AFSCME v. Department of Labor

During the Great Depression, state and federal job placement assistance programs were ineffective because of political patronage and unqualified staff. To remedy this problem, Congress in 1933 passed the Wagner-Peyser Act, establishing a program known as the Employment Service (ES). Through the ES program, the Department of Labor provides grant funds to states to provide job search and placement assistance to workers across the country.  The Wagner-Peyser Act directs the Department to develop and prescribe minimum standards of efficiency for state programs as a condition of the states’ receipt of grant funding. From the earliest days of the program, one requirement the Department has imposed pursuant to this statutory provision is that services be delivered by state employees hired on the basis of merit and whose jobs are protected from political or partisan influence.

In August 2026, the Department of Labor issued a new rule that would eliminate this requirement, based on a novel statutory interpretation that the requirement was not authorized by the Wagner-Peyser Act. Under the new rule, states would be free to use private contractors to deliver ES services—despite a wealth of evidence showing that such privatization leads to a decrease in the quality of services provided.

On behalf of the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME)—a labor union that represents current state merit-system ES employees in fifteen states—we filed suit to challenge the rule. Our complaint alleges that the Department of Labor’s new statutory interpretation is wrong and that its elimination of the merit-staffing requirement was arbitrary, capricious, and not in accordance with law.