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New Jersey Softens Independent Contractor Rule, Removes Compliance Trigger

New Jersey's Department of Labor has unveiled modifications to its independent contractor classification framework that ease some industry concerns. The updated rule applies an ABC test to determine worker status under the state's Wage & Hour and Wage Payment laws. The rule is derived from regulatory precedents and court decisions rather than legislation. The most significant revision eliminates a provision that would have classified workers as employees if employers required legal compliance. The framework requires independent contractors to demonstrate freedom from control, work outside the employer's usual business or locations, and maintain an independently established trade. While the changes have reduced early opposition from those who hire independent contractors, the overall standard remains one of the most stringent in the country.