What happened
On May 5, 2026, the New Jersey Department of Labor and Workforce Development (NJDOL) adopted new rules at N.J.A.C. 12:11. The rules explain how the department applies the “ABC test.” New Jersey uses that test to decide whether a worker is an employee or an independent contractor.
The adoption was published in the New Jersey Register on June 1, 2026, at 58 N.J.R. 1587(a). The rules became effective that day. Their operative date is October 1, 2026. NJDOL first proposed them on May 5, 2025.
NJDOL says the rules do not create a new test. The ABC test itself is in the statute, N.J.S.A. 43:21-19(i)(6). The rules apply wherever the department uses that test. That includes the Wage and Hour Law, the Wage Payment Law and the Earned Sick Leave Law. It also includes the Unemployment Compensation Law and the Temporary Disability Benefits Law.
Under the rules, the business has the burden of proof. It must meet all three prongs. Prong A: the business does not control or direct the work in fact, and does not reserve the right to do so. Prong B: the work is outside the usual course of the business, or is done outside all of the business’s places of business. Prong C: the worker is customarily engaged in an independently established trade, occupation, profession or business. The rules list factors for this prong. They include the strength and viability of the worker’s own business, the number of customers, and whether the worker sets the rate of pay.
The rules also say that paying someone on a Form 1099 does not make that person a contractor. A contract that uses the label “independent contractor” does not decide the question.
NJDOL removed the industry examples that appeared in the proposal. It added language saying the rules do not change existing statutory exemptions.
What it means for workers
If you work in New Jersey and are paid as a contractor, the business has the burden under the ABC test. If it cannot prove all three prongs, the test treats you as an employee under the laws listed above. Those laws cover minimum wage, overtime, timely payment of wages and earned sick leave. Each law has its own exemptions. What your contract or tax form says is not the end of the question.
What it means for employers
The test is not new, but the department’s reading of it is now written into the administrative code. Several Prong C factors look at the worker’s business apart from yours. Exemptions in the underlying statutes remain. The federal test is different, and meeting one test does not mean you meet the other.
What to do now
Workers: save contracts, invoices, schedules and messages that show who controls your work.
Employers: review contractor relationships against each prong before October 1, 2026, and document the facts.
A wage-and-hour lawyer can explain how the test applies to a specific job.
This summary is general information, not legal advice. Usher Law Group was not involved in this matter.
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