With a critical May 5 deadline just days away, the New Jersey Business & Industry Association (NJBIA) is making a final push to convince the Sherrill administration to abandon a controversial rule proposal that would drastically restrict independent contracting in the Garden State.
The proposal, a carryover from the previous administration, seeks to tighten the state’s “ABC test”—the three-pronged criteria used to determine if a worker is an employee or an independent contractor. While proponents argue the rule protects workers from misclassification, the NJBIA and a broad coalition of advocates warn it will dismantle the gig economy and harm thousands of freelance workers.
NJBIA President and CEO Michele Siekerka expressed gratitude for Governor Sherrill’s recent 90-day freeze on new state agency rules, which temporarily stalled the proposal. However, with that freeze expiring next week, the business community is on high alert.
“We urge the Governor to not act on this flawed policy from the previous administration and understand the full scope of damage it will do to thousands of gig workers and employers in New Jersey,” Siekerka said. “It upends settled law, contradicts federal standards, and undermines flexible work opportunities.”
NJBIA Policy Analyst Jack Kelly described the proposal as a “complete overhaul” of regulations that would stifle flexibility and increase costs for businesses still navigating employment challenges.
Critics point to empirical research from the Mercatus Center at George Mason University, which analyzed New Jersey’s ABC test applications from 1995 to 2024. The findings suggest that restrictive contractor laws have already contributed to:
- A 10.08% decrease in self-employment.
- A 3.95% decrease in overall employment.
- A 7.40% decrease in W-2 employment specifically for women.
The New Jersey proposal has drawn frequent comparisons to California’s AB5 law, which went into effect in 2019. According to data highlighted by the Independent Women’s Forum, that law negatively impacted 10.5% of self-employed Californians and resulted in over 600 exemptions as the state scrambled to fix the law’s unintended consequences.
“We respectfully urge the administration to not try to save this rule… and avoid putting itself in the situation of picking winners and losers,” Kelly added. He warned that those on the “losing end” would likely be working mothers, caregivers, racial minorities, and immigrants who rely on the flexibility of gig work.
The pushback against the rule is not limited to business groups. The NJBIA noted that:
- More than 9,500 public comments were filed, with over 99% in opposition.
- 24 state legislators from both sides of the aisle have written to the Department of Labor to oppose the move.
- Sen. Declan O’Scanlon, Asm. Gerry Scharfenberger, and Asw. Vicky Flynn (R-13) have proposed legislation to declare the rule inconsistent with legislative intent if it is adopted.
As the clock ticks toward the May 5 expiration, the NJBIA has offered to work with the Sherrill administration on future labor regulatory considerations, provided this specific proposal is taken off the table.
