New Jersey's ABC test for independent contractors takes effect — no carve-outs

New Jersey's independent contractor regulation is now in effect after a last-minute push for a delay fizzled, according to FreightWaves on Oct. 2. The rule codifies the ABC test for determining independent contractor status — with no industry carve-outs.

To count as an independent contractor, a worker must meet three standards: be free from control and direction; do work "outside the usual course of the hiring company's business"; and be customarily engaged in an independent trade or business with lasting enterprise and independent viability. The second prong is the landmine for trucking, where a carrier can have as much as 100% of its freight needs serviced by independent contractors. Attorney Richard Reibstein of Littler Mendelson said the final regulation takes a more moderate approach than the proposed version from April 2025 — but it still carries out "one of the most business-unfriendly tests for IC status in the country." Unlike California's AB5, which accumulated carve-outs for industries from surgeons to translators, New Jersey's version covers everybody.

Business groups are furious: NJBIA president and CEO Michele Siekerka called it "now the legal default, and a virtually impossible standard to meet." And the reach extends past New Jersey carriers — nationwide companies that engage New Jersey workers performing services from home offices in the state are also swept in. For owner-operators and the carriers that use them, the new default means employee classification unless all three prongs are clearly met.