Standing Up for the Future of Work in New Jersey

On May 5, 2026, the New Jersey Department of Labor adopted regulations clarifying the ABC test for determining whether a worker is an independent contractor or an employee.

In today’s world where the gig economy is an unavoidable factor, this distinction is extremely important: workers who are classified as independent contractors are often denied unemployment insurance, overtime protections, workers’ compensation coverage, paid sick leave, paid family leave, and even the right to organize.

Less than a week after the rules were finalized, New Jersey’s Senate Labor Committee heard testimony both in favor of and against the decision, and SMART-TD was in the room to make one thing abundantly clear during our remarks: workers who are classified as employees should receive the protections and dignity that status provides.

What is the ABC Test?

Like many other states, New Jersey has a simple, three-pronged test for determining whether a worker is an independent contractor or employee, aiming to reduce the likelihood of intentional worker misclassification.

To be classified as an independent contractor, employers must prove all of the following criteria…

• Worker has been and will continue to be free from control or direction over the performance of services, both under the worker’s contract of service and in fact;
• Work performed is either outside the usual course of the business for which the work is being performed, or the work is performed outside of all the places of business of the enterprise; and
• Worker is customarily engaged in an independently established trade, occupation, profession or business.

These rules are set to take effect on October 1, 2026, 120 days after the anticipated June 1, 2026, publication date.

“This issue is bigger than organized labor…it’s about the future of work”

During his prepared remarks to lawmakers in support of the regulations, SMART-TD’s New Jersey and Delaware State Safety and Legislative Director Ron Sabol explained how this criteria helps the labor movement do what it’s always done for more than a century: protect workers.

“The labor movement has never simply been about protecting the rights of those who pay dues to a union,” he said. “At its core, the labor movement exists to protect the working class; all working people, especially when powerful economic interests attempt to exploit loopholes, gray areas, or changing economic conditions at the expense of workers.”

While members of New Jersey’s business community claimed that the new rules are overly burdensome and that bad actors are already being pushed if they attempt to skirt the law, SLD Sabol push back on that idea.

“The proposed ABC test regulations are important because they bring clarity, consistency, and fairness to an area where too many companies have intentionally operated in the dark,” he said. “These regulations do not create some radical new standard. In many ways, they simply formalize long-established principles already recognized under New Jersey law and case law.“

Beyond the Workforce: Misclassification is a Massive Expense

SLD Sabol made it clear that worker misclassification punishes honesty but elaborated on how the damage reaches much further.

“The State of New Jersey itself loses enormous amounts of revenue through payroll tax avoidance connected to worker misclassification,” he explained. “Conservative estimates…projected those losses at approximately $500 million annually. Given the explosive growth of gig-economy employment across the state since then, many believe those losses could now exceed $1 billion every year.”

Money that should be supporting infrastructure, schools, transportation, public safety, and services for New Jersey residents is lost to employers who attempt to intentionally misclassify workers, a serious problem that SLD Sabol believes these regulations will help prevent.

Meeting the Moment by Building Off Past SMART-TD-Led Victories

As SLD Sabol reminded senators, New Jersey isn’t a state that’s known for waiting for others to define labor issues for it: New Jersey is a leader.

Some of those moments have centered around several recent SMART-TD-led legislative victories that have broken new ground and charted a strong path forward for labor.

“This state led the nation in strengthening protections against assaults on bus drivers and transit workers. New Jersey was also among the first states to establish minimum two-person crew requirements for freight trains,” he said. “Those victories happened because this Legislature and New Jersey’s labor community chose to define the times we live in instead of waiting for Congress, Washington bureaucrats, or other states to act first.”

SLD Sabol left lawmakers with a simple question before ending his remarks: will New Jersey continue to lead in protecting working people, or will we allow others to define these standards for us later? 

In the lead up to the October 1 effective date, SMART-TD will continue to make its stance heard loud and clear on New Jersey’s ABC test and ensure that the state remains a leader in worker dignity and economic fairness.

“That’s what we’ve always done and will continue to do,” emphasized SLD Sabol. “Anything less would be a dereliction of duty.”