted a narrower interpretation of the section 13(a)(15) exemption in the 2013 rule, which was subsequently upheld by the U.S. Court of Appeals for the D.C. Circuit in Home Care Association of America v. Weil, 799 F.3d 1084 (D.C. Cir. 2015), cert. denied, 579 U.S. 927 (2016). However, the Department is considering the effect of a recent Supreme Court decision, Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), on the legal foundation that underpinned the Department's 2013 rule and the D.C. Circuit's subsequent approval of that rule.

In the Loper Bright decision issued last year, the Supreme Court eliminated “Chevron deference,” a doctrine of administrative law which previously required courts to defer to agency interpretations of ambiguous statutes so long as such interpretations were “permissible.”  28 Going forward under Loper Bright, the only “permissible” interpretation of a statute is the one that courts—and not federal agencies—determine is the “best reading” of the statute. 29 Some employers have argued that because of Loper Bright, the 2013 rule's third party employer provision is no longer valid. The Department has thus far taken the position in litigation that the 2013 rule is still valid despite the 2024 Loper Bright decision, but is now taking a fresh look at arguments to the contrary.

In sum, the Department seeks to determine whether, with respect to third party employers, its original interpretation of the section 13(a)(15) and 13(b)(21) exemptions is the better reading of the FLSA's statutory text. The Department welcomes comment on this issue.

As with third party employment, the Department is considering whether to restore the definition of “companionship services” reflected in the Department's pre-2013 regulations. Among other changes, the 2013 rule changed the definition from “fellowship, care, and protection” to “fellowship and protection.”  30 The 2013 regulations permit some “care,” but only up to 20 percent of the total hours worked. 31 While the 1975 regulations wholly included “household work related to the person's care . . . such as meal preparation, bed making, washing of clothes,” the 2013 regulations limited the time that could be spent on such services.

The statutory exemption applies to work done for those people who “are unable to care for themselves.”  32 By definition, these people need “care,” not just fellowship and protection. Thus, basic meal preparation, bed making, and washing of clothes is an important part of companionship services. The Department has tentatively determined that the 1975 regulations more sensibly restricted the companionship services exemption to “those services which provide fellowship, care, and protection.”  33 “Indeed, what services could possibly be required more by those `unable to care for themselves' than care itself?”  34 While the 1975 companionship services exemption did not include care provided by “trained personnel such as nurses,” the Department is considering whether the exemption should once again apply to “household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes, and other similar services.”  35

In the 2013 rule, the Department justified its limitation of care-related duties by analogizing exempt companions to babysitters, citing to remarks in the legislative history of the 1974 FLSA Amendments which described the role of an exempt companion to include passive activities such as “sit[ting]” and “watch[ing].”  36 The Department is reevaluating these arguments, cognizant that the Department's regulations have always recognized that fellowship and protection are elements of exempt companionship services. More fundamentally, “[b]abysitters provide care—assistance with activities of daily living and instrumental activities of daily living—to the extent the children they are watching are unable to care for themselves.”  37 For example, babysitters are often responsible for feeding, bathing, and changing the diapers of young children, and often prepare food and drive children to places they cannot reach on their own. 38 While the Department has long advised that “[t]he term `babysitting services' does not include services relating to the care . . . of infants or children which are performed by trained personnel, such as registered, vocational, or practical nurses,”  39 the regulation for casual babysitters who are exempt under section 13(a)(15) do not otherwise place any limitation on a babysitter's provision of care. The Department now believes the regulation for exempt companions should not be any more restrictive.

Thus, the Department is proposing to restore “care” alongside “fellowship” and “protection” as an example of exempt “companionship services,” consistent with its contemporaneous interpretation of the FLSA as reflected in the 1975 Rule. The Department welcomes comment on this proposal and the reasoning behind it.

