As Gov. Phil Murphy reflects on his legacy, he points to important accomplishments: growing New Jersey’s economy, advancing equity, and instilling fiscal responsibility. He deserves credit for his focus on strengthening the state’s economic foundations and investing in inclusive growth.
But just as that progress takes hold, a proposed regulation from within his own administration threatens to undermine it.
The New Jersey Department of Labor has introduced a sweeping new rule to tighten the criteria for classifying workers as independent contractors. The goal—reducing worker misclassification—is a worthy one. However, the regulation’s design, based on a rigid “ABC test,” risks sweeping in legitimate small businesses and professionals who choose independent work as a career—not out of necessity, but by design.
As a business strategy consultant and corporate board member, I work across industries with companies of all sizes. I’ve seen firsthand how the rise of independent work models—particularly among knowledge workers, specialized service providers, and professional consultants—has enabled economic participation, entrepreneurial innovation, and flexibility that benefits both businesses and workers.
Yet the proposed regulation, in its current form, threatens to undo that progress. It mirrors a California-style ABC test, which assumes that a worker performing a company’s core function must be an employee—even if that individual runs their own firm, serves multiple clients, and actively chooses not to be tied to a single employer.
This approach fails to reflect the complexity of today’s workforce. It also disregards hard-earned lessons from California’s implementation, where rigid rules led to lost work and fewer opportunities for freelancers—particularly women and workers of color. Research shows that self-employment dropped significantly in affected sectors. Many of those individuals didn’t shift to employment—they simply exited the market.
New Jersey’s version goes even further. Unlike California, which eventually carved out more than 100 professional exemptions—including for engineers, architects, and consultants—New Jersey’s proposal currently includes none. Not only is that economically risky, it’s a missed opportunity to design smarter, more inclusive policy informed by lived experience.
The business community has rightly raised concerns. Industry leaders—from logistics to legal services—have noted that the proposed rule doesn’t merely clarify existing law, as claimed, but extends it in ways that create regulatory uncertainty. Ambiguities in the test’s language (such as what constitutes “control” or “an independently established business”) would create compliance confusion for employers and anxiety for legitimate contractors. Worse, businesses unable to absorb the cost of converting contractors to employees will likely reduce engagements or avoid the state altogether.
There is still time to get this right. Rather than imposing a one-size-fits-all model, New Jersey can take a more balanced, tailored approach. That means:
- Re-evaluating whether a regulatory shift of this magnitude is necessary, especially after the legislature declined a similar move in 2020.
- If proceeding, building in guardrails—including common-sense exemptions and clear standards that distinguish between vulnerable workers and empowered entrepreneurs.
The future of work is not binary. It’s not just W-2 employees or exploited gig workers. There is a growing ecosystem of independent professionals powering everything from corporate innovation to community-based services. We should be supporting them—not making their work harder.
Gov. Murphy has built a reputation for pragmatism. Preserving flexibility for New Jersey’s diverse workforce—and protecting the small business owners who choose independence—would be a fitting addition to his legacy.
Brenda Ross-Dulan is an independent business consultant, corporate board director who runs a successful business following her many years of leadership at Wells Fargo.
