in effect
This is a final rule from the Department of Labor’s Wage and Hour Division, effective December 22, 2025, that permanently removes 29 CFR Part 9 from the Code of Federal Regulations. It is a rescission — an erasure of existing regulations — taken because the executive order that authorized those regulations was itself revoked by President Trump on January 20, 2025.
The deleted regulations had required that when one company takes over a federal service contract from another, the incoming (successor) contractor must offer jobs first to the workers already employed on that contract by the outgoing (predecessor) contractor. That “right of first refusal” requirement is now eliminated. No public comment period was held; the Department determined one was unnecessary because the underlying legal authority no longer existed. Notably, the Department states the original rule had never actually taken effect — the Federal Acquisition Regulation Council never issued the contract-clause regulations that would have triggered it — so no active contracts were operating under it. The Department estimates the rescission saves roughly $39 million in the first year (primarily avoided compliance and recordkeeping costs for contractors and federal contracting officers) against about $8 million in one-time costs for firms reading the new rule.
Federal service contractors and subcontractors — approximately 120,000 firms currently holding Service Contract Act-covered contracts — are the primary regulated parties, and they are relieved of obligations to offer preferential hiring to predecessor workers when winning a new contract. Workers employed on expiring federal service contracts lose the regulatory protection that would have given them first-refusal employment rights with the incoming contractor.