Morristown, N.J. – The Garden State Initiative (GSI) is sounding the alarm over a proposed New Jersey Department of Labor rule that the group says would dramatically restrict independent contracting, threatening the livelihoods of thousands of freelancers, caregivers, and small business owners across the state.
The proposal would expand the state’s “ABC test” for worker classification, potentially forcing many independent contractors to be reclassified as employees.
GSI President Audrey Lane said the change would “punish flexibility and autonomy” while repeating the same mistakes that devastated gig workers in California.
Key Points
- GSI says New Jersey’s proposed labor rule would reclassify many independent contractors as employees.
- The group warns the move mirrors California’s 2020 AB5 law, which led to widespread job losses.
- GSI urges policymakers to pursue “smart, flexible solutions” to protect economic opportunity.
GSI: Rule would stifle flexibility and raise costs
“Independent contracting is not a loophole—it’s a legitimate career choice that millions of Americans value for its flexibility and autonomy,” Lane said. “New Jersey should learn from California’s experience, where broad reclassification forced thousands of workers out of business.”
The proposed regulation would broaden the definition of employer control, redefine what constitutes a place of business, and disregard traditional signs of worker independence such as professional licenses or multiple clients. GSI argues these changes would create a presumption of employment, eliminating legitimate paths to self-employment.
Drawing lessons from California’s AB5 fallout
GSI’s analysis compares the proposed rule to California’s Assembly Bill 5, enacted in 2020, which was later amended after widespread backlash. According to GSI, AB5 led to one in ten independent contractors losing work and forced lawmakers to grant over 100 exemptions to mitigate economic harm.
“New Jersey risks repeating these same mistakes,” the group said, noting that 99% of public comments submitted on the proposal were opposed to the rule.
Who stands to lose
The organization warned that the proposed rule would disproportionately harm parents seeking flexible schedules, retirees supplementing their income, immigrants entering the workforce, and independent professionals such as writers, trainers, and consultants who rely on autonomy and client trust.
“These are people who have built their lives around independence,” GSI’s statement said. “Forcing them into rigid employment structures will only raise costs, limit opportunity, and undermine economic freedom.”
GSI proposes alternative reforms
Rather than tightening classification rules, GSI recommends three reforms: developing portable benefits for gig workers, targeting genuine cases of abuse, and encouraging innovation in flexible work models.
Surveys cited by GSI show that 84% of full-time independent workers report higher satisfaction, and more than half say they would never return to a traditional job.
“New Jersey’s economy depends on entrepreneurs, freelancers, and independent professionals,” Lane said. “We urge policymakers to reject this rule and instead craft policies that empower workers and strengthen competitiveness.”
The Department of Labor has not yet announced a final decision on the proposed rule, which is under review following the close of the public comment period.