As discussed more fully in the regulatory impact analysis in section III(A) of this notice, the Department has tentatively determined that the 2013 rule has had negative effects on the ground which are hindering consumer access to home- and community-based services. These consequences are contrary to the policy goals that motivated Congress' decision to include the section 13(a)(15) and 13(b)(15) exemptions in the 1974 FLSA Amendments. 40

For example, one study by the U.S. Government Accountability Office (GAO) found that home care providers and states administering Medicaid-financed home care programs responded to the 2013 rule by imposing hours restrictions for home care employees to avoid overtime costs. 41 GAO elaborated that these policies “exacerbated” the challenge for consumers to obtain home care, with “a few stakeholders, including worker and consumer advocacy groups, [reporting] that some consumers have had to hire additional workers . . . making it particularly difficult to find enough workers to cover their needs.”  42 While incentivizing employers to spread employment is one of the major policy goals of the FLSA's overtime requirement, 43 Congress has enacted exemptions to the overtime requirement in occupations and industries where spreading employment is difficult, unnecessary, or otherwise undesirable, such as the FLSA's section 13(a)(1) exemption for bona fide professional employees, which includes doctors, lawyers, and teachers. 44 As with such professional employees (particularly teachers), the shortage of qualified workers in the home care industry  45 and the paramount importance of trust and continuity between home care workers and the individuals who they help caution against an unduly narrow reading of the FLSA's section 13(a)(15) and 13(b)(21) exemptions.

As expected, the 2013 rule has resulted in increased costs for home care providers, such as increased recruiting, hiring, and training costs. 46 Additionally, the complicated definitions and reporting regime introduced by the 2013 rule has been burdensome to implement. 47 However, some of the expected benefits of the 2013 rule have failed to fully materialize. For example, GAO's 2020 report concluded that hourly wages and weekly earnings for home care workers “did not significantly increase” following implementation of the 2013 rule when compared to those in occupations with similar entry requirements. 48 The turnover rate for home care workers remains stubbornly high—nearly 80 percent in 2024, 49 comparable to the range of estimates provided in the 2013 rule (spanning 44 to 100 percent). 50 And although the Department predicted in 2013 that “guarantee[ing] minimum wage and overtime compensation for home care jobs . . . will attract more workers to the home care industry,”  51 growth in the home care workforce “slowed” in the years following the 2013 rule, with “the number of home care workers per 100 [individuals receiving home and community-based services] declin[ing] by 11.6 percent between 2013 and 2019.”  52 These findings call into question whether the benefits of the 2013 rule truly exceeded its costs.

For all of the reasons discussed above, the Department proposes to amend 29 CFR part 552 by rescinding the 2013 rule in its entirety and returning to the 1975 regulations. The Department invites public comment on this proposal and the preliminary assessments behind it. The Department specifically invites comment on whether these changes are likely to increase the supply of qualified home health workers, and whether the proposal is likely to decrease regulatory burden on home care consumers and providers.

Under Executive Order 12866, the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) determines whether a regulatory action is significant and, therefore, subject to the requirements of the Executive Order and OMB review. 53 Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as a regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $100 million or more, or adversely affect 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) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. OIRA has determined that this proposed rule is economically significant under section 3(f) of Executive Order 12866.

Executive Order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits. Executive Order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when 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.

The analysis provided below outlines the impacts that the Department anticipates may result from this proposed rule and was prepared pursuant to the above-mentioned executive orders. This proposed rule is expected to be an Executive Order 14192 deregulatory action.

The Fair Labor Standards Act (FLSA or Act) requires that covered, nonexempt employees be paid not less than the Federal minimum wage for all hours worked and overtime pay at one and one-half times the regular rate of pay for hours worked over 40 in a workweek. However, section 13(a)(15) of the FLSA provides an exemption from the Act's minimum wage and overtime pay requirements for “any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves.”  54 Similarly, section 13(b)(21) of the FLSA provides an exemption from the Act's overtime pay requirement—but not its minimum wage requirement—for live-in domestic service workers, who are defined as “any employee who is employed in domestic service in a household and who resides in such household.”  55

In this rulemaking, the Department proposes to reverse regulatory changes introduced by the 2013 final rule entitled, “Application of the Fair Labor Standards Act to Domestic Service.”  56 Specifically, the Department proposes to restore the ability of third-party employers (including home care staffing agencies) to claim the FLSA's section 13(a)(15) companionship services exemption and the section 13(b)(21) exemption for live-in domestic service workers, and to eliminate limitations on “the provision of care” by employees who are exempt under the companionship services exemption.

The Department has carefully reviewed the 2013 final rule and is considering whether its pre-2013 regulations better comport with the FLSA's statutory language and Congress's intent to exempt home care employees from FLSA coverage. Returning to the Department's pre-2013 regulations could also significantly reduce regulatory burden and help to expand access to home care services, consistent with policy goals that inform the FLSA's exemptions for companion employees and live-in domestic service employees.

