TRENTON, N.J. — New Jersey Assemblywoman Dawn Fantasia is warning that aggressive enforcement of independent contractor classification rules could unintentionally harm legitimate freelancers, small businesses, and flexible work arrangements throughout the state.
Fantasia criticized Gov. Mikie Sherrill, former Gov. Phil Murphy, New Jersey Labor Commissioner Robert Asaro-Angelo that state officials ignored concerns raised by independent contractors who say they could be negatively affected by the state’s interpretation of worker classification laws.
“The problem is that two things can be true at the same time,” Fantasia said in a public statement. “Workers and industries must be protected from misclassification, which harms workers, trade unions, and taxpayers. But legitimate independent contractors and flexible work arrangements can’t be crushed under rules so broad they wipe out lawful work along with actual bad actors.”
At the center of the debate is New Jersey’s use of the so-called “ABC Test,” a legal standard used to determine whether a worker qualifies as an independent contractor or an employee.
Under the test, workers must satisfy several conditions to remain classified as independent contractors, including demonstrating that they operate independently from the hiring business and perform work outside the company’s usual course of business.
Fantasia argued the rules properly target companies that intentionally misclassify full-time employees to avoid taxes, overtime, workers’ compensation, and benefits obligations. However, she said the same standards can also sweep up legitimate freelance professionals who work independently by choice.
As an example, Fantasia pointed to freelance writers working from home on flexible schedules for multiple clients. Even though they control their own assignments, hours, and equipment, she argued they may still fail the ABC Test because writing is considered part of a publisher’s core business activity.
The assemblywoman also referenced California’s controversial rollout of similar independent contractor legislation known as AB5. That law sparked backlash from freelance workers, musicians, photographers, writers, and other self-employed professionals after many found themselves unable to continue operating under existing business models.
California lawmakers later approved numerous exemptions for affected professions following widespread criticism and lobbying efforts.
Fantasia warned New Jersey could face a similar situation if broad worker classification standards remain in place without clearer exemptions for legitimate independent contractors.
She also criticized what she described as a growing system where industries must seek politically negotiated carve-outs from Trenton lawmakers and regulators.
“One industry gets exempted, then another, then another,” Fantasia said. “The law is written so broadly it starts detonating legitimate work arrangements all over the state.”
New Jersey has adopted sweeping new regulations governing independent contractors, a move that could significantly affect freelancers, gig workers, truck drivers, consultants, and thousands of businesses operating throughout the state.
The rules, set to take effect later this year, formally strengthen New Jersey’s already strict “ABC test” used to determine whether a worker is truly an independent contractor or legally qualifies as an employee. State labor officials say the changes are designed to crack down on worker misclassification and ensure companies properly pay taxes, unemployment insurance, overtime, and workers compensation benefits.
Under the regulations, workers are presumed to be employees unless businesses can prove all three parts of the ABC test are satisfied.
To qualify as an independent contractor, a worker must operate free from company control, perform work outside the company’s normal business operations, and maintain an independently established business.
The rules have sparked concern among many freelancers and small business owners who fear companies may reduce or eliminate contract work rather than risk violating labor laws. Critics argue the regulations could threaten flexible work arrangements that many workers rely on for supplemental income or full-time self-employment.
Industries expected to feel the greatest impact include rideshare services, delivery companies, construction, trucking, media, entertainment, beauty services, and consulting. Some freelance journalists and photographers have also expressed concern that media organizations could scale back contractor relationships due to legal uncertainty surrounding the new standards.
Supporters of the changes argue stronger enforcement is needed because some businesses improperly classify workers as independent contractors to avoid payroll taxes and labor protections. New Jersey has previously pursued major enforcement actions against gig economy companies over classification disputes.
Business groups, however, say the state’s interpretation of the ABC test is among the strictest in the nation. In many cases, companies may struggle to satisfy the requirement that contractors perform work outside the normal scope of the business itself.
The final version of the regulations was revised after significant public backlash and removed some controversial examples included in earlier drafts. Still, many legal experts believe the rules will increase compliance costs and lead to more audits and legal disputes over worker classification.
For workers, the changes could lead to more traditional W-2 employment opportunities but fewer freelance arrangements in certain sectors. For employers, the regulations may force companies to reevaluate contractor relationships and employment practices before the rules officially take effect.
Supporters of stricter classification enforcement argue the ABC Test is necessary to prevent worker exploitation and protect employees from being improperly denied wages, benefits, unemployment protections, and workplace safeguards.
State labor officials have previously said enforcement efforts are aimed at businesses that intentionally misclassify workers to reduce labor costs and avoid legal obligations.
The debate over independent contractor rules continues to generate strong reactions nationwide as lawmakers attempt to balance worker protections with the growing demand for freelance and flexible employment arrangements.