New Jersey Releases Guidance on ABC Test

Highlights

Impacted Employers: An employer with at least one employee (other than agricultural and domestic) earning at least $1,000 in a calendar year.

Effective Date: October 1, 2026

Summary: New Jersey has released guidance on the ABC test, which is used to help determine a worker’s classification as an employee or independent contractor.

The Details

The New Jersey Department of Labor has adopted rules clarifying the New Jersey ABC test, which employers use to help determine whether a worker should be classified as an employee or an independent contractor. The rules take effect on Oct. 1, 2026.

Background

Under the New Jersey ABC test, an individual is considered an employee unless they meet all three of the following criteria:

• They were, and will continue to be, free from control or direction over the performance of services (under their contract and in actuality);
  
• They are customarily engaged in an independently established trade, occupation, profession or business; and
  
• The service is:

The Final Rules

The final rules provide guidance on existing law, emphasizing a multi-factor analysis where no single factor determines independent contractor status, and continuing to presume workers are employees unless all three criteria are satisfied. The rules apply to state laws, such as New Jersey’s Unemployment Compensation Law, Wage and Hour Laws, and Wage Payment Law. See the rules for further details.

Under the final rules:

• An individual who works remotely from home is not automatically considered an employee, and their home is not automatically considered a part of the company’s usual places of business.
  
• The following do not automatically prove independent contractor status:
  
• The following do not, on their own, determine an employer’s control for ABC test purposes:

The final rule also removed:

• Examples that were industry-specific for a usual course or place of business (such as gig delivery or rideshare companies).
  
• Language stating that a relevant question for determining independent contractor status is not whether a worker has the right to work for others, but whether they actually perform paid work for others.
  
• The distinction between “essential” and “ancillary” off-site work to determine a usual place of business. See the rules for further details.

Next Steps

• Review the adopted rules’ multi-factor framework when evaluating each part of the ABC test.
  
• Update hiring policies and procedures and train supervisors.
  
• Consult legal counsel as needed to help ensure proper classification of workers by Oct.  1, 2026.