On May 5, 2026, the New Jersey Department of Labor enacted final regulations that codify the “ABC test” for determining whether a worker is an employee or an independent contractor under the New Jersey Unemployment Compensation Act, the New Jersey State Wage and Hour Law (“WHL”), and the New Jersey Wage Payment Law (“WPL”).

The ABC test is controversial but has been an integral part of New Jersey’s wage-and-hour laws for over a decade. In 2015, the Supreme Court of New Jersey ruled that the ABC test, which originates from the New Jersey Unemployment Compensation Act, would also be used for determining independent-contractor status under the WHL and the WPL. The new regulations codify that existing case law and add clarification to the factors to be considered under each prong of the test. The final regulations will go into effect on October 1, 2026.

Under the ABC test, a putative employer must show three things to avoid having a worker classified as an employee:

• Prong A: Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and
• Prong B: Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
• Prong C: Such individual is customarily engaged in an independently established trade,...

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