According to available data from the Bureau of Labor Statistics (BLS), in 2023, there were approximately 3.7 million “Home Health and Personal Care Aides” employees in the United States. 57 Consistent with the methodology used to estimate the number of affected workers in the 2013 rule, the Department believes that this figure represents an upper bound estimate of the total number of home care workers “employed by agencies” who could be affected by this proposed rule. 58 The Department notes, for example, that some of these 3.7 million workers would “[remain] covered by minimum wage and overtime protections at the state level,”  59 while others might be “employed in facilities, such as nursing homes and hospitals,”  60 and therefore are not domestic service employees eligible to be classified as exempt companions or live-in domestic service employees under sections 13(a)(15) or 13(b)(21) of the FLSA. However, this estimate might not account for workers in other occupations who might be affected by this proposed rule, such as live-in nannies. 61 The Department welcome feedback from the public on ways to refine this upper-bound estimate of workers employed by agencies who might be affected by this rule.

Data limitations continue to make it difficult to estimate the number of “independent providers” who might be affected by this rulemaking, i.e., home care workers employed directly by a consumer or a member of the consumer's family or household. 62 Last year, the Paraprofessional Healthcare Institute (PHI) estimated that there were “at least 1.5 million home care workers, including family members . . . employed as `independent providers' through Medicaid-funded consumer-direction programs, based on 2022-2023 survey data on consumer enrollment in these programs.”  63 The Department will use this 1.5 million figure as its upper bound estimate for the number of independent providers potentially affected by this proposed rule, keeping in mind that it includes workers who might remain covered by minimum wage and overtime requirements under state law. The Department welcomes feedback on this choice.

According to the Bureau of Labor Statistics (BLS), “home health and personal care aides” monitor the condition of people with disabilities or chronic illnesses and help them with daily living activities. 64 In addition to these general duties, “home health aides” perform basic health-related services—such as checking a client's pulse, temperature, and respiration rate—depending on the state in which they work. 65 “Personal care aides,” sometimes called caregivers or personal attendants, are generally limited to providing nonmedical services, including companionship, cleaning, cooking, and driving. 66 The median pay for home health and personal care aides is $16.78 per hour, with median annual earnings of $34,900 per year. 67 According to PHI, 84 percent of home care workers are women, 67 percent are non-white, and 32 percent are immigrants. 68

The home care workforce is projected to experience rapid growth in future years to meet the demands of an aging U.S. population. 69 For example, the Bureau of Labor Statistics (BLS) has projected that the demand for “home health and personal care aide” workers will grow 21 percent from 2023 to 2033, much faster than the 4 percent average for all occupations. 70 Indeed, the home care workforce has already doubled in size over the past ten years, growing from 1.4 million home care workers in 2014 to more than 2.9 million in 2023. 71

Despite this growth, the supply of home care workers is failing to keep pace with the growing demand for home care services. 72 According to a 2023 industry report, “the workforce shortage in home-based care has reached crisis proportions,” with “home health care providers [reporting that they turn] away over 25% of referred patients due to staff shortages.”  73 Although the Department predicted in the regulatory impact analysis for its 2013 rule that “guarantee[ing] minimum wage and overtime compensation for home care jobs . . . will attract more workers to the home care industry,”  74 growth in the home care workforce “slowed” in the years following the 2013 rule, resulting in “the number of home care workers per 100 [individuals receiving home and community-based services] declin[ing] by 11.6 percent between 2013 and 2019.”  75

In the absence of this rulemaking, home care workers and other live-in domestic service employees would continue to be entitled to minimum wage and overtime pay if they are employed by a “third party” employer, such as a home care agency that supplies workers in an “agency-directed model” of home care. 76 Additionally, independent providers who are currently exempt companions would likely continue spending no more than 20 percent of their weekly worktime providing “care” to the individuals they serve, which is a requirement to remain exempt under the current regulations. 77 The Department assumes that many nonexempt companion workers employed by third party employers presently spend more than 20 percent of their weekly worktime providing “care” to individuals, as the 20 percent limit on care introduced in the 2013 rule only applies to companion workers who are exempt. The Department welcomes comment on these assumptions, which inform the baseline scenario used to measure the potential effects of this rulemaking.

