New Jersey's independent contractor regulation took effect Thursday, and weeks of speculation that implementation might be delayed came to nothing. The state's Department of Labor rule codifies the ABC test for determining whether a worker is an independent contractor or an employee — and unlike California's AB5, it contains no exemptions for any industry, trucking included.

For trucking, the stakes are immediate. The B prong of the test requires that work be "outside the usual course of the hiring company's business" — a standard that is particularly problematic for carriers, since a trucking company can have as much as 100% of its freight needs serviced by independent contractors. Owner-operators working under lease arrangements with New Jersey-based carriers, or performing work from New Jersey locations, now face reclassification exposure across a host of issues: control, minimum wage, workers' compensation and more.

The full test requires that three standards be met for a worker to qualify as an independent contractor: the worker must be free from control and direction; the work must be outside the usual course of the hiring company's business; and the worker must be "customarily engaged in an independent trade, occupation, profession, or business that has lasting enterprise and independent viability."

A softer rule, but still 'business-unfriendly'

Richard Reibstein, an attorney at Littler Mendelson who specializes in IC law, noted that the final regulation was modified from the initial proposal issued in April 2025 in a way that reduced its punitive character. But he drew a hard line on the bottom line.

"The final regulation takes a more moderate regulatory approach than the proposed regulation issued in April 2025. However, the new regulation still carries out one of the most business-unfriendly tests for IC status in the country and interprets that test in a particularly unhelpful manner," Reibstein wrote.

The New Jersey measure invites comparison with California's AB5, but the two arrived by different routes. California's legislature passed AB5 and the governor signed it. New Jersey's standard came through a rulemaking process, creating a framework that a regulator or a court can apply when IC status is a factor in a dispute.

The ABC test has long been viewed as a standard more likely to conclude that a worker is an employee. That outcome can reshape the relationship between an employer and a worker who believed he or she was independent.

No carve-outs for anyone

When AB5 took effect in California, the state responded to implementation problems by adding a long list of exemptions — a hodgepodge ranging from surgeons to translators. New Jersey's regulation is "clean" in that it covers everybody, for better or worse.

Opponents were not necessarily asking for carve-outs. Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, criticized the regulation in a prepared statement and warned against following California's path.

"(New Jersey) should not follow California's path of responding to problems with its independent contractor law by creating numerous exemptions and carve-outs for specific professions and industries. That approach creates an increasingly complicated patchwork of rules and even more uncertainty," Bracken said. "New Jersey needs a clear, consistent and workable standard that applies fairly across our economy."

What Bracken called for instead was a delay of implementation. He didn't get one.

Backers of the rulemaking had tried to downplay its significance, arguing that the ABC test already existed in the state's body of law on IC status and the regulation simply put meat on bones that were already there. Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, rejected that framing.

"(The state's Department of Labor) has dismissed this adoption as merely the codification of already existing regulatory actions and behavior, when, in fact, it is now leaving open an overly broad interpretation of an ABC framework from nearly a century ago," Siekerka said in a prepared statement. "In New Jersey, this is now the legal default, and a virtually impossible standard to meet, without any acknowledgement of the realities of the modern gig economy."

Reach beyond the Garden State

Reibstein flagged a nationwide dimension that shippers, carriers and forwarders engaging remote contractors should not miss.

"While some companies may mistakenly regard this New Jersey regulation as only governing businesses located or operating a facility in New Jersey, it also impacts companies operating on a nationwide basis that engage any New Jersey workers who perform services from their home offices or other business locations in New Jersey," he wrote.

In practice, that means any carrier, broker or logistics provider anywhere in the country that contracts with dispatchers, sales staff or back-office workers based in New Jersey now faces the ABC test's reach. The B prong alone threatens traditional models where contractors perform work central to a company's core business.

Business associations in New Jersey, including trucking-related groups such as Bi-State Motor Carriers, criticized the regulation virtually across the board in the run-up to implementation — to no avail. With the rule now in force, no delay materialized and no exemptions exist, the immediate practical questions shift to how aggressively the state Department of Labor applies the standard in audits and how New Jersey courts interpret the century-old framework the test rests on. For fleets and logistics companies with contractor relationships touching New Jersey, the reclassification risk is no longer theoretical; it is the legal default.