Freelance workers and business groups called on the Senate Labor Committee on May 11 to overturn the Department of Labor & Workforce Development’s recently adopted independent contractor rules, saying these changes could threaten gig economy jobs and increase unemployment.
The debate centers on new regulations that take effect Oct. 1, which state labor officials say codify existing case law but critics argue will harm those who prefer freelance work. The New Jersey Business and Industry Association (NJBIA), representing employers across various sectors, led calls for reconsideration of the rules. “Let’s not kill any more jobs,” NJBIA President & CEO Michele Siekerka told the committee.
Those testifying said businesses may face higher costs, including legal expenses if their interpretation of whether a worker qualifies as an independent contractor under the so-called “ABC Test” differs from that of the Department of Labor. Kim Kavin, a freelance writer and editor, said: “I can’t see how my income and career are safe in New Jersey now under this ABC test.” Kavin added: “I have a great freelance career that I love. Yet none of you can tell me if I would be considered a legal independent contractor under this interpretation… The Department says it may consider some factors in one case, but not in another case, and we’ll never know what might matter.”
Alexander T. MacDonald, co-chair of the Workplace Policy Institute, pointed out that while there were some adjustments to the final rule, key parts requiring contractors to work outside a company’s usual place of business or maintain their own trade remain largely unchanged. He asked: “So, the practical question becomes what actually does satisfy prong C?” MacDonald cited regulatory language stating that having multiple clients or forming an LLC is often insufficient.
Acting Commissioner Kevin Jarvis was questioned about whether businesses could seek advisory opinions from DOL regarding compliance with these rules but responded: “No, we are not in a position to provide advisory opinions… That’s what the regulations are for to provide that guidance.” Some lawmakers expressed frustration at businesses needing lawyers just to interpret hiring provisions; Jarvis replied: “As a lawyer, I can tell them you’ll pay (lawyers) a lot less because you can look in one place instead of 90 years of case law.”
Elissa Frank, president of the New Jersey Civil Justice Institute (NJCJI), said expanding use of the ABC test beyond its original intent creates riskier litigation environments for wage-and-hour disputes than originally intended by unemployment benefit laws. She said: “Expanding that same standard into entirely separate statutory schemes — including wage-and-hour enforcement — stretches the original purpose… far beyond its intended scope.” Frank also noted uncertainty leads to inconsistent outcomes and costly litigation: “The test is highly fact-sensitive… without clear legislative guidance.”
Adam Perle, president & CEO at ArtPride New Jersey, testified about unintended consequences for nonprofit arts organizations relying on freelancers for limited engagements. He said classifying artists as employees would likely reduce opportunities overall: “New Jersey’s nonprofit arts sector generates nearly $692 million in economic activity… supports nearly 13,000 jobs… more than $156 million in annual tax revenue… The arts are not only a cultural asset; they are an economic driver.”
The NJBIA serves as both an advocate for employers throughout New Jersey—offering partnerships among business communities as well as government entities—and provides advocacy services along with essential information supporting business prosperity according to the official website.