As noted earlier, the Department assumes that there are 3.7 million home care workers employed by third-party agencies, and an additional 1.5 million home care workers employed directly by a consumer (or their family or household) who are commonly described as “independent providers.”  78 Under this proposal, some or all of the 3.7 million home care workers employed by third-party agencies could become newly exempt under the FLSA as a consequence of the proposed changes third party employment in section 552.109, but some of these workers may not be affected as a practical matter if they remain subject to minimum wage and overtime pay requirements under state law. While the estimated 1.5 million independent providers would not be affected by the proposed changes to third party employment in section 552.109, some of these workers could have greater care-giving responsibilities as a consequence of the proposed changes to the definition of “companionship services” in section 552.6—at least to the extent that these independent providers presently are (and would remain) FLSA-exempt companions.

The Department expects that its proposal to revert to the pre-2013 regulations would reduce the cost of home care services by providing home care staffing agencies with greater scheduling flexibility and reduced labor costs for home care workers who become newly exempt. Relatedly, this rulemaking could obviate compliance costs related to recordkeeping and other costs for home care providers, such as increased hiring, recruiting, and training costs, that stakeholders have asserted are attributable to the 2013 rule. 79 This would result in direct costs savings for employer home care agencies and potential indirect cost savings for the consumers of home care services and for Federal and State governments, which reimburse home care services through Medicaid. 80

The Department additionally expects that this NPRM, if adopted, would expand access to home care services. By lowering labor costs, the proposed rule may encourage more providers to enter or expand operations in the home care market, increasing the availability of home care services for aging and disabled populations. Relatedly, easier access to home-based care may delay or prevent placement in more expensive institutional settings, aligning with federal and state policies favoring HCBS. Consumers who would prefer one home care worker, rather than having multiple people assist them with sensitive activities such as bathing and toilet use, would benefit from the proposed rule to the extent that it lessens incentives to spread jobs across multiple workers.

Finally, workers who are, in the baseline, employed by multiple home care agencies (working more than 40 hours per week in total) may be able to consolidate their employment with one agency, thus yielding a convenience-related benefit.

The Department welcomes comment on the likelihood of these potential benefits and the extent to which they offset or outweigh the potential costs of this rulemaking, discussed below.

Under the NPRM, many home care workers presently employed by third party agencies would become newly exempt and lose the right to receive minimum wage and overtime pay under the FLSA. Losing the right to receive the federal minimum wage would not affect most workers, as the median hourly wage for home health and personal care aides was $16.12 per hour in 2023—well above the $7.25 per hour federal minimum wage. 81 However, losing the right to receive overtime pay could result in home care workers working additional overtime hours at straight-time pay and/or receiving less pay for the overtime work they would perform in the absence of this proposed rule. These potential effects—longer work hours and/or less pay—could negatively impact the morale of affected home care workers and lead to increased employee turnover and difficulty attracting skilled workers to the industry. 82

Additionally, the Department anticipates that a final rule similar to this proposal would result in modest regulatory familiarization costs. Although the proposed rule would not impose any new regulatory requirements on home care agencies or consumers that these stakeholders would need to learn about, the Department expects that home care agencies, consumers, and home care workers would choose to spend time learning about this rulemaking if it is finalized. Such familiarization costs would be modest because the effects of the proposed rule are fairly straightforward.

The proposed rule would likely result in a transfer of income from domestic workers to employers, state Medicaid programs, and private consumers. The majority of this income transfer would come from home care workers currently employed by third party employers, who could become newly exempt from minimum wage and overtime pay as a consequence of this rulemaking. This transfer is not a net cost to society but represents a redistribution of income and purchasing power.

As noted earlier, the majority of this income transfer would be attributable to avoided overtime premiums, as most of home care workers affected by this rulemaking are paid well above the FLSA's $7.25 per hour minimum wage. The Department notes that, while it had previously anticipated significant transfers from employers to home care workers in the form of overtime earnings, GAO's 2020 report concluded that earnings “did not significantly increase” following implementation of the 2013 final rule. 83 This may be because the Department did not anticipate the extent to which affected employers would respond to the 2013 final rule by reducing the hours of their home care employees, thereby avoiding overtime pay and reducing regular earnings. 84 The transfer resulting from rescission of the 2013 final rule is thus likely to be more muted than the Department's 2013 analysis suggested. This transfer effect could also be mitigated to the extent that third party home care providers respond to this rulemaking by allowing exempt home care workers to work longer hours than if such workers were nonexempt. 85 The Department welcomes comments on what transfer effects may occur in light of how employers may respond to the rescission of the 2013 final rule.

