Freelance workers and businesses urged the Senate Labor Committee on Monday to overturn the Department of Labor & Workforce Development’s newly adopted independent contractor rules because these will imperil livelihoods in the gig economy and increase unemployment.
State labor officials characterized the rules, which take effect Oct. 1, as codifying existing case law and final agency decisions, but freelancers and business groups, led by NJBIA, argued that the rules would hurt workers who prefer the flexibility of freelance jobs.
“Let’s not kill any more jobs,” NJBIA President & CEO Michele Siekerka told the committee.
Many who testified noted businesses will face increased costs, including legal expenses, should their interpretation differ from DOL on whether a worker meets the conditions of the “ABC Test” used in the regulations to determine an independent contractor.
“I can’t see how my income and career are safe in New Jersey now under this ABC test,” said Kim Kavin, a freelance writer and editor and a grassroots advocate for independent contractors nationwide.
“I have a great freelance career that I love. Yet none of you can tell me if I would be considered a legal independent contractor under this interpretation of the ABC test that New Jersey’s Labor Department just adopted. The Department says it may consider some factors in one case, but not in another case, and we’ll never know what might matter,” Kavin said.
Alexander T. MacDonald, co-chair of the Workplace Policy Institute, noted that while DOL did make some adjustments in the final rule, prongs B and C of the ABC Test (independent contractors must work outside the company’s usual place of business and must be engaged in their own established trade or profession) were left virtually unchanged.
“The regulations repeatedly explain what does NOT count as an independently established business,” MacDonald said, referring to prong C. “Multiple clients? Not enough. Working for others? Not enough. Professional licenses? Not enough. Forming an LLC or corporation? Not enough. Maintaining liability insurance or workers compensation coverage? Not enough.
“So, the practical question becomes what actually does satisfy prong C?” MacDonald asked.
Lawmakers on the committee noted the confusion and that the ABC test causes businesses. Acting Commissioner Kevin Jarvis, who defended the regulations, was asked if it was possible for a business to get an advisory opinion beforehand from DOL on whether a particular worker they want to hire meets the ABC test provisions for an independent contractor.
“No, we are not in a position to provide advisory opinions,” Jarvis said. “That’s what the regulations are for to provide that guidance.”
One lawmaker told Jarvis that it was frustrating for businesses to need to hire lawyers to help them review DOL’s regulatory provisions on the ABC test and advise whether they can hire someone as an independent contractor.
“As a lawyer, I can tell them you’ll pay (lawyers) a lot less because you can look in one place instead of 90 years of case law,” Jarvis replied.
Elissa Frank, president of the New Jersey Civil Justice Institute, testified that ABC test was first created to determine eligibility for unemployment benefits and its expansion into the context of wage and hour law enforcement causes concerns.
"Expanding that same standard into entirely separate statutory schemes — including wage-and-hour enforcement — stretches the original purpose and application of the test far beyond its intended scope,” Frank said.
“Unlike unemployment disputes, wage-and-hour statutes carry substantial private litigation exposure, including liquidated damages, attorneys’ fees, statutory penalties, and class action risk. As a result, the application of the ABC test in this context transforms what may have been an administrative classification issue into high-stakes civil litigation,” Frank said.
NJCJI is also concerned about the lack of statutory clarity surrounding how the ABC test
applies across different employment laws and industries, Frank said.
“The test is highly fact-sensitive, and businesses are left attempting to reconcile evolving agency interpretations, judicial decisions, and overlapping statutory obligations without clear legislative guidance,” Frank said. “That uncertainty creates inconsistent outcomes and incentivizes costly litigation.”
Adam Perle, president & CEO, ArtPride New Jersey, testified about the unintended consequences the new DOL rule could have on New Jersey’s nonprofit art community.
Because most artists work with multiple organizations on limited engagements, requiring organizations to classify independent artists as employees would likely result in organizations working with fewer artists overall, he said.
“New Jersey’s nonprofit arts sector generates nearly $692 million in economic activity, supports nearly 13,000 jobs and generates more than $156 million in annual tax revenue,” Perle said. “The arts are not only a cultural asset, they are an economic driver.”
