Quick Hits

• The NJDOL released its final “ABC test” regulations, which are used to determine whether a worker is an employee or an independent contractor under various New Jersey laws.
• The final regulations, which become effective on October 1, 2026, purport merely to codify court and agency interpretations of the three ABC test prongs, but many in the business community believe the new regulations unfavorably expand existing law.
• While the NJDOL removed some of the more controversial provisions found in the proposed regulations, the final regulations will inevitably constrain many businesses’ efforts to classify workers as independent contractors.

The “ABC test” is used to determine whether a worker is an independent contractor or an employee under various New Jersey laws, including the New Jersey Wage and Hour Law, Wage Payment Law, and Unemployment Compensation Law. The NJDOL’s final rule largely mirrors the April 2025 proposed regulations, while moderating some of the proposed regulations’ more onerous provisions. Even with these adjustments, however, many New Jersey businesses will still be challenged to lawfully classify workers as independent contractors and insulate themselves from the risk of significant liability upon a misclassification finding by state regulators or employees’ lawyers.

ABC Test Framework

Several New Jersey laws rely on the ABC test to distinguish a covered employee from an excluded independent contractor, including the New Jersey Wage and...

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