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HUD is retaining its existing Section 3 labor-hour benchmarks while asking grantees, contractors and other stakeholders about their experience meeting them. The notice, Federal Register document 2026-20374 and docket FR-6622-N-01, was filed October 2 at 8:45 a.m. and published October 5.
The final Federal Register page confirms October 5 publication. The notice is effective November 4, so publication does not mean the notice took effect over the preceding weekend.
The document lists November 4, 2026 as its effective date and December 4, 2026 for public comments. Its substantive decision is continuity: HUD says the available data do not provide a sufficiently representative sample to support altering the current benchmark goals. The notice continues the ratios established in the original benchmark notice and the labor-hour methodology used there.
It does not create a new grant competition, announce an allocation or change a property's physical inspection score. Section 3 concerns employment and economic opportunities associated with covered housing and community-development assistance. This notice addresses the benchmarks used within that framework.
The original September 29, 2020 benchmark notice establishes two ratios. Section 3 workers are to account for at least 25 percent of the relevant total labor hours, while Targeted Section 3 workers are to account for at least 5 percent of that total.
The targeted-worker ratio is not 5 percent of the Section 3-worker hours. Both benchmarks use the applicable total labor-hour denominator. The targeted benchmark is also not an additional unrelated 5 percent hiring requirement measured by the number of people employed.
For public housing financial assistance, the original notice frames the ratios around labor hours worked with that assistance during the PHA's or other recipient's fiscal year. For Section 3 projects, the ratios concern labor hours worked on the project. Current regulations in 24 CFR 75.13 and 75.23 preserve those distinct contexts.
The October notice refers back to the original ratios rather than reproducing a new set of numerical goals. Reading it with the original benchmark document explains what is being retained. A headline saying HUD updated benchmarks would be incomplete if readers were left to assume the percentages changed.
Labor hours and headcount can produce different measures. The regulations define labor hours as paid hours worked by people on a Section 3 project or by people employed with funds that include public housing financial assistance. A recipient cannot simply replace those records with the percentage of employees who qualify and assume it has measured the same thing.
The complete October 5 edition PDF includes a more detailed explanation than the extracted web text. HUD says some larger projects funded after July 1, 2021 have not completed construction and therefore have not reported final labor hours for Section 3 workers or Targeted Section 3 workers.
The notice explains that labor-hour counts and evaluation of benchmark achievement for those projects are not determined until completion. Different construction durations can therefore leave the reporting pool incomplete, especially where unfinished larger projects account for substantial numbers of labor hours.
For public housing financial assistance, HUD says its reporting application launched January 21, 2026 for recipients with fiscal-year ends of September 30 and December 31, 2025. The document states that the reporting window for the last cohort of public housing authorities closed July 30, 2026.
HUD says this leaves public-housing financial-assistance recipients with only their first year of reporting under the current regulations, rather than the full three years of data needed for the review. It also says those recipients were not required to report labor hours under Part 75 until a reporting system was in place.
These statements are HUD's explanation for retaining the goals. They do not establish that all recipients achieved them, that all reports were complete or that the program's employment objectives have been met. The conclusion is narrower: HUD considers the initial data too limited and unrepresentative to justify changing the percentages at this time.
Under 24 CFR 75.13, PHAs and other recipients are considered compliant in the absence of evidence to the contrary when they certify that they followed the applicable prioritization of effort and meet or exceed the benchmarks. Section 75.23 provides the corresponding structure for covered housing and community-development projects.
The certification and the ratios are both parts of the safe harbor. Meeting a percentage does not remove the certification requirement. The regulations also preserve the qualification that contrary evidence can matter, rather than describe the numerical result as an absolute exemption from every compliance concern.
The October notice does not replace that framework with a new automatic pass-or-fail rule. It retains the goals within the existing regulations. A recipient's obligations still depend on the relevant assistance, project and reporting provisions.
The reporting rules also address recipients that do not meet the benchmarks. Sections 75.15 and 75.25 require additional reporting on the qualitative nature of compliance activities when the reported labor hours fall short. That includes the recipient's efforts and those of contractors and subcontractors.
Examples in the regulations include outreach to potential workers, training and apprenticeships, job fairs, job-placement support, work-readiness services and assistance to businesses seeking contracts. The existence of that additional reporting route should not be mistaken for a waiver, but it also means a shortfall cannot be accurately described using the percentages alone.
