NJBIA: Proposed NJDOL Rule Will Reduce Freedom for Freelance Workers, Add Costs for NJ Businesses
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NJBIA: Proposed NJDOL Rule Will Reduce Freedom for Freelance Workers, Add Costs for NJ Businesses
The New Jersey Department of Labor and Workforce Development is proposing a rule that would classify more gig workers as regular company employees. NJBIA Vice President of Government Affairs Elissa Frank said the NJDOL proposal would reduce their freedoms and work flexibility, while greatly increasing labor costs for businesses. “Beyond legal overreach, these rules pose a serious threat to New Jersey’s economy,” Frank said in a public hearing today at the New Jersey Division of Taxation. Under the new proposal, drivers for a ride-sharing company, for example, would no longer fall under the definition of a freelance worker. That person then would be an employee, Frank said. The result won’t be more jobs, she said. ‘It will be fewer. Fewer opportunities for flexible work, and fewer ways for people to participate in the economy on their own terms,’ Frank added.
NJBIA Vice President of Government Affairs Elissa Frank also said the NJDOL proposal, which purports to provide protections to independent contractors, would instead reduce their freedoms and work flexibility, while greatly increasing labor costs for businesses.
“This proposal targets specific industries like rideshare, trucking, and construction, unfairly presuming that workers in these sectors are employees, regardless of context,” Frank said. “That approach is not only analytically flawed—it contradicts state and federal law.
“Worker classification must be based on the facts of each individual relationship, not blanket assumptions.
“Beyond legal overreach, these rules pose a serious threat to New Jersey’s economy. The state’s independent workforce — including contractors, freelancers, and gig workers — depends on flexibility.
“These are parents managing childcare, retirees supplementing income, and students working around class schedules. For many, independence isn’t a loophole—it’s a lifeline.”
Knowing the ABCs
Under New Jersey state law, businesses must use an “ABC test” to determine a gig worker versus an employee.
That means independent contractors are required to:
A. Be free from control and direction by the business
B. Do work outside of a firm’s “usual course of business” and “places of business.”
C. Be engaged in an independent and established “trade, occupation, profession or business.”
For a transportation network company under the NJDOLWD rule proposal, however, “the services performed by the driver are likely not outside of the transportation network company’s usual course of business.”
In other words, under Requirement B, drivers for a ride-sharing company, for example, would no longer fall under the definition of a freelance worker. That person then would be an employee.
That “employee” under the proposal would be subject to employment taxes and other requirements under their new “employer,” Frank said.
Also, under Prong B of the ABC rules, a drywall installation company engaging a drywall installer or a country club engaging a caddie to work on a golf course would be deemed not outside the putative employer’s usual scope of business.
So those example gig workers would also be defined as employees.
Additionally, under Prong C in the new proposal, a worker having multiple employers would not equate that individual as having an independently established trade or profession, nor would a license in a specific occupation.
The proposed regulations state also that paying someone by IRS Form 1099 versus an IRS Form W2 does not transform that individual into an independent contractor, Frank said.
“Let me be clear: these regulations do not merely “codify” existing law as the Department claims—they significantly alter it,” Frank said.
“They introduce new forms of ‘control’ under Prong A, strip away critical flexibility from Prong B, and narrow the interpretation of independence under Prong C.
“In doing so, they restrict the very framework that has allowed thousands of New Jerseyans to earn a living on their own terms.”
More Costs for Business
In her testimony, Frank said New Jersey businesses forced to convert contractors into employees won’t be able to sustain the added cost, “and many won’t try.”
“The result won’t be more jobs,” she said. “It will be fewer. Fewer opportunities for flexible work, and fewer ways for people to participate in the economy on their own terms.
Frank added: “Let’s not forget the ripple effects: disrupting the independent trucking industry could damage supply chains and raise consumer prices. Deterring safety and compliance measures by treating them as “control” puts workers and the public at risk.
“And the regulatory uncertainty this creates will chill investment and drive business elsewhere—at a time when New Jersey can least afford it.”