New Jersey Labor Regulators Propose New Rules for Independent Contractors

On April 28th, 2025, the New Jersey Department of Labor and Workforce Development announced its proposal to put new regulations in place for the use of independent contractors. The rules would effectively codify the NJ DOL’s interpretation of the “ABC Test” for independent contractor status. Here, our New Jersey wage and hour attorney provides an overview of the proposed regulation.

Understanding the ABC Test for Independent Contractors in New Jersey

The proposed NJ DOL rule is focused on independent contractor classification. The ABC test is a three-pronged standard used to assess worker classification. A worker must satisfy all three of the prongs in order to be properly considered an independent contractor. Here is an overview:

• A: The worker must be free from control or direction over the performance of their services.
• B: The services performed must be outside the usual course of the employer’s business or performed outside all the employer’s places of business.
• C: The work must be customarily engaged in an independently established trade, occupation, profession, or business.

What if just one of the three prongs is not satisfied? Under New Jersey law, the person in question could not properly be considered an independent contractor. They must be classified as an employee and provided with all of the accompanying benefits, such as workers’ comp.

 Proposed NJ DOL Would “Tighten” All Three Prongs of the Independent Contractor Test 

Prong A – Control or Direction

The proposed rules have implications for Prong A (control and direction). Most notably, they emphasize that even the reservation of the right to control a worker’s performance may indicate an employment relationship. Some key factors such as setting work hours and requiring specific tools or software can be viewed as evidence of employer control/direction.

Prong B – Course and Place of Business

The regulations interpret the term “places of business” in a relatively broadly manner—they would include locations where the employer’s clients are served. For instance, if a contractor performs essential services at a client’s residence, that location may be deemed the employer’s place of business under the new regulations. Though, a case-by-case determination is always required.

Prong C – Independent Trade or Business

Finally, the regulations have implications for the independent trade requirement. To satisfy this prong, the worker must demonstrate a stable and lasting business independent of the employer. Indicators include having multiple clients, investing in business tools, setting their own rates, and/or their own advertising services.

Public Comment Period for Proposed Regulations 

The NJDOL has opened a 60-day public comment period starting May 5, 2025, allowing stakeholders to provide feedback on the proposed regulations. Comments can be submitted via mail, fax, or email to the Department’s Legal and Regulatory Services

 Get Help From Our New Jersey Wage and Hour Lawyer Today

At Poulos LoPiccolo PC, our New Jersey employment attorney handles all types of wages and hour cases. If you have any questions about independent contractor status, we can help. Contact us for a free, no obligation initial case review. With an office in Monmouth County, we provide wage and hour representation throughout the surrounding region in New Jersey.

Source:

nj.gov/labor/lwdhome/press/2025/20250428_ABC.shtml