The Department considered two alternatives to this proposal. First, the Department considered the alternative of preserving the status quo under the current regulations. This alternative was rejected for the reasons discussed earlier in sections II and III(A)(2) of this notice. Second, the Department considered the alternative of retaining some changes from the 2013 rule in lieu of a wholesale return to the pre-2013 regulations—specifically, retaining all changes to the regulatory text in part 552 introduced by the 2013 rule except for the third party provision codified at 29 CFR 552.109 and limits on “the provision of care” codified in 29 CFR 552.6(b). This approach would, for example, keep the 2013 rule's updated definition of the job duties which constitute “care” and its removal of outdated domestic service worker examples like “governesses,” “footmen,” and “grooms.” The Department invites comments on these two regulatory alternatives, as well as other regulatory alternatives that commenters may propose.

The proposed rule is anticipated to result in numerous benefits, including potentially significant reductions in the cost of obtaining and providing home care services. These benefits must be weighed against likely reductions in employee earnings and worker protections. Given these tradeoffs, the Department seeks public comment and empirical data to better quantify the proposed rule's effects (perhaps by updating quantitative inputs used in the analysis accompanying the 2013 final rule) and ensure that any final rule appropriately balances the interests of consumers, workers, and providers.

The Regulatory Flexibility Act of 1980 (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), hereafter jointly referred to as the RFA, requires that an agency prepare an initial regulatory flexibility analysis (IRFA) when proposing, and a final regulatory flexibility analysis (FRFA) when issuing, regulations that will have a significant economic impact on a substantial number of small entities. Because this proposed rule would have a significant (beneficial) impact on a significant number of small entities in the home care industry, the Department has prepared this IRFA.

The FLSA generally requires that employees be paid at least the Federal minimum wage, currently $7.25 per hour, for every hour worked and at least one and one-half times their regular rate of pay for each hour worked over 40 in a single workweek. 29 U.S.C. 206(a), 207(a). Prior to 1974, the FLSA's minimum wage and overtime compensation provisions did not apply to domestic service workers. In 1974, Congress revised the FLSA to extend coverage to all domestic service workers, however, Congress included an exemption from the minimum wage and overtime compensation requirements for domestic service workers who provide “companionship services” and an exemption from the overtime compensation requirement for live-in domestic service workers. In 1975, the Department promulgated regulations implementing the companionship and live-in domestic service employee exemptions. These regulations defined companionship services as “fellowship, care, and protection,” which included “household work . . . such as meal preparation, bed making, washing of clothes, and other similar services” and could include other general household work not exceeding “20 percent of the total weekly hours worked.” Additionally, the 1975 regulations permitted third party employers, or employers of home care workers other than the individuals receiving care or their families or households, to claim both the companionship services and live-in domestic service employee exemptions.

In 2013, the Department revised its companionship services and live-in employee regulations. The 2013 regulations defined “companionship services” narrowly to encompass only workers providing limited, non-professional services. And the regulations precluded third party employers (like home care agencies) from claiming the exemption for companionship services or live-in domestic service employees.

The Department proposes to rescind the 2013 regulations and restore the 1975 standards that applied following the amendments to the FLSA. 29 CFR part 552. The Department is also requesting comment on reasons to keep or rescind the 2013 home care regulations, the best definition of companionship services, and whether third party employers should be covered by the exemption under the best reading of the FLSA. The Department also seeks comment on the 2013 regulations' consistency with statutory authority, and costs and benefits.

The 2013 regulation defines a “small entity” as a (1) small not-for-profit organization, (2) small governmental jurisdiction, or (3) small business. The Department used standards defined by SBA to classify entities as small for the purpose of this analysis. For the two industries that are the focus of this analysis, the SBA defines a small business as one that has average annual receipts of less than $19 million for Home Health Care Services (HHCS, NAICS 621610) and $15 million for Seniors and Elderly Persons with Disabilities (SEPD, NAICS 624120). Based on the 2022 Statistics of U.S. Businesses (SUSB) data, there are 27,140 small businesses in the HHCS industry (96 percent of all business), and 32,899 small business in the SEPD industry (96 percent of all business). Thus, this rulemaking could impact 60,039 small businesses.

There are no reporting or recordkeeping requirements associated with this rescission. Thus, the only direct costs to affected entities would be rule familiarization costs.

The Department is unaware of any Federal rules which duplicate, overlap, or conflict with the proposed rule.

