On behalf of our member companies that make NJBIA the largest, most impactful association representing job creators in New Jersey, I write to you today regarding S-2782 (Johnson/Sarlo). NJBIA appreciates Senator Johnson's leadership on this issue and supports the intent of S-2782. The bill seeks to provide certainty for several categories of workers and professionals who have historically operated as independent contractors and who continue to face uncertainty under New Jersey's worker-classification framework.
Specifically, the bill applies to four categories of workers and professionals:
- Licensed insurance producers;
- Securities professionals, including broker-dealers, agents, investment advisers, and investment adviser representatives;
- Certain drayage operators serving marine terminals and rail facilities; and
- Individuals who already qualify for existing exemptions under New Jersey's unemployment compensation law.
As we reviewed this legislation, two points immediately stood out.
First, throughout discussions surrounding the New Jersey Department of Labor & Workforce Development’s (NJDOLWD) ABC regulations, stakeholders repeatedly heard that certain professionals were already excluded from the framework. Yet today, the Legislature is considering legislation specifically exempting several categories of licensed and regulated professionals. If these exclusions were already clear and functioning as intended, legislative clarification would not be necessary.
Second, the bill acknowledges a concern NJBIA has consistently raised throughout the ABC debate. Certain individuals may be treated as independent contractors under one statute while simultaneously being treated as employees under another. In fact, S-2782 expressly addresses individuals who are already exempt under portions of New Jersey's unemployment compensation law. The need for legislation to reconcile those conflicting classifications suggests broader inconsistencies within NJDOLWD’s current framework.
S-2782 is not evidence that these professions need special treatment. Rather, it is evidence that the current framework is producing outcomes that require legislative correction. California's experience provides a useful example.
After adopting AB5, California lawmakers found themselves repeatedly revisiting worker-classification policy. Rather than addressing concerns through broader reform of the underlying framework, lawmakers began creating occupation-specific exemptions and alternative standards. Over time, California established well over 100 occupational exemptions and alternative classification standards covering insurance professionals, securities professionals, physicians, accountants, architects, engineers, real estate professionals, writers, musicians, photographers, construction subcontractors, and many others.
Even after those legislative changes, California voters approved Proposition 22 by a margin of 58.6% to 41.4%, creating an entirely separate worker-classification framework for app-based transportation and delivery workers. What began as a broad worker-classification standard ultimately evolved into a growing collection of exemptions, exceptions, alternative standards, and voter-approved carveouts as policymakers attempted to address concerns raised by individual industries.
The lesson is not that S-2782 is unnecessary.
To the contrary, NJBIA supports the bill because it addresses a legitimate concern. The existence of this legislation highlights issues that deserve legislative attention.
The larger lesson is that the growing need for exemptions may indicate that the framework itself warrants legislative review. California's experience suggests that addressing classification concerns one industry at a time can become an ongoing exercise as additional professions seek similar treatment.
As policymakers consider S-2782, we encourage the Legislature to also evaluate whether broader reform of New Jersey's ABC framework would provide a more durable solution than continuing down a carveout-by-carveout path.
These reforms are necessary to protect New Jersey’s more than one million independent contractors, many of whom are women, caregivers, retirees, and individuals seeking the flexibility that independent work provides. Independent contractors are also often small business owners themselves or provide essential services that other employers rely upon to operate and grow. By modernizing the current framework, New Jersey can better support entrepreneurship, workforce participation, and economic opportunity while improving the State’s overall business climate. NJBIA stands ready to work with the Legislature on meaningful solutions that address the concerns created by the NJDOLWD’s ABC regulations and make New Jersey a more competitive place to work, invest, and create jobs.