Section 3 workers and Targeted Section 3 workers are defined categories. Under 24 CFR 75.5, a Section 3 worker can qualify through the applicable income limit, employment by a Section 3 business concern or participation in YouthBuild, subject to the regulation's documentation and timing provisions.
Targeted-worker definitions differ by assistance type. For public housing financial assistance, 24 CFR 75.11 includes specified public-housing and Section 8-assisted residents, YouthBuild participants and workers employed by Section 3 business concerns. Section 75.21 addresses the targeted category for housing and community-development assistance.
Those distinctions matter when evaluating reports. A general statement that a worker has a low income or lives near a project does not replace the applicable documented definition. Nor should a contractor assume that the same targeted-worker test applies without regard to which assistance framework governs the work.
The regulations also state that workers must meet the qualifications of the positions to be filled and that Section 3 businesses must meet contract specifications. The benchmark notice does not suspend those requirements or guarantee a job or contract to every person or business that meets a Section 3 definition.
The retained ratios therefore concern documented labor hours within an existing set of definitions. They are not a new household housing benefit or an assurance of employment for every resident of a subsidized property.
The safe-harbor regulations exclude professional services from the total labor-hour denominator. The reporting provisions permit qualifying Section 3-worker and targeted-worker hours from professional services to be reported without including those professional-service hours in the total hours worked.
Part 75 defines professional services as nonconstruction services requiring an advanced degree or professional licensing. Its examples include legal services, financial consulting, accounting, environmental assessment, architectural services and civil engineering.
This is a defined reporting rule, not a general invitation to exclude any inconvenient contractor hours. The regulations also say that when a contract combines professional services with other work, nonprofessional hours still must be reported if the recipient elects not to report the professional-service hours.
The October notice does not change those rules. Retaining the percentages does not mean the correct denominator can be assumed from a project's total payroll without considering the applicable reporting provisions.
HUD specifically seeks comments on stakeholders' experience achieving the current goals, challenges they have faced and recommendations for appropriate goals in future updates. The notice says another update will be published no later than three years after this one, as required by the regulations.
It also says HUD does not intend to issue a second notice subject to public comment unless comments provide a basis for an additional revision. That statement describes the agency's planned handling of this update, not a guarantee that the benchmarks can never change before the next scheduled review.
The December 4 comment date is separate from the November 4 effective date. It is not a construction completion date, a grant application deadline or a newly established labor-reporting deadline for every recipient. Existing reporting schedules must be read in their own program context.
The immediate result is a published notice preserving the current goals and inviting evidence about how the framework operates. The supported operational takeaway is continuity in the labor-hour ratios, with the existing definitions, safe-harbor certifications and reporting requirements still relevant.
1. Continue using the existing labor hour benchmarks and applicable worker definitions. Confirm that tracking uses labor hours rather than employee headcount and that both percentages use the applicable total labor hour denominator.
2. Review the applicable prioritization certification and reporting requirements. Where benchmarks are not met, document the required qualitative compliance efforts rather than treating a shortfall as an automatic waiver.
3. If submitting comments, gather actual experience, challenges and recommendations for future benchmarks. Submit through the official notice's public comment route by December 4, 2026, identifying docket FR-6622-N-01.
HUD is keeping the existing Section 3 labor hour goals, not raising or lowering them. Covered recipients can continue planning around the 25 percent Section 3 worker and 5 percent Targeted Section 3 worker benchmarks, while offering evidence on how the goals work in practice. December 4 is a public comment deadline, not a new construction or labor reporting deadline.
PHAs and other recipients of covered public housing financial assistance, recipients of covered housing and community development projects, and their contractors and subcontractors. Section 3 workers, Targeted Section 3 workers and qualifying businesses are also stakeholders in the employment and contracting opportunities generated by this assistance. The notice does not create a new household housing benefit or guarantee a job.
HUD's published Section 3 notice retains the existing labor-hour benchmark ratios rather than raising or lowering them.
The notice was filed October 2 and published in the Federal Register October 5.
It lists November 4 effectiveness and December 4 as the public-comment date.
Existing benchmarks remain 25 percent for Section 3 workers and 5 percent for Targeted Section 3 workers.
HUD says incomplete project data and the recent public-housing reporting rollout do not provide a representative basis for changing the goals.
The percentages measure labor hours, not worker headcount, and safe harbor also requires the applicable prioritization certification.
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