Mark Law Firm Recent Articles

This week in Trenton, worker classification under New Jersey employment law took center stage as the New Jersey Senate Labor Committee heard testimony on the Department of Labor’s newly adopted ABC Test regulations.

Among those testifying in support was Edward J. Herban, Esq., a partner at Mark | Lavigne, LLC, who joined fellow members of the National Employment Lawyers Association – New Jersey (NELA‑NJ) in advocating for clearer enforcement of New Jersey’s longstanding worker classification standards.

 What Is the ABC Test Under New Jersey Law? 

New Jersey has long applied the ABC Test to determine whether a worker is properly classified as an employee or independent contractor for purposes of wage and hour laws, unemployment insurance, and other labor protections.

Under the ABC Test, a worker is presumed to be an employee unless the employer can establish all three of the following:

• A – Freedom from Control: The worker is free from the employer’s control or direction in performing the work
• B – Outside the Usual Course of Business: The work is outside the employer’s usual business or performed outside its places of business
• C – Independent Business: The worker is customarily engaged in an independently established trade or business

The newly adopted New Jersey Department of Labor regulations are intended to clarify how the ABC Test is applied and enforced, particularly in cases involving worker misclassification.

Why the New ABC Test Regulations Matter

According to the Department of Labor, worker misclassification remains a widespread issue that can deprive workers of critical protections, including:

• Minimum wage and overtime pay
• Unemployment and workers’ compensation benefits
• Employer‑provided health and retirement benefits
• Paid sick time and other statutory protections

The regulations aim to provide clearer guidance, promote consistent enforcement, and prevent law‑abiding employers from being undercut by businesses that improperly classify workers as independent contractors.

Controversy Over Independent Contractor Classification in NJ

The regulations have generated strong opposition from certain gig workers, freelancers, and industry groups, many of whom testified that stricter enforcement could reduce flexibility and eliminate 1099 opportunities in sectors such as:

• Transportation and trucking
• Construction
• Creative and professional services
• Real estate and financial services

Critics argue that the rules may affect hundreds of thousands of New Jersey workers who intentionally choose independent contractor arrangements and have urged lawmakers to delay, rewrite, or exempt certain industries before the regulations take effect.

Why NELA‑NJ Members Supported the Regulations

NELA‑NJ members testified in favor of the regulations, emphasizing that:

• The ABC Test has long been the law in New Jersey
• Misclassification harms workers and compliant employers
• Clear rules increase predictability for businesses and workers alike
• Proper classification ensures workers receive legally mandated wages and benefits

Supporters stressed that the regulations do not eliminate legitimate independent contracting, but rather reinforce the legal boundary between lawful contractor relationships and arrangements that function as employment in practice.

Edward J. Herban, Esq.: Why He Testified in Favor of the ABC Test Rules

Edward J. Herban explained that misclassification has far‑reaching consequences for workers and the broader labor market.

Employees who are misclassified as independent contractors are often denied overtime pay, health insurance, retirement benefits, paid sick time, and vacation pay. In addition, when employers fail to properly pay payroll taxes, the financial burden frequently shifts to the worker.

For these reasons, Mr. Herban believes that clearer ABC Test enforcement benefits both workers and law‑abiding employers by leveling the playing field and strengthening workplace protections across New Jersey.

Key Takeaways from the Senate Labor Committee Hearing

Based on Mr. Herban’s observations, several important themes emerged from the hearing:

1. The Senate Labor Committee is generally supportive of the ABC Test in principle
2. The executive branch fully supports the regulations it adopted
3. Labor unions and unionized employers largely favor the regulations
4. Certain industries are seeking or already pursuing legislative exemptions
5. Lawmakers expressed concern about inconsistent or unclear Department of Labor guidance
6. The Committee is troubled by the lack of advisory opinions for employers seeking compliance
7. Legislators acknowledged that compliant employers are disadvantaged by those misclassifying workers

Mr. Herban noted that the greatest risk lies in piecemeal legislative exemptions and potential statutory changes to the ABC Test itself, which could undermine existing judicial precedent under New Jersey employment law.

Our Commitment as New Jersey Employment Lawyers

Mark | Lavigne, LLC remains deeply engaged in developments affecting New Jersey employment law, including worker classification, wage and hour compliance, and employee rights.

Whether advising employers on compliance or representing workers impacted by misclassification, our firm is committed to providing clear, practical legal guidance in this evolving area of the law.

If you have questions about the ABC Test, independent contractor classification, or New Jersey labor regulations, contact our employment law team today.