M E M O R A N D U M

TO:                       Senate Labor Committee

FROM:                Hilary Chebra, Director, Government Affairs, CCSNJ 

RE:                        Testimony on Rule N.J.A.C. 12:11 – ABC Test Clarifications

DATE:                  May 11, 2026

The Chamber of Commerce Southern New Jersey (CCSNJ) appreciates the opportunity to provide comments regarding the New Jersey Department of Labor and Workforce Development’s adopted rule changes to N.J.A.C. 12:11 concerning worker classification under the ABC test.

CCSNJ represents more than 1,200 member companies throughout the seven southern counties of New Jersey, as well as the greater Philadelphia region and northern Delaware. Approximately 85 percent of our members are small businesses employing fewer than 50 people. These businesses rely on clear, predictable, and balanced labor policies to remain competitive and continue creating jobs in New Jersey.

We appreciate that the Department considered stakeholder feedback during the rulemaking process and made several revisions to the originally proposed rule. In particular, CCSNJ acknowledges the Department’s decision to remove certain industry-specific examples and revise portions of the proposal that created significant uncertainty for businesses utilizing independent contractors. The Department’s recognition that legitimate independent contractors play an important role in New Jersey’s economy is a positive step.

However, despite these revisions, CCSNJ remains concerned that portions of the adopted rule may still create ambiguity and unintended consequences for businesses and independent contractors across New Jersey.

First, while the Department clarified that the factors used to evaluate Prong A are not intended to function as a checklist, businesses remain concerned about how these factors will ultimately be interpreted and enforced in practice. The adopted rule continues to provide broad discretion in determining whether an individual is “free from control or direction,” which may create uncertainty for employers attempting to comply in good faith. Small businesses in particular often lack the legal and administrative resources necessary to navigate highly subjective classification standards.

Additionally, CCSNJ remains concerned that legitimate independent contractors who operate on a project-by-project basis or within highly specialized industries may still face difficulty satisfying Prong C. Many independent professionals do not maintain traditional storefronts, formal branding, or multiple simultaneous clients, yet nonetheless operate independent businesses and intentionally choose flexible work arrangements.

CCSNJ is encouraged that the Department removed certain language suggesting that the use of digital applications or software platforms alone could indicate employer control. That revision addressed a major concern raised by businesses and workers alike. However, questions remain regarding how technology-based work arrangements will be evaluated under the broader totality-of-the-circumstances framework established by the rule. As digital marketplaces and app-based work continue to evolve, clear and consistent guidance will remain essential.

We also note that the final rule codifies a highly fact-specific and case-by-case analysis, which, while consistent with existing case law, may still leave businesses uncertain about compliance obligations until challenged through enforcement actions or litigation.

Importantly, CCSNJ continues to emphasize the need for New Jersey to remain economically competitive with neighboring states. Businesses throughout South Jersey operate in a highly regional economy and are often competing directly with employers in Pennsylvania and Delaware that may operate under different worker classification frameworks. Regulatory uncertainty or overly restrictive interpretations could discourage investment, reduce flexible earning opportunities, and place New Jersey employers at a competitive disadvantage.

We recognize and support the Department’s goal of preventing intentional worker misclassification and ensuring workers receive appropriate protections under the law. However, it is equally important that legitimate independent contractor relationships are preserved and that businesses have clear, workable standards that can be consistently applied.

CCSNJ values the Legislature’s engagement on this issue and looks forward to continuing to work collaboratively with lawmakers during the 120-day stay period to identify additional improvements and clarifications that can help ensure the rule is implemented fairly, consistently, and in a manner that protects both workers and New Jersey’s economic competitiveness. Thank you again for your consideration.