Another Blow to Business? NJ’s New Contractor Rule Sparks Backlash

the staff of the Ridgewood blog

Trenton, NJ — The Murphy administration is under fire yet again — this time over a controversial Department of Labor proposal that critics say could deal a devastating blow to New Jersey’s gig economy, small businesses, and worker flexibility.

The proposed NJDOL rule would redefine how workers are classified as independent contractors under the state’s strict “ABC test” — effectively making it far more difficult for freelancers, gig workers, and contract-based professionals to maintain their independent status.

But according to the New Jersey Business & Industry Association (NJBIA), the new rule does far more than simply “codify” existing law — it rewrites it completely.

“The proposed rule is legally flawed, economically unsound, procedurally deficient, and socially regressive,” said NJBIA Vice President of Government Affairs Elissa Frank in formal comments submitted this week.

“It undermines flexible work opportunities in a misguided attempt to expand employment classifications. We urge the Department to withdraw this rulemaking.”

🔍 What the Proposed Rule Would Change

The state currently relies on a three-part ABC test to determine whether workers are employees or independent contractors. NJBIA argues the proposed changes:

• Prong A: Redefines normal practices like app usage, GPS tracking, and insurance compliance as “employer control” — instantly tipping contractors into employee status.

• Prong B: Treats a worker’s own vehicle as the company’s “place of business,” effectively crushing transportation gigs like rideshare and delivery.

• Prong C: Dismisses clear contractor indicators (1099 tax forms, multiple clients, licenses) as “irrelevant,” turning the ABC test into a presumption of employment by default.

“These changes aren’t codification — they’re transformation,” Frank said.

⚠️ Bipartisan Pushback Grows

Opposition to the rule has united lawmakers from both parties — a rare sight in Trenton. Nearly 20 legislators across North, Central and South Jersey have publicly urged NJDOL to pull the proposal, warning of:

• Massive job losses

• Increased costs for small businesses

• Loss of flexibility for tens of thousands of independent workers

• Damage to NJ’s already fragile business climate

👩‍💼 Who Gets Hurt?

According to NJBIA, the rule would disproportionately impact:

• Women and caregivers who rely on flexible work schedules

• Minority communities

• Immigrants

• Formerly incarcerated individuals working to rebuild

• Freelancers, app-based workers, contractors, and entrepreneurs

“Eliminating these options will reduce — not enhance — economic inclusion,” Frank said.

📅 What’s Next?

Public comments on the proposal close today, and pressure is mounting on the Murphy administration to back down or extend the process.

In a state already known for being tough on business, critics warn this rule could be the final straw for countless entrepreneurs and gig workers.

⚠️ Bottom Line:
New Jersey’s latest move could force thousands of independent contractors into unwanted employee status — dramatically raising costs, cutting flexibility, and risking jobs. Opponents say Trenton should fix the economy, not break what’s left of it.

 

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