The New Jersey Department of Labor and Workforce Development has adopted new regulations clarifying how businesses must classify workers as either employees or independent contractors under state law.
The updated rules apply to major labor laws including the New Jersey Unemployment Compensation Law, Wage and Hour Law, and Wage Payment Law. The regulations are based on long-standing legal precedent, including key rulings by the Supreme Court of New Jersey in East Bay Drywall, LLC v. Department of Labor (2022) and Carpet Remnant Warehouse, Inc. v. NJ Department of Labor (1991).
According to NJDOL, the goal of the new regulations is to provide businesses with clearer standards for worker classification, protect legitimate independent contractors, and ensure fair competition among employers.
During the public comment process, the Department extended its review period and received thousands of comments from businesses and workers. Several proposed provisions were revised or removed in response to feedback from the business community.
Acting Labor Commissioner Kevin D. Jarvis stated that the final framework was designed to balance worker protections with clarity for responsible employers.
The ABC Test Explained
Under New Jersey law, a worker is presumed to be an employee unless the employer can prove all three parts of the ABC Test:
- A: The worker is free from control or direction over the work performed
- B: The work is outside the company’s usual course or place of business
- C: The worker is independently engaged in an established trade or business
If any one of these conditions is not met, the worker may legally be considered an employee.
The new regulations are scheduled to become operative on October 1, 2026.
Businesses operating in New Jersey should review their current contractor relationships and compliance practices before the rules take effect.
For more information, visit the official New Jersey Department of Labor and Workforce Development website or contact the Cg Team. © 2026