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New Jersey Implements ABC Test for Contractor Classification

New Jersey's independent contractor regulation took effect recently, establishing an ABC test standard for determining worker classification. The rule codifies requirements that workers must meet to qualify as independent contractors rather than employees. Industry groups, including trucking associations, have broadly opposed the regulation, which legal experts describe as among the nation's most restrictive contractor standards. According to Richard Reibstein, an attorney specializing in independent contractor law at Littler Mendelson, the final rule represents a more moderate approach than an earlier proposal issued in April 2025, though it remains business-unfavorable. The ABC test requires three conditions: workers must operate free from control and direction; work must fall outside the hiring company's usual business operations; and workers must be customarily engaged in independent trades. The transportation sector faces particular challenges, as trucking companies may rely on contractors for as much as 100% of their freight operations. The regulation differs from California's AB5 law, which was enacted through legislative action rather than administrative rulemaking.