NJ’s new contractor rules are coming — and nobody agrees what happens next

🔴 New Jersey's controversial new independent contractor rules are scheduled to take effect Oct. 1.

💼 Critics warn the rules could threaten freelance work, while the state insists they do not change the existing ABC test.

⚠️ Even Democratic Senate President Nick Scutari has asked Gov. Mikie Sherrill to delay implementation until July 2027.

NJ labor commissioner says critics are spreading misinformation

The clock is ticking toward a major change in how New Jersey handles independent contractors — but the state’s top labor official says much of the outrage surrounding it is based on misinformation.

Acting Labor Commissioner Kevin Jarvis is defending new regulations governing New Jersey’s so-called ABC test, which determines whether someone can legally work as an independent contractor or must be classified as an employee.

The rules become operative Oct. 1.

Jarvis told the New Jersey Monitor the regulations do not create a new test or change enforcement. Instead, he says, they put into regulation decades of court and administrative decisions interpreting a test that has long been part of New Jersey law.

“There’s absolutely some frustration because we’re swimming upstream against a river of misinformation,” Jarvis told the Monitor.

The ABC test presumes a worker is an employee unless all three parts of the test are satisfied: The worker must be free from the company’s control; the work must generally fall outside the company’s usual course or place of business; and the worker must operate an independently established trade, occupation, profession or business.

The Department of Labor says the regulations provide clarity, protect workers from misclassification and prevent businesses from gaining an unfair advantage by improperly treating employees as contractors.

Freelancers and businesses fear the consequences

Critics see it very differently.

Roughly 1.7 million New Jerseyans have been cited by opponents as part of the state’s independent or self-employed workforce potentially touched by the debate. That does not mean 1.7 million people will lose their jobs. Critics instead argue the rules could make it harder for some freelancers to maintain contractor relationships and could prompt companies to stop using some independent workers.

Kim Kavin of Freelancebusting.com recently joined me on Jersey Thing and warned that attempting to solve the problem through industry-by-industry exemptions creates another problem: Who gets protected and who gets left behind?

Kavin points to California’s experience and argues women, minorities, immigrants and other freelancers with less political clout could be particularly vulnerable if industries with powerful lobbying operations secure exemptions while others do not.

She also points to the growing number of carveout bills in Trenton as evidence that lawmakers themselves are concerned about how the rules could affect existing contractor relationships.

Even top Democrats want more time

And opposition is hardly limited to Republicans or business groups.

Senate President Nick Scutari, one of the most powerful Democrats in Trenton, has asked Gov. Mikie Sherrill to postpone implementation from Oct. 1 until July 1, 2027.

In an Aug. 25 letter, Scutari warned the regulations remain too broad and could have a serious adverse impact on New Jersey workers and businesses. He said lawmakers need additional time to examine what he called an “economy-wide regulation.”

Other Democratic lawmakers are already advancing legislation designed to protect specific groups of independent contractors. Democratic Sens. Gordon Johnson and Paul Sarlo sponsored legislation clarifying contractor status for certain licensed professionals, while Sarlo has separately warned against reclassifying amateur sports officials.

That leaves New Jersey with a rather glaring question.

If the rules merely clarify what has already been the law for years, why are lawmakers scrambling to protect entire professions from their potential impact?

Unless the administration or Legislature acts, we will begin finding out Oct. 1.

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