The Department considered two alternatives to this proposal. First, the Department considered the alternative of preserving the status quo under the current regulations. This alternative was rejected for the reasons discussed earlier in sections II and III(A)(2) of this notice. Second, the Department considered the alternative of retaining some changes from the 2013 rule in lieu of a wholesale return to the pre-2013 regulations—specifically, retaining all changes to the regulatory text in part 552 introduced by the 2013 rule except for the third party provision codified at 29 CFR 552.109 and limits on “the provision of care” codified in 29 CFR 552.6(b). This approach would, for example, keep the 2013 rule's updated definition of the job duties which constitute “care” and its removal of outdated domestic service worker examples like “governesses,” “footmen,” and “grooms.” The Department welcomes comment on these regulatory alternatives, particularly regarding whether the Department should retain any changes from the 2013 rule which are not implicated by the legal and policy considerations motivating this rulemaking.

The purpose of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., includes 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 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 it is approved by the Office of Management and Budget (OMB) under the PRA and it 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).

This rulemaking potentially affects the existing information collection designated as OMB Control Number 1235-0018, Records to be kept by Employers—Fair Labor Standards Act. Any changes to this collection will be communicated through an upcoming 60-day Federal Register Notice.

E.O. 13132, “Federalism,” 64 FR 43255 (August 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.

The Department has examined this proposed rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. 2 U.S.C. 1532(a), (b)). The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them.

The Department examined this proposed rule according to UMRA and its statement of policy and determined that the rule does not contain a Federal intergovernmental mandate, nor is it expected to require expenditures of $100 million or more (adjusted for inflation) in any one year by State, local, and Tribal governments, in the aggregate, or by the private sector. As a result, the analytical requirements of UMRA do not apply.

This proposed rule is expected to be an Executive Order 14192 deregulatory action. It also implements Presidential Memorandum Directing the Repeal of Unlawful Regulations, dated April 9, 2025.

For the reasons set forth in the preamble, the Department is proposing to amend part 552 of chapter V, subchapter A of title 29 of the Code of Federal Regulations, as set forth below:

The Administrative Procedure Act (APA) broadly defines the term “rule” as “[t]he whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency[.]” 5 U.S.C. 551(4). Within this category are “legislative rules” which have “the force and effect of law,” Perez v. Mortgage Bankers Assoc., 575 U.S. 92, 96 (2015), 1 and “interpretive rules,” which “advise the public of the agency's construction of the statutes and rules which it administers” but “do not have the force and effect of law and are not accorded that weight in the adjudicatory process.” Id. at 97 (internal quotation marks omitted). The APA also recognizes a third kind of rule: “general statements of policy,” 5 U.S.C. 553, which are understood to be “agency statements of general applicability, not binding on members of the public, `issued . . . to advise the public prospectively of the manner in which the agency proposes to exercise a discretionary power.' ”  2

Since the Code of Federal Regulations (CFR) was created in 1937, Federal law has described the CFR as “a complete codification of the documents of each agency of the Government having general applicability and legal effect, ” which are “relied upon by the agency as authority for, or are invoked or used by it in the discharge of, its activities or functions.” 44 U.S.C. 1510(a) (emphasis added); see also 1 CFR 8.1 (describing the CFR as “a compact and practical code . . . contain[ing] each Federal regulation of general applicability and legal effect”). Similarly, Executive Order 12866—which sets forth Presidential oversight of the Federal regulatory process—defines the term “regulation” in relevant part as “an agency statement of general applicability and future effect, which the agency intends to have the force and effect of law[.]” 58 FR 51735, 51737 (Sept. 30, 1993). These authorities imply, and can lead the general public to infer, that all “regulations” codified in the CFR are legislative rules with the force and effect of law.

Legislative rules set forth by the Department's Wage and Hour Division (WHD) regarding the Fair Labor Standards Act (FLSA) primarily appear in Subchapter A of its assigned chapter in the CFR. See 29 CFR parts 500-697. Examples of legislative rules issued by WHD include employer recordkeeping requirements established pursuant to section 11(c) of the FLSA (located at 29 CFR part 516), 3 criteria which “define and delimit” the FLSA's section 13(a)(1) exemption for executive, administrative, and professional employees (located at 29 CFR part 541), 4 and child labor regulations issued under section 3(l) of the FLSA (located at 29 CFR part 570). 5 Regulations on topics addressed in certain FLSA amendments, such as the FLSA's application to tipped employees (located at 29 CFR part 531 subpart D) or the employees of state or local governments (located at 29 CFR part 553), are also legally binding legislative rules. 6

