1.7 million NJ gig workers impacted by controversial new rule change
⚖️ New Jersey adopts strict ABC test, putting 1.7M gig workers’ status at risk.
📉 Critics warn freelancers could lose flexibility, income, and opportunities.
⏳ Lawmakers have 120 days to make before rules take effect
New Jersey has finalized new rules for independent contractors after massive outrage among gig workers and businesses alike.
On Tuesday, the state Department of Labor said it had adopted "clear rules" to prevent worker misclassification. Officially, those rules have codified what's known as the ABC test to determine whether an individual is an independent contractor or an employee.
Right now, around 1.7 million New Jerseyans are independent contractors. They're also known as gig workers, freelance workers, or 1099 workers. Critics say that these new rules will make hundreds of thousands of these workers lose their independent status.
What is the ABC test for New Jersey independent contractors?
Under the ABC test, employers must prove that their workers are independent contractors. If they don't meet all three prongs of the test, the workers are classified as employees. The following are the three requirements, word for word, from the Department of Labor:
The ABC test prongs in New Jersey
A) Worker has been and will continue to be free from control or direction over the performance of services, both under the worker’s contract of service and in fact;
B) Work performed is either outside the usual course of the business for which the work is being performed, or the work is performed outside of all the places of business of the enterprise; and
C) Worker is customarily engaged in an independently established trade, occupation, profession or business.
When implemented, the rules will level the playing field for responsible employers and protect them against businesses that misclassify their workers to get ahead, according to Acting Labor Commissioner Kevin Jarvis.
“At its core, this action has always been about protecting workers through fairness and clarity," said Jarvis.
Backlash from NJ businesses and freelance workers
He said the rules have been published with input from New Jersey business leaders and workers. More than 9,500 public comments were submitted to then-Gov. Phil Murphy's labor department last year — 99% of them were against codifying the ABC test.
However, business leaders say the new worker misclassification rules announced on Tuesday are still unclear.
One of the groups leading the charge against the ABC test has been the New Jersey Business & Industry Association. NJBIA President and CEO Michele Siekerka said the new rules would harm job creators and freelance workers alike.
“That proposal significantly reduced flexibility and opportunities for freelance workers who choose to be so, as well as the added costs facing businesses. It is significant to note that the rules would have a negative disproportionate impact on women, working mothers and minorities, not to mention the further hit to New Jersey’s affordability agenda," said Siekerka.
Gov. Mikie Sherrill's administration had included some adjustments based on input from the public and NJBIA, according to Siekerka. However, she said some adjustments have now made things even more confusing.
The NJBIA had pushed the Sherrill administration to abandon the ABC test. Siekerka said New Jersey and its workers would be better off if no rule changes were implemented.
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New Jersey follows "failed" California gig worker rules
In 2019, California adopted the ABC test for its workforce. Assembly Bill 5 redefined most gig workers as employees. In a June 2025 Washington Examiner Op-ed, U.S. Labor Department Deputy Secretary Keith Sonderling said the law caused "chaos."
One year later, lawmakers scrambled to pass an update that included more than 100 exceptions, including doctors and lawyers. Voters also passed Prop. 22 to override AB5, which included more exclusions for rideshare and delivery service workers.
"That's a failed experiment. Why in gosh sake would we want to try to repeat that here?" Siekerka said to New Jersey 101.5.
When do the new NJ gig worker rules take effect?
In an attempt to prevent the same chaos from reaching New Jersey, there is now a 120-day window before the new ABC test rules take effect. Siekerka said state lawmakers must use this time to sort out statutory conflicts so that gig work across New Jersey isn't dismantled.
The New Jersey ABC test will be implemented on Oct. 1, according to the Department of Labor.
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