ABC New Jersey is closely monitoring developments around New Jersey’s independent contractor regulations, which are currently scheduled to take effect on October 1, 2026.
Senate President Nicholas Scutari has formally asked Governor Mikie Sherrill to delay implementation of the New Jersey Department of Labor and Workforce Development’s regulations governing the state’s “ABC” test until July 1, 2027. The request would give lawmakers, businesses, workers, labor organizations, independent contractors, and other stakeholders nine more months to review the regulations and their potential consequences.
In an August 25 letter to Governor Sherrill, Senate President Scutari expressed concern that, even after modifications were made during the regulatory process, the regulations remain too broad and could have a serious adverse impact on New Jersey workers and businesses.
The regulations were originally scheduled to become operative on June 1, 2026. Governor Sherrill later granted a four-month delay, moving the operative date to October 1 to allow more time for potential legislative action. According to Scutari, however, that period has not provided enough time for the Legislature to fully evaluate what he described as an “economy-wide regulation.”
Why this matters to New Jersey’s construction industry
For ABC New Jersey and its members, the issue deserves particular attention because independent businesses, specialty contractors, subcontractors, and other business-to-business relationships are common throughout the construction industry.
ABC-NJ supports appropriate enforcement against employers that intentionally misclassify employees in order to avoid their legal responsibilities. Worker misclassification can disadvantage responsible contractors that follow New Jersey’s wage, tax, unemployment, workers’ compensation, and other employment laws.
At the same time, enforcement against misclassification must be carefully distinguished from legitimate relationships between independently established businesses.
Construction projects routinely involve multiple independent companies with different specialties working together to complete a project. Electrical contractors, HVAC contractors, plumbers, concrete contractors, roofers, painters, equipment operators, and numerous other specialty businesses may perform work as part of a larger construction project while maintaining their own independently established businesses.
New Jersey’s construction industry is already subject to specific laws governing worker classification. The Construction Industry Independent Contractor Act provides enforcement mechanisms and penalties for improper classification, including potential stop-work orders, civil penalties, debarment, and other consequences.
Because classification decisions carry significant consequences, ABC-NJ contends that contractors need rules that are clear, predictable, and able to distinguish legitimate independent businesses from situations involving actual employee misclassification.
Concerns surrounding the new regulations
The Department of Labor has stated that the regulations do not create a new ABC test. Instead, NJDOL maintains that the rules provide greater clarity by codifying how the Department interprets and applies the existing statutory test, including principles established through decades of New Jersey court decisions.
The Department also changed the regulations after substantial public feedback, including removing certain examples from the original proposal.
Nevertheless, New Jersey’s business community remains concerned about how the regulations will be interpreted and enforced in practice.
For contractors, uncertainty surrounding terms such as a business’s “usual course” of operations, “place of business,” the level of control exercised over a worker, and what constitutes an “independently established” business can have significant consequences when applied to real-world contracting arrangements.
This is particularly important in construction, where a general contractor or construction manager may coordinate schedules, establish safety requirements, control access to a jobsite, set project specifications, and oversee contractual performance while subcontractors remain separate businesses responsible for their own employees and operations.
ABC-NJ maintains that these types of legitimate construction relationships must be considered carefully as New Jersey determines how its worker-classification laws will be administered.
Supporting additional review
ABC-NJ supports Senate President Scutari’s request, which provides an opportunity for additional review before the regulations become operative.
A delay until July 1, 2027, would allow the Legislature and Administration additional time to hear directly from employers, contractors, independent businesses, workers, organized labor, and other affected stakeholders. It would also provide an opportunity to determine whether statutory clarification is necessary to ensure that New Jersey aggressively addresses genuine worker misclassification without creating unnecessary uncertainty for legitimate independent businesses.
The construction industry requires clear rules that allow responsible contractors to understand their obligations before entering into business relationships. Contractors that comply with the law should be able to determine with reasonable certainty whether a particular arrangement satisfies New Jersey’s requirements without facing ambiguity that could expose them to significant penalties after the fact.
ABC-NJ will continue to monitor Governor Sherrill’s response to Senate President Scutari’s request, any legislative proposals addressing the ABC test, and additional guidance from the Department of Labor.
Unless the Administration or Legislature takes additional action, the new regulations remain scheduled to become operative on October 1, 2026.
As always, advocating for a regulatory framework that protects workers, holds bad actors accountable, provides contractors with clear and predictable standards, and preserves legitimate business-to-business relationships throughout New Jersey’s construction industry will continue.
