By Francine Foner, Esq. and Ty Hyderally, Esq.

May 18, 2026

If you’ve ever wondered whether you should be treated as an employee or an independent contractor, New Jersey is about to make that question much clearer—and it could directly impact your pay, benefits, and protections at work.

On May 5, 2026, the New Jersey Department of Labor (“DOL”) adopted regulations clarifying whether a worker should be classified as an employee or an independent contractor. The new rules, titled “ABC Test; Independent Contractors,” largely codify the ABC test the New Jersey Supreme Court adopted in Hargrove v. Sleepy’s, LLC, 220 N.J. 289, 303 (2015). The DOL says the regulations also draw on decades of case law, including the Court’s unanimous decision in East Bay Drywall, LLC v. Department of Labor (2022) and its landmark ruling in Carpet Remnant Warehouse, Inc. v. NJ Department of Labor (1991).

Under the regulations’ ABC test, an employer has the burden of proving all three of the following requirements in order to classify a worker as an independent contractor:

1. A) Worker has been and will continue to be free from control or direction over the performance of services, both under the worker’s contract of service and in fact;
2. B) Work performed is either outside the usual course of the business for which the work is being performed, or the work is performed outside of all the places of business of the enterprise; and
3. C) Worker is customarily engaged in an independently established trade, occupation, profession or business.

New Jersey laws to which the new rules will apply include the New Jersey Unemployment Compensation Law, the New Jersey Wage and Hour Law,  the New Jersey Wage Payment Law and the New Jersey Earned Sick Leave Law.  These regulations are important for New Jersey employees, as if you’re classified as an employee, you may be entitled to:

• Minimum wage and overtime
• Unemployment benefits
• Workers’ compensation
• Paid sick leave
• Payroll tax contributions from your employer

However, if you’re misclassified as an independent contractor, you may be wrongly denied these worker protections.

As Acting Labor Commissioner Kevin D. Jarvis commented “We heard from New Jersey’s business community and workers — and we acted on it. We removed provisions in the draft rules that created uncertainty and built a framework shaped by their input, one that protects legitimate independent contractors, supports employees, and respects businesses that follow the rules. At its core, this action has always been about protecting workers through fairness and clarity. When expectations are set, responsible employers can compete on a level playing field, without being undercut by those who misclassify workers.”

The new rules are slated to go into effect on October 1, 2026, 120 days from the anticipated June 1, 2026 publication date.

The adoption of the ABC test is a win for New Jersey employees because it helps prevent worker misclassification and strengthens workplace protections. If you believe that you have been misclassified, or have any questions regarding your rights as an employee, you should seek an experienced attorney who concentrates on employment law. Our firm has been concentrating on employment law for over twenty-three (23) years!

En nuestra firma hablamos español. This blog is for informational purposes only. It does not constitute legal advice and may not reasonably be relied upon as such. If you face a legal issue, you should consult a qualified attorney for independent legal advice regarding your particular set of facts. This blog may constitute attorney advertising. This blog is not intended to communicate with anyone in a state or other jurisdiction where such a blog may fail to comply with all laws and ethical rules of that state or jurisdiction.