New Contractor Rules Covering an Estimated 1.7 Million Workers Just Took Effect. Here’s What Changed — and What’s Still Being Fought.

On October 1, a change years in the making quietly took effect for an estimated 1.7 million New Jersey workers — the freelancers, gig drivers, owner-operators and small-business contractors who make up a large and growing share of the state’s workforce. If you are one of them, or you hire one of them, the rules for who counts as an “employee” and who counts as an “independent contractor” are now spelled out in state regulations, more strictly than before, critics say. It’s worth understanding what actually changed, because the fight over it is not finished.

What the ABC test asks

The standard is called the ABC test, and the name is literal. The test itself is not new: it has been in New Jersey law since 1936, and the Labor Department’s regulations spell out how the state will apply it. To treat a worker as an independent contractor rather than an employee, a business must satisfy all three parts: (A) the worker is free from the company’s control over how the work gets done; (B) the work falls outside the company’s usual business, or is performed away from its worksites; and (C) the worker is genuinely running an independent trade or business of their own. Miss any one of the three, and the state treats that person as an employee — with everything that follows, from payroll taxes to benefits eligibility.

Supporters say the rule is about stopping businesses from misclassifying workers to dodge those obligations, leaving people without the protections employment is supposed to carry. Critics say the test, as written, is so broad it sweeps in legitimate independent businesses that never asked to be anyone’s employee.

A request from her own party

That tension produced an unusual moment in Trenton. In late August, Senate President Nicholas Scutari — a Democrat, like the governor — asked Gov. Mikie Sherrill to delay the rules until July 1, 2027, and business groups made the same request in September. “When balanced against concerns raised by independent contractors as to how this regulation will impact their ability to provide for their families,” Scutari argued, “a nine-month delay is reasonable.” Sherrill declined, saying the regulations put existing court decisions into writing and that anyone who is an independent contractor today will still be one tomorrow. The regulations took effect on schedule.

The business community did not take the loss quietly. Michele Siekerka, who leads the New Jersey Business & Industry Association, called the rules in their current form “another hit, and an unnecessary one at that, on New Jersey’s job creators.”

What it means down here

For readers down here, the stakes are concrete. South Jersey runs on independent work: the owner-operator truckers moving freight off the Turnpike and 295, the contractors and tradespeople, the drivers and delivery workers, the freelancers who’ve stitched together a living outside a traditional paycheck. Some will gain protections they were wrongly denied. Others may find companies less willing to bring them on as contractors at all, rather than take on the risk of reclassification. Both things can be true at once, and the honest answer is that we won’t know the real balance until the first enforcement cases and the first lost contracts work their way through.

Some will gain protections they were wrongly denied.Grace Monroe

What is clear is that the debate did not end when the deadline passed. Scutari’s delay request is a signal that some of the governor’s own party would still like to revisit this in the next session. If you work for yourself in New Jersey, this is a law worth watching — and worth asking your legislator about before it’s decided for you.

Based on reporting from ROI-NJ, the New Jersey Globe, the New Jersey Monitor, and NJBIA.