New Jersey legislators introduced a concurrent resolution this week declaring that the state Department of Labor and Workforce Development’s proposed changes to the employment-status test for independent contractors conflict with legislative intent and should be withdrawn.
Assembly Concurrent Resolution 177, introduced Monday, triggers the state constitution’s rule-review process, allowing the Legislature to prohibit the adoption of agency rules it deems inconsistent with statute.
Lawmakers say the Department of Labor and Workforce Development’s May 2025 proposal — an overhaul of regulations interpreting the state’s long-standing “ABC test” that gauges whether a worker is an employee for such issues as employment law and workers compensation — effectively rewrites the standard by heavily presuming employment and minimizing factors that traditionally support independent-contractor status.
Under New Jersey’s unemployment compensation law, a worker is an independent contractor only if all three ABC factors are met: freedom from control; performing work outside the employer’s usual business or premises; and being engaged in an independently established business. Failure to meet any one part classifies the worker as an employee for unemployment, wage-and-hour and tax purposes.
The resolution asserts that several provisions of the proposed rules misapply the test. It cites new language that treats the mandatory use of digital apps or software as evidence of employer control, even though such tools are routine business requirements. It objects to deeming liability insurance irrelevant to determining an independent trade and to classifying transportation-network drivers’ personal vehicles as the companies’ “places of business,” which legislators say contradicts case law preserving gig-driver contractor status.
Lawmakers also argue that proposed rules would discount traditional markers of independence, such as professional licensing, working for multiple entities, and receiving Form 1099s, in favor of a presumption of employment not contemplated by statute.
If transmitted to the governor and the labor commissioner, the resolution gives the department 30 days to amend or withdraw the proposal. If the agency declines, the Legislature may, after a public hearing, pass a second concurrent resolution formally prohibiting or invalidating the rules.