New Jersey has released a revised version of its independent contractor rule, a development that is easing some of the initial backlash from industry stakeholders, particularly in trucking. However, despite the amendments, the framework is still widely seen by contractors and employers as one of the strictest ABC tests in the United States.
The rule, issued by the New Jersey Department of Labor (NJDOL), is designed to codify long-standing regulatory and court precedents into formal administrative guidance. It will be used by state agencies interpreting laws such as New Jersey’s Wage & Hour law and Wage Payment law, according to the department.
On paper, the structure mirrors ABC-style tests used in other states. But unlike California’s AB5, it is not legislation; rather, it is built on existing legal rulings and regulatory interpretations.
To qualify as an independent contractor under the rule, a worker must meet all three conditions:
- A)Freedom from control or direction in performing the work, both in contract and practice
- B)Work performed outside the usual course of the hiring business or outside its places of business
- C)Worker is independently engaged in a separate trade, occupation, or business
Much of the debate around the rule has focused on how these three prongs are defined in practice.
Key revision: compliance with law no longer treated as “control”
One of the most significant changes in the revised version concerns Prong A. The initial proposal suggested that requiring a worker to comply with laws or regulations could be interpreted as evidence of employer control, potentially pushing independent contractors into employee classification.
That language has now been removed.
The updated rule clearly states: “Actions taken by a putative employer solely to comply with federal, state, or local, laws or regulations shall not, standing alone, be considered evidence of control or direction under Prong A.”
For trucking, industry legal experts say this shift is particularly important.
Greg Feary, partner at trucking-focused law firm Scopelitis, described the change as “big,” noting that regulated industries such as transport already require strict compliance.
“Safety in trucking is heavily regulated, as well as federal leasing regulations,” Feary said in an interview with FreightWaves. He added that under the previous wording, simply requiring compliance could have been interpreted as exerting employer control.
Attorney Richard Reibstein of Troutman Pepper Locke was even more critical of the original draft, warning that it could have had far-reaching consequences.
“Unless this part of the regulation is corrected, it will foster the elimination of almost all independent contractors in this state,” he said.
Other notable changes: apps and “place of business” definition softened
Another revision removes references suggesting that proprietary apps could be treated as evidence of employer control under Prong A. These tools include dispatch systems, tracking platforms, and driver scanning applications.
“That part is gone,” Feary said. “That’s a good thing.”
The updated version also narrows the definition of a company’s “place of business.” Earlier language raised concerns that even a truck cab could potentially be interpreted as a business location, depending on how services were classified. That broader interpretation did not make it into the final rule.
Business groups still raising concerns
Despite these revisions, industry opposition has not disappeared.
The New Jersey Business & Industry Association (NJBIA) told lawmakers during a Senate Labor Committee hearing that the rule still represents, in its view, a major tightening of independent contractor standards.
While it supported some of the adjustments in Prong A, it continues to object to how Prong B and C define independent business activity.
Legal commentary from Morgan Lewis also highlighted remaining constraints under Prong C, noting that factors such as holding a professional license, having multiple clients, registering a business, receiving 1099 forms, or carrying insurance are not individually sufficient to establish contractor status.
In formal testimony, NJBIA policy analyst Jack Kelly described the rule as “a sweeping and unilateral redefinition of settled legal standards,” warning that it could significantly restrict independent work in the state.
He also referenced long-standing legal precedent in New Jersey, including the 1991 Carpet Remnant Warehouse case, arguing that the new framework still applies an overly strict interpretation of contractor classification.
“Proving independent contractor status is nearly impossible in many industries,” Kelly said.
The association is urging lawmakers to consider resolutions to void the regulation, or alternatively to reopen the framework for broader legislative review within 120 days, with adjustments that better reflect modern gig economy structures.
