NJ blasted over proposed changes to gig economy
Freelancers would be contract employees
By: Daniel Munoz
and Michael L. diamond
Asbury Park Press
USA today Network - New Jersey
..... New Jersey lawmakers, some gig workers and business groups are broadly opposed to a push by the Murphy administration that could classify freelancers such as drivers for ride-sharing apps including Uber and DoorDash as regular employees rather than independent contractors.
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They say the rules proposed by the New Jersey Department of Labor and Workforce Development would undermine the flexibility that attracted workers to contracting jobs in the first place.
..... "if this test goes through as proposed, it's almost impossible to establish an independent contractor relationship in New Jersey," said Elissa Frank, director of government relations for the New Jersey Business and Industry Association, a lobbying group.
..... The opposition marked the end of the public comment period for a rule first proposed by the Labor Department in May [2025] to clarify guidelines on whether a workers is an independent contractor of an employee. The Labor Department has 18 months to finalize the rule change, although Governor Phil Murphy's term comes to an end in January. [2026]
..... The rules are the latest step by the Murphy administration to rain in the misclassification of employees as independent contractors, making them eligible for benefits such as overtime pay, workers' compensation, unemployment compensation and paid sick leave.
..... A survey by McKinsey & Company, a consulting group, found that 36% of Americans identified as independent workers,up form 27% in 2016.
..... The Murphy administration has assessed more than $10.6 million in penalties paid to more than 12,500 workers it says were misclassified as independent contractors since September 2021.
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The new rule would take into account court decisions on the issue and codify the Labor Department;s interpretation of how independent workers should be defined.
..... "Not only would these new rules protect workers' rights, but they would also ensure that bona fide independent contractors understand what makes them independent contractors, rather than employees, so that they can continue to operate with autonomy," Labor Commissioner Robert Asaro-Angelo said in April. [2025]
..... Under existing state law, businesses must use what's called the three-pronged "ABC tests."
..... The criteria require that freelance workers:
* A: Ar free from control and direction by the business.
* B: Do work outside of a firm's "usual course of business" and "places of business."
* C: Are engaged in an independent, established "trade, occupation, profession or business."
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The proposed changes expand on them, spelling out new factors to determine the worker's classification.
..... Ride-sharing companies appear to expect the biggest impact.
..... In Prong B, for example, the department says employers would need to prove the service is outside its usual course of business or performed outside its place of business.
..... For a "transpiration network company" - one which drivers transport riders from one location to another - "the service performed by the driver are likely not outside of the transpiration network company's usual course of business," reads the 33-page proposal.
..... That means freelance drivers would likely not meet the second prong in the ABC test that defines independent contractors.
..... State officials introduced the ensures three years after ride-sharing app Uber agreed to a $100 million settlement with the state over allegations that the ride-sharing company improperly misclassified nearly 300,000 workers as freelancers rather than employees between 2014 and 2018.
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New Jersey labor officials also allege that ride-sharing app Lyft owes the state $17 million for similar worker misclassification practices, New Jersey Monitor reported.
..... State officials have argued that by classifying workers such as drivers as freelancers, companies such as Uber and Lyft are able to avoid legally required disability and family leave insurance payments, as well as contributions toward the state's unemployment and temporary disability funds.
..... Lyft spokesperson CJ Macklin said in an email earlier this summer, [2025] that the proposal rules would "force and outdated employment model" that "would only serve to hurt drivers across the state."
..... Proponents of freelance work argue that it provides a flexible means to earn extra income, whether it's a delivery driver at DoorDash, an Uber driver, a trucker picking up fright from the Ports of Newark and Elizabeth, a DJ, a freelance wedding photographer or musician, or a journalist.
..... The say the new rules wouldn't be confined to ride-sharing operations. The rules list other examples of workers classified as freelancers when they could likely be employees, including a caddie at a country club and a drywall installer for a drywall company.
..... The American Council of Life Insurers, a trade group, said in its comment that New Jersey is home to 58,000 independent insurance agents and urged the Labor Department to withdraw the proposal.
..... The rule "would effetely eliminate the independent contraction businesses of thousands of licensed insurance producers in New Jersey and cause significant harm to insurance small businesses and consumers," wrote David Chavern,, president and chief executive officer of the council.
..... State lawmakers, both Democratic and Republicans, have shown their displeasure with the proposal as well.
..... "As currently proposed, we believe the revised rule would have far-reaching small business owners, employees, and consumers," state Senator Vin Gopal, Assemblywoman Luanne Peterpaul, all Monmouth Democrats, wrote to the Labor Department.