NJBIA is launching a grassroots campaign urging the Sherrill administration to pause the implementation of a controversial New Jersey Department of Labor and Workforce Development rule that expands the ABC test and makes  it more difficult for workers to qualify as independent contractors.

After the rule was officially codified by the NJDOL on May 5, Gov. Mikie Sherrill imposed a 120-day stay to allow time to work with the Legislature on necessary statutory changes.

To date, none of those changes have been enacted.

The rule is scheduled to go into effect on Oct. 1.

The new ABC test presumes a worker is an employee, and the business must prove all three prongs of the test to establish independent contractor status. If the business fails one prong, it fails the test - making ABC considerably more  restrictive than classification standards that weigh multiple factors.

While NJBIA’s first preference would be to abstain from the rule all together to avoid the economic harm that lies ahead, it is, for now,  asking all freelance workers, businesses who utilize them and consumers who benefit from them to submit a form asking the administration to  provide additional and sufficient time to address the many unresolved  questions and issues regarding the ABC test. 

“With so much at stake, so many unanswered questions to likely scenarios, few meaningful statutory changes, risks to both our gig economy and our business climate, and with a failed history of the same policy in California, we are respectfully asking the Sherrill administration to delay the implementation of the Oct. 1 effective date until July 1, 2027,” said NJBIA Policy Analyst Jack Kelly. 

The form to submit the request to delay the implementation of the ABC Test can be found at njbia.org/ABCDelay.  

Since last year, NJBIA has been the leading business voice opposing sweeping changes to the criteria of the ABC test that determines whether a person is a freelancer or an employee.

Last year’s proposal by the Murphy administration yielded 9,500 comments in opposition to it, many by freelance workers themselves who are rightfully concerned about their ability to maintain work flexibility and their means of earning a living.

Two dozen lawmakers from both sides of the political aisle also publicly urged NJDOL to abandon the proposal.

While the Sherrill administration has said the adoption of the rule is only a codification of the ABC test, NJBIA, the business community at large and freelance workers throughout New Jersey say the regulations do much more than merely restate existing law.

“They cement into regulation a legal framework that originated in 1936, when the ABC test was developed for workers' compensation cases during a vastly different economic era,” Kelly said.

“At that time, worker protections were limited, employee misclassification was a widespread means of avoiding basic obligations, and beginning with the presumption that a worker was an employee served an important public policy purpose.”

“Independent professionals today perform app-based work, consulting, project-based services. Yet these regulations now adopt a framework built for the labor market of 90 years ago and make it the default standard for modern employment relationships,” Kelly added.

Kelly noted that Prong B of the ABC test – which states that a freelancer must perform work either outside the usual course of a business or outside of its place of business – is the most challenging and dangerous provision.

“The Department's interpretation of the 'usual course of business' standard effectively means that if a worker performs services for compensation and the business earns revenue from those services, the worker is likely to be considered part of the company's usual course of business,” Kelly said.

Additionally, if a business cannot prove every prong of the ABC test in New Jersey, then regardless of any written agreement or 1099 issued, the worker is considered by the state to be an employee.

For more information about the ABC test and its many implications on freelance workers and businesses, click here.