SHRM Urges Revisions to New Jersey’s Independent Contractor Rule

SHRM and the Garden State Council-SHRM submitted a joint comment on New Jersey’s proposed rule for determining independent contractor status under the ABC test, warning that the rule, as written, creates significant uncertainty and legal risk for employers. Representing nearly 8,000 HR professionals in New Jersey, SHRM emphasized the importance of maintaining flexible work arrangements that meet both business needs and worker preferences.

While supportive of the state’s intent to provide clarity, SHRM cautioned that the way the rule defines and applies the prongs of the ABC test would significantly narrow the path for legitimate independent contractor relationships. SHRM argued that the proposed definitions are overly rigid and fail to reflect real-world working relationships, creating compliance challenges and legal uncertainty. Each prong of the test — assessing control, the nature of the work, and business independence — was interpreted in a way that heavily favors employee classification, leaving little room for flexibility or nuance. SHRM urged the New Jersey Department of Labor and Workforce Development to revise the rule to better align with statutory language, legal precedent, and the modern workforce, emphasizing the importance of preserving diverse work arrangements that benefit both workers and employers.