Murphy Administration Approves Big Changes for 1099 Workers
The Murphy administration in New Jersey is set to implement significant changes affecting the state’s independent contractors, a move that has sparked considerable debate among gig workers and business owners alike. With approximately 1.7 million New Jersey workers classified as independent contractors, the implications of these new rules are far-reaching.
The New Rules: A Double-Edged Sword
State labor officials argue that the proposed changes aim to protect workers from misclassification, which can lead to a lack of proper pay, benefits, and rights. Labor Commissioner Robert Asaro-Angelo emphasized the importance of these new regulations, stating, “This rule proposal is a critical step in providing clear, reliable guidance to employers to help them comply with the law and prevent the illegal misclassification of employees.”
However, many independent contractors view these changes as a threat to their livelihoods. In June, a labor department hearing was flooded with gig workers voicing their concerns. They argued that the new rules would increase operational costs for businesses and ultimately harm the state’s economy. Kim Kavin, co-founder of the advocacy group Fight For Freelancers, urged the administration to reconsider, saying, "Rescind this proposal before you hurt anybody else."
New Jersey Looks to Codify ABC Test Changes for Gig Workers
At the heart of the proposed changes is the ABC test, a framework used to determine whether a worker is classified as an independent contractor or an employee. According to New Jersey’s Unemployment Compensation Law, a worker is considered an employee by default unless they meet all three of the following criteria:
A. Freedom from Control
The worker must be free from control or direction by the business regarding aspects like hours or pay rate.
B. Performance Outside the Usual Place of Business
The worker must perform their tasks outside the usual place of business for the enterprise.
C. Independently Established Trade
The worker must be engaged in an "independently established trade, occupation, profession, or business."
If a worker fails to meet any of these criteria, they will be classified as an employee, shifting the burden of proof onto employers to demonstrate that a worker qualifies as an independent contractor.
California’s Influence on New Jersey’s Gig Worker Law
The proposed changes in New Jersey echo controversial legislation enacted in California. In 2019, California passed Assembly Bill 5, which codified the ABC test and redefined many independent contractors as employees. Critics of the law, including U.S. Labor Department Deputy Secretary Keith Sonderling, argue that it has caused significant economic disruption in California.
Sonderling noted in a June 2025 op-ed that the changes had done "damage" to California’s economy, stating, "Instead of improving livelihoods, it triggered chaos." The backlash led to an emergency update the following year, which created exceptions for 109 categories of industries, including doctors and musicians. Voters also passed Proposition 22 in 2020, which allowed app-based drivers to remain classified as independent contractors.
Kavin criticized the Murphy administration for seemingly adopting California’s approach, saying, "Apparently, the Murphy administration looked at all that and said let’s see how we can make it even worse."
New Jersey Business Group Opposes Changes to Gig Worker Rules
The New Jersey Business & Industry Association (NJBIA) has voiced strong opposition to the proposed rules. Elissa Frank, NJBIA’s vice president of government affairs, expressed concern that the changes would do more harm than good. She stated, “The main takeaway is that under the proposal it will be extremely difficult to be considered an independent contractor in New Jersey. And that may be what the Department of Labor’s goal is, in the name of worker protections.”
Frank also warned that the rules could lead to increased prices for services like Uber, Lyft, Grubhub, and DoorDash, ultimately affecting consumers.
Conclusion: A Divided Landscape
As New Jersey moves forward with these proposed changes, the landscape for independent contractors remains divided. While the administration aims to provide protections for workers, many fear that the new rules could stifle the gig economy and lead to unintended consequences. The ongoing debate highlights the complexities of balancing worker rights with the need for flexibility in the modern workforce. As the situation evolves, both workers and employers will be watching closely to see how these changes unfold and what they mean for the future of work in New Jersey.
