The N.J. Business and Industry Association and the N.J. State Chamber of Commerce are urging Gov. Mikie Sherrill to delay the Oct. 1 operative date of the Department of Labor and Workforce Development’s regulations governing the ABC test for independent contractor classification until July 1, 2027 — saying the rules will hurt business in the state and not help the people they are intended to serve.
“Legitimate independent contractors can demonstrate nearly every traditional indicator of independence — they can operate their own businesses, serve multiple clients, maintain insurance, provide their own equipment, negotiate their own rates, and assume their own business expenses — and still fail the test because the service they were contracted to perform is deemed essential or integral to the contracting entity’s business.
“That creates a fundamental problem. Independent contractors are hired precisely because the service they provide is needed. An umpire is contracted to umpire a game. A musician is contracted to perform at an event. A specialized professional is retained because an organization needs that professional’s expertise.
“Yet under an expansive interpretation of ‘usual course of business,’ (in Prong B of the rule) the importance of the service that created the need for the independent contractor in the first place can become the basis for treating that contractor as an employee.”
The ABC rule was first introduced by the Murphy administration and yielded more than 9,500 comments in opposition, compared to fewer than 30 supporters. Opposition was clear from the start.
After the rule was officially codified by the DOL on May 5, Sherrill imposed a 120-day pause to allow time to work with the Legislature on necessary statutory changes.
To date, however, none of those changes have been enacted, the NJBIA said.
Instead, there have only been two bill packages containing carveout language from select industries looking for exemptions to the rule, just as was the case when California put forth a similar rule in 2019 – which resulted in job and income loss and disproportionately impacted women and minority freelancers.
“We should not spend the remaining days before October 1 racing to decide who needs to be carved out,” Siekerka and Bracken wrote. “We should use the coming months to get the underlying policy right for everyone.
“That approach would reflect the same principles of efficiency, predictability, affordability, and common-sense regulatory reform that have defined your ‘Save You Time and Money’ agenda. We respectfully ask you to provide New Jersey with the time necessary to get this right.”
The letter from the business groups echoes a request State Sen. President Nicholas Scutari (D-Clark) sent on Aug. 25, also calling for the regulations to be delayed until July 1, 2027.
“When balanced against concerns raised by independent contractors as to how this regulation will impact their ability to provide for their families, a nine-month delay is reasonable,” Scutari wrote then.
Scutari’s letter drew plenty of support from business groups and legislators. In fact, similar letters were sent to the governor or the DOL by numerous elected officials, including:
State Senate: Carmen Amato, Joe Cryan, Vin Gopal, Gordon Johnson, Declan O’Scanlon, Parker Space, Shirley Turner and Andrew Zwicker.
General Assembly: Margie Donlon, Dawn Fantasia, Vicky Flynn, Mike Inganamort; Brian Rumph, Gerry Scharfenberger and Balvir Singh.
The letter from Siekerka and Bracken was in addition to a myriad of voices from across a broad spectrum of freelancers, businesses, impacted nonprofits and legislators from both sides of the aisle all urging the administration to delay the controversial rule that will make it much more difficult to be an independent contractor in New Jersey.
Adam Perle, CEO of ArtPride New Jersey, and Lisa Yakomin, President of the Association of Bi-State Motor, offered op-eds to BINJE.
Siekerka and Bracken stressed that they share the state’s interest in protecting workers from genuine misclassification, but said it is “increasingly clear that New Jersey has not yet found the appropriate balance between combating misclassification and protecting legitimate independent work” through an ABC test codified by the Sherrill administration in May.