However, since the 1940s, WHD has provided “Statements of General Policy or Interpretations Not Directly Related to Regulations” in Subchapter B of its assigned CFR chapter, 7 which presently spans parts 775 to 795 of Title 29. Most of the parts in Subchapter B provide interpretive guidance on topics that Congress has not specifically delegated rulemaking authority to the Department to address, such as: the principles of coverage under the FLSA (29 CFR part 776); the determination of an employee's “regular rate of pay” used to calculate overtime premiums under the FLSA (29 CFR part 778); the definition of “hours worked” under the FLSA (29 CFR part 785); or independent contractor status under the FLSA (29 CFR part 795). While some of the parts or provisions located in Subchapter B were originally issued or subsequently amended through notice-and-comment rulemaking, many were not, as the APA exempts “interpretative rules” and “general statements of policy” from the notice-and-comment requirement that generally applies to legislatives rules. See 5 U.S.C. 553(b)(A).

Like other forms of guidance, the interpretive rules and policy statements in Subchapter B provide “enormous value” by “channel[ing] the discretion of agency employees, increas[ing] efficiency, and enhanc[ing] fairness by providing the public clear notice of the line between permissible and impermissible conduct while ensuring equal treatment of similarly situated parties.”  8 “[W]hile not controlling upon the courts,” interpretive rules and policy statements “constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance[,]” with the weight afforded to such guidance “depend[ing] upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). As with legislative rules, employers can rely upon interpretive rules and policy statements issued by the WHD Administrator under section 10 of the Portal-to-Portal Act of 1947, which provides a defense against liability for violations of the FLSA, the Walsh-Healey Public Contracts Act, or the Davis-Bacon Act for any acts or omissions that an employer makes in good faith reliance on such guidance. See 29 U.S.C. 259; see also 29 CFR 790.13-.19 (elaborating on the requirements for a “good faith reliance” defense under the Portal-to-Portal Act).

However, when interpretive rules and policy statements are codified in the CFR alongside legislative rules, there is a risk that regulated entities and members of the public may misunderstand the nature of these materials. For example, employers may mistakenly assume that all “regulations” set forth in the CFR carry the force of law. In fact, Federal courts have sometimes stated that heightened standards of judicial deference intended for legislative rules apply to the interpretive rules set forth in Subchapter B. 9 For example, in ruling against a plaintiff employee in Kavanagh v. Grand Union Co., Inc., 192 F.3d 269 (2d Cir. 1999), the Second Circuit said that it was “not free to disregard” an interpretive rule on compensable time set forth in part 785, “when that regulation represents a permissible construction of the statute” at the time under the then-applicable Chevron deference. Despite remarking that “[the employee's] situation strikes us as inequitable,” the court emphasized that “constraints on the judicial function” determined the outcome of the case. Id. at 272-73. Whether by courts or employers, undue deference to the guidance set forth in Subchapter B is a foreseeable outcome of authorities implying that all content in the CFR has binding “legal effect,” as noted earlier. See 44 U.S.C. 1510(a); see also 1 CFR 8.1.

Even if employers understand that the interpretive rules and policy statements set forth in Subchapter B are non-binding— i.e., that the “correctness an interpretation . . . can be determined finally and authoritatively only by the courts” and that WHD “will receive and consider statements suggesting change of any interpretation,” 29 CFR 790.1(c)—employers may feel compelled to comply with such guidance as a practical matter. As the Administrative Conference of the United States (ACUS) has noted, “modern regulatory schemes often have structural features that tend to lead regulated parties to follow [an interpretive rule or policy statement] even if in theory they might be legally free to choose a different course, because the costs and risks associated with doing so are simply too high,” particularly where “statutes or regulations . . . subject the regulated party to the possibility of enforcement proceedings that entail prohibitively high costs regardless of outcome, or can lead to sanctions so severe that the party will not risk forcing an adjudication of the accusation.”  10

This rulemaking seeks to address such risks by proposing to remove all parts from Subchapter B which have not undergone notice-and-comment rulemaking. Ensuring that all of the parts in Subchapter B have undergone notice-and-comment rulemaking will confirm that the guidance provided therein has benefited from the input of interested outside stakeholders, particularly “parties [who] lack the opportunity and resources to participate in the individual adjudicatory or enforcement proceedings to which [an interpretive rule or] policy may apply.”  11 The Department also intends for this action to reinforce the distinction between such rules and other sub-regulatory guidance, thereby promoting consistency in its regulatory program

