---
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"
date: "2026-07-12"
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, with up to 10 [States](/usc/42/410.md?p=h) that submit an application described in [subsection (b)](#b), for the purpose of allowing such [States](/usc/42/410.md?p=h) to conduct demonstration [projects](/usc/42/13641.md?p=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 unemployment compensation under the [State](/usc/42/410.md?p=h) law of such [State](/usc/42/410.md?p=h); or
  - (2) to improve the effectiveness of a [State](/usc/42/410.md?p=h) in carrying out its [State](/usc/42/410.md?p=h) law with respect to reemployment.
- (b) **Application for demonstration project; required content—** The Governor of any [State](/usc/42/410.md?p=h) desiring to conduct a demonstration [project](/usc/42/13641.md?p=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/42/13641.md?p=2), [including](/usc/42/1301.md?p=b) the authority (under the laws of the [State](/usc/42/410.md?p=h)) for the measures to be tested, as well as the period of time during which such demonstration [project](/usc/42/13641.md?p=2) would be conducted;
  - (2) if a waiver under [subsection (c)](#c) is requested, a statement describing the specific aspects of the [project](/usc/42/13641.md?p=2) 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/42/13641.md?p=2), [including](/usc/42/1301.md?p=b) how the [project](/usc/42/13641.md?p=2) 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/42/13641.md?p=2) would operate for a period of at least 1 calendar year and not result in any increased net costs to the [State](/usc/42/410.md?p=h)’s account in the Unemployment Trust Fund;
  - (5) a description of the manner in which the [State](/usc/42/410.md?p=h)—
    - (A) will conduct an impact evaluation, using a methodology appropriate to determine the effects of the demonstration [project](/usc/42/13641.md?p=2), [including](/usc/42/1301.md?p=b) on individual skill levels, earnings, and [employment](/usc/42/410.md?p=a) 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/42/410.md?p=h) will provide any reports relating to the demonstration [project](/usc/42/13641.md?p=2), after its approval, as the [Secretary](/usc/42/1301.md?p=a-6) of Labor may require; and
  - (7) assurances that [employment](/usc/42/410.md?p=a) meets the [State](/usc/42/410.md?p=h)’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/42/410.md?p=h) to carry out a demonstration [project](/usc/42/13641.md?p=2) under this section.
- (d) **Time for demonstration project—** A demonstration [project](/usc/42/13641.md?p=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/42/13641.md?p=2) under this section are limited to—
  - (1) subsidies for employer-provided training, 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](/usc/42/409.md?p=a) 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/42/410.md?p=h) for which an application is submitted under [subsection (b)](#b)—
  - (1) notify the [State](/usc/42/410.md?p=h) 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/42/410.md?p=h) 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/42/13641.md?p=2) under this section if the [Secretary](/usc/42/1301.md?p=a-6) determines that the [State](/usc/42/410.md?p=h) has violated the substantive terms or conditions of the [project](/usc/42/13641.md?p=2).
- (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/42/13641.md?p=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.