---
kind: "section"
citation: "42 U.S.C. § 505"
title: "42"
title_heading: "The Public Health and Welfare"
number: "505"
heading: "Demonstration projects"
release: "119-102"
url: "https://uscodex.org/usc/42/505"
units:
  - "Chapter 7 — Social Security"
  - "Subchapter III — Grants to States for Unemployment Compensation Administration"
---

# §505. Demonstration projects

- (a) **State demonstration projects authorized—** The [Secretary](/usc/42/1301.md?p=a-6) of Labor may enter into [agreements](/usc/42/1320b–8.md?p=a-3-A), with up to 10 [States](/usc/42/1397n–12.md?p=6) that submit an application described in [subsection (b)](#b), for the purpose of allowing such [States](/usc/42/1397n–12.md?p=6) to conduct [demonstration projects](/usc/42/16281.md?p=d-2) to test and evaluate measures designed—
  - (1) to expedite the reemployment of individuals who have established a benefit year and are otherwise eligible to [claim](/usc/42/1320a–7a.md?p=i-2) unemployment compensation under the [State](/usc/42/1397n–12.md?p=6) law of such [State](/usc/42/1397n–12.md?p=6); or
  - (2) to improve the effectiveness of a [State](/usc/42/1397n–12.md?p=6) in carrying out its [State](/usc/42/1397n–12.md?p=6) law with respect to reemployment.
- (b) **Application for demonstration project; required content—** The [Governor](/usc/42/6372.md?p=1) of any [State](/usc/42/1397n–12.md?p=6) desiring to conduct a [demonstration project](/usc/42/16281.md?p=d-2) under this section shall submit an application to the [Secretary](/usc/42/1301.md?p=a-6) of Labor. Any such application shall include—
  - (1) a general description of the proposed [demonstration project](/usc/42/16281.md?p=d-2), [including](/usc/42/1301.md?p=b) the authority (under the laws of the [State](/usc/42/1397n–12.md?p=6)) for the measures to be tested, as well as the period of time during which such [demonstration project](/usc/42/16281.md?p=d-2) would be conducted;
  - (2) if a waiver under [subsection (c)](#c) is requested, a statement describing the specific aspects of the [project](/usc/42/11360.md?p=20) to which the waiver would apply and the reasons why such waiver is needed;
  - (3) a description of the goals and the expected programmatic outcomes of the [demonstration project](/usc/42/16281.md?p=d-2), [including](/usc/42/1301.md?p=b) how the [project](/usc/42/11360.md?p=20) would contribute to the objective described in [subsection (a)(1)](#a-1), [subsection (a)(2)](#a-2), or both;
  - (4) assurances (accompanied by supporting analysis) that the [demonstration project](/usc/42/16281.md?p=d-2) would operate for a period of at least 1 calendar year and not result in any increased net costs to the [State](/usc/42/1397n–12.md?p=6)’s account in the Unemployment [Trust](/usc/42/12854.md?p=6) [Fund](/usc/42/12854.md?p=3);
  - (5) a description of the manner in which the [State](/usc/42/1397n–12.md?p=6)—
    - (A) will conduct an impact evaluation, using a methodology appropriate to determine the effects of the [demonstration project](/usc/42/16281.md?p=d-2), [including](/usc/42/1301.md?p=b) on individual skill levels, earnings, and employment retention; and
    - (B) will determine the extent to which the goals and outcomes described in [paragraph (3)](#b-3) were achieved;
  - (6) assurances that the [State](/usc/42/1397n–12.md?p=6) will provide any reports relating to the [demonstration project](/usc/42/16281.md?p=d-2), after its approval, as the [Secretary](/usc/42/1301.md?p=a-6) of Labor may require; and
  - (7) assurances that employment meets the [State](/usc/42/1397n–12.md?p=6)’s suitable work requirement and the requirements of section 3304(a)(5) of the Internal Revenue Code of 1986.
- (c) **Waiver of certain requirements allowed—** The [Secretary](/usc/42/1301.md?p=a-6) of Labor may waive any of the requirements of section 3304(a)(4) of the Internal Revenue Code of 1986 or of paragraph (1) or (5) of [section 503(a) of this title](/usc/42/503.md?p=a), to the extent and for the period the [Secretary](/usc/42/1301.md?p=a-6) of Labor considers necessary to enable the [State](/usc/42/1397n–12.md?p=6) to carry out a [demonstration project](/usc/42/16281.md?p=d-2) under this section.
- (d) **Time for demonstration project—** A [demonstration project](/usc/42/16281.md?p=d-2) under this section—
  - (1) may be commenced any time after February 22, 2012;
  - (2) may not be approved for a period of time greater than 3 years; and
  - (3) must be completed by not later than December 31, 2015.
- (e) **Limitations on activities—** Activities that may be pursued under a [demonstration project](/usc/42/16281.md?p=d-2) under this section are limited to—
  - (1) subsidies for employer-provided [training](/usc/42/285e–2.md?p=b-2), such as wage subsidies; and
  - (2) direct disbursements to employers who hire individuals receiving unemployment compensation, not to exceed the weekly benefit amount for each such individual, to pay part of the cost of wages that exceed the unemployed individual’s prior benefit level.
- (f) **Notification of approval or denial of application—** The [Secretary](/usc/42/1301.md?p=a-6) of Labor shall, in the case of any [State](/usc/42/1397n–12.md?p=6) for which an application is submitted under [subsection (b)](#b)—
  - (1) notify the [State](/usc/42/1397n–12.md?p=6) as to whether such application has been approved or denied within 30 days after receipt of a complete application; and
  - (2) provide public notice of the decision within 10 days after providing notification to the [State](/usc/42/1397n–12.md?p=6) in accordance with [paragraph (1)](#f-1).

  Public notice under [paragraph (2)](#f-2) may be provided through the Internet or other appropriate means. Any application under this section that has not been denied within the 30-day period described in [paragraph (1)](#f-1) shall be deemed approved, and public notice of any approval under this sentence shall be provided within 10 days thereafter.

- (g) **Termination of demonstration project—** The [Secretary](/usc/42/1301.md?p=a-6) of Labor may terminate a [demonstration project](/usc/42/16281.md?p=d-2) under this section if the [Secretary](/usc/42/1301.md?p=a-6) determines that the [State](/usc/42/1397n–12.md?p=6) has violated the substantive terms or conditions of the [project](/usc/42/11360.md?p=20).
- (h) **Funding—** Funding certified under [section 502(a) of this title](/usc/42/502.md?p=a) may be used for an approved [demonstration project](/usc/42/16281.md?p=d-2).

## Source credit

(Aug. 14, 1935, ch. 531, title III, § 305, as added Pub. L. 112–96, title II, § 2102, Feb. 22, 2012, 126 Stat. 159.)

## Notes

### Editorial Notes

### References in Text

The Internal Revenue Code of 1986, referred to in subsecs. (b)(7) and (c), is classified generally to Title 26, Internal Revenue Code.