The Department acknowledges that there may once have been reason to publish interpretive guidance in the CFR at a time when few would have access to view such guidance otherwise. Indeed, when the Department began moving interpretive guidance from earlier “Interpretive Bulletins” into the CFR in the late 1940s, the Department explained that the purpose of codification was “to make available in one place interpretations of the Administrator which will provide `a practical guide to employers and employees as to how the office representing the public interest in enforcement of the law will seek to apply it.' ” 13 FR 419, 420 (Jan. 30, 1948) (citing Skidmore, 323 U.S. at 138).

However, technology has widened the availability of resources available to the public, which are no longer limited to the U.S. Code and the CFR. Indeed, it is commonplace today for interested parties to view the Department's website and, in particular, WHD's Field Operations Handbook (FOH), which summarizes many of the agency's positions and cross-references to various other resources. 12 And while one of the original reasons for the CFR was to have a comprehensive publication of every agency's rules and legal interpretations, many agencies, including WHD, issue sub-regulatory guidance outside of the CFR which is entitled to the same weight as interpretive rules and policy statements that are in the CFR. Accordingly, the Department intends to temporarily retain all content which is removed from the CFR as sub-regulatory guidance, apart from the provisions in part 779 which are obviously obsolete. 13

In sum, to better serve the public and increase transparency, the Department proposes to remove all interpretive rules and policy statements located in Title 29, Chapter V, Subchapter B of the CFR that have not, at least in part, been issued or revised through notice-and-comment rulemaking, while seeking comment on whether any portions should be retained in the CFR. The Department intends to relocate the removed Subchapter B provisions (other than obsolete content in Part 779) into an appendix to the FOH (with similar citations) until such time that WHD can determine which are appropriate to: (1) propose as legislative or interpretative regulations; (2) retain as sub-regulatory interpretive guidance; or (3) amend or eliminate for one or more substantive reasons. Any substantive changes made as described in category (3) would not require public notice and, as such, it would be up to the Department's discretion regarding how to proceed with respect to any changes once the material is located in the FOH.

The Department emphasizes that this rulemaking is not a commentary on the underlying merits of any provisions which are presently located in Subchapter B. Relocating interpretive guidance from Subchapter B of the CFR to the FOH would not have any substantive import for the guidance itself, nor would the relocation invalidate or call into question any (1) WHD opinion letters, fact sheets, or other compliance assistance materials that interpret and rely on the CFR provisions, (2) any court decisions that have relied on such provisions, or (3) any of the Department's enforcement efforts that may involve these provisions.

Although it is not necessary to issue an NPRM for the relocation or elimination of individual interpretative rules or policy statements which themselves were not promulgated or revised through notice and comment rulemaking, given the scope of the proposed changes to Subchapter B, and as a matter of public courtesy, the Department is seeking comment on the current proposed rule. The Department, however, reserves its right to decline additional notice-and-comment for any future changes to content removed from the CFR as a consequence of this rulemaking. 14

WHD's assigned portion of the CFR (located in Chapter V of Subtitle B of Title 29) is divided into the following four subchapters: Subchapter A (“Regulations”); Subchapter B (“Statements of General Policy or Interpretation Not Directly Related to Regulations”); Subchapter C (“Other Laws”); and Subchapter D (“Garnishment of Earnings”). The potential effects of this rulemaking for each of these sections is addressed below.

Subchapter A (“Regulations”) contains Part 500 through Part 697. To the extent that these parts contain provisions that should be removed or relocated, such provisions may be addressed in a separate rulemaking. To provide one illustration, Part 531(“Wage Payments Under the Fair Labor Standards Act of 1938”) contains a subpart (Subpart C) entitled “Interpretations,” consisting of what appear to be non-binding interpretive rules. For example, an introductory section to Subpart C of part 531 explains that the “the interpretations [provided in this subpart] indicate . . . the construction of the law which the Secretary of Labor and the [WHD] Administrator believe to be correct and which will guide them in the performance of their administrative duties under the [FLSA] unless and until they are otherwise directed by authoritative decisions of the courts. ” 29 CFR 531.25(b) (emphases added). Nearly identical language appears in an introductory section for 29 CFR part 790, which provides interpretive guidance about the Portal-to-Portal Act of 1947. See 29 CFR 790.1(c).