On May 5, 2026, the New Jersey Department of Labor (NJDOL) announced its adoption of regulations designed to “clarify the statutory ABC test for determining whether a worker is an independent contractor or employee.” The regulations will take effect October 1, 2026, and in the simplest terms, reiterate that New Jersey remains one of the toughest states in which to properly classify workers as independent contractors.
The ABC test
By way of background, worker classification – i.e., classification of personnel as employees or independent contractors – remains one of the hottest areas of employment litigation. As such, it is imperative that businesses carefully consider a host of factors when classifying workers, perhaps as independent contractors.
With that in mind, the U.S. Department of Labor and several other agencies and courts have adopted an “economic reality” test to determine whether workers should be classified as employees or independent contractors. Under this test, workers’ classifications are based on their economic dependence on employers for work based upon an assessment of various factors including: (1) opportunity for profit or loss depending on worker’s managerial skill; (2) investments by the worker and employer; (3) permanence of the work relationship; (4) nature and degree of control; (5) whether the work performed is integral to the employer’s business; and (6) the worker’s skill and initiative.
However, several states, including New Jersey, utilize...
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