{"id":7058694,"date":"2026-09-10T19:49:07","date_gmt":"2026-09-10T19:49:07","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/legal\/scissors-fiasco-avoided-new-jersey-dol-adopts-softer-version-of-independent-contractor-rule-than-originally-proposed-who-is-my-employee\/"},"modified":"2026-09-10T19:49:07","modified_gmt":"2026-09-10T19:49:07","slug":"scissors-fiasco-avoided-new-jersey-dol-adopts-softer-version-of-independent-contractor-rule-than-originally-proposed-who-is-my-employee","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=7058694","title":{"rendered":"Scissors Fiasco Avoided! New Jersey DOL Adopts Softer Version of Independent Contractor Rule Than Originally Proposed \u2013 Who Is My Employee?"},"content":{"rendered":"


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I flew to Washington, DC, last week and needed to bring scissors so I could cut and rewrap a bandage on my hand. The smallest scissors I could find were in a tiny Swiss Army knife that\u2019s been in a drawer, unused for 20 years. <\/p>\n

I took a chance and brought the tiny SWAK, but it was seized by TSA because of the knife part.<\/p>\n

So I had to buy scissors when I got to DC. I went to a drug store and found a $4 pair of kids\u2019 scissors (ages 4+) and brought them to the counter to pay.<\/p>\n

No kidding, the scissors were fastened to the paper backing with little nylon straps, so the only way to release the scissors was to cut the straps. To cut the straps, I would need scissors. And I couldn\u2019t buy a second pair of scissors because they too would have been secured by the little nylon straps.<\/p>\n

Quite the conundrum. Fortunately, the checkout guy recognized the problem and pulled out his own scissors to cut the straps so I could use my scissors.<\/p>\n

There\u2019s a good lesson for retailers on how packaging matters.<\/p>\n

The New Jersey Department of Labor also had a packaging problem, but its problem was with the ABC Test the state uses for determining who is an independent contractor. The ABC Test had been sold to the public with the usual three prongs (listed below) but no guidance, no exceptions, and no examples of how to interpret the prongs.<\/p>\n

A new regulation<\/a>, recently adopted by the NJDOL, takes effect October 1, 2026. It provides interpretive guidance for New Jersey\u2019s ABC Test.<\/p>\n

The NJDOL published a proposed set of regulations last year, and the business community went berserk. The proposed rule would have adopted interpretations of the three prongs that are inconsistent with case law and inconsistent with how businesses interact with legitimate independent contractors. The proposed rule sought to stack the deck to make it very hard to maintain an independent contractor relationship.<\/p>\n

Fortunately, the final rule removed many of the troubling provisions.<\/p>\n

The ABC Test requires each of these three prongs to be present for an independent contractor relationship to exist:<\/p>\n

A)<\/strong>\u00a0Worker has been and will continue to be free from control or direction over the performance of services, both under\u00a0the worker\u2019s\u00a0contract of service and in fact;\u00a0<\/p>\n

B)<\/strong>\u00a0Work performed is either outside the usual course of the business for which the work is being performed, or the work is performed outside of all the places of business of the enterprise; and\u00a0<\/p>\n

C)<\/strong>\u00a0Worker is customarily engaged in an independently established trade, occupation,\u00a0profession\u00a0or business.\u00a0<\/p>\n

Interpreting prong A, the proposed rule would have changed the meaning of control in several ways troubling to businesses. The proposed rule would have found evidence of control any time a hiring party required the contractor to use electronic devices. After an outcry from the business community, this term was deleted. <\/p>\n

The proposed rule also would have found evidence of control any time a hiring party insisted that its contractors follow applicable law. This term was substantially softened. The final rule says that directives issued \u201csolely\u201d to comply with applicable law are not, \u201cstanding alone,\u201d evidence of control. Companies that include various requirements in their independent contractor agreements that are designed to ensure compliance with the law should be careful to draft these provisions narrowly, with a focus limited to what is necessary to ensure legal compliance. <\/p>\n

Interpreting prong B, the proposed rule would have vastly expanded the meaning of \u201cplaces of business\u201d to include just about anywhere work is performed. If adopted, the effect would have been to fundamentally change prong B, making it very difficult to show that any work is \u201cperformed outside of all the places of business of the enterprise.\u201d The final rule deleted the proposed interpretation. The final rule also added the important clarification that when work is performed at the contractor\u2019s residence, the residence is not an employer\u2019s \u201cplace of business.\u201d Seems obvious, but it\u2019s good they added it.<\/p>\n

When the proposed rules were released last year, it looked like the NJDOL was trying to repackage the ABC Test in a way that would have made it nearly unusable \u2014 like my $4 scissors. Fortunately, the final rule adheres more closely to the way the ABC factors are traditionally interpreted. I\u2019m not saying I agree with the final version; it still has its warts and still leans toward making it harder to classify workers as independent contractors. But it is a lot better for businesses than the proposed rule would have been.<\/p>\n

Companies that retain independent contractors in New Jersey should be aware of the new regulations and should stress-test their contractor relationships to make sure they are in compliance. Changes can often be made to contractor relationships that will better protect contractor status.<\/p>\n

With the new regulation taking effect in October, now is a great time to proactively review those relationships. Agreements may need to be revised, and factual aspects of the relationship may need to be changed.<\/p>\n

\u00a9 2026 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.<\/em><\/p>\n

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