Calls for Smarter, Flexible Policies to Protect Economic Opportunity
The Garden State Initiative (GSI) today cautioned that a proposed rule from the New Jersey Department of Labor could significantly restrict flexible work arrangements, impacting thousands of freelancers, caregivers, and small business owners across the state.
The rule seeks to expand the state’s “ABC test” for determining worker classification—an approach that would reclassify many independent contractors as employees, limiting opportunities and raising costs for families and employers alike.
“Independent contracting is not a loophole—it’s a legitimate career choice that millions of Americans value for its flexibility and autonomy,” said Audrey Lane, President of GSI. “New Jersey should learn from California’s experience, where broad reclassification forced thousands of workers out of business and created unnecessary exemptions. Our state can protect workers and expand benefits without eliminating the independence that freelancers have chosen. We urge policymakers to pursue smart, flexible solutions that empower New Jersey families, not constrain them.”
Today, more than 72 million Americans—nearly one in three workers—earn income through freelance or gig work. In New Jersey, these flexible arrangements are critical for parents balancing childcare, retirees supplementing their income, and professionals managing multiple clients or projects.
Yet under the proposed rule, the Department of Labor would:
- Broaden the definition of employer control, treating routine business practices—like requiring insurance or using digital platforms—as evidence of control;
- Redefine a worker’s own vehicle or a client’s home as an employer’s place of business; and
- Dismiss traditional signs of independence, such as holding professional licenses, receiving 1099 forms, or working with multiple clients.
These changes would effectively create a presumption of employment, eliminating many legitimate paths to independent work.
A Cautionary Tale from California
California’s Assembly Bill 5 (AB5), enacted in 2020 with similar goals, led to widespread job losses and confusion. Studies found that one in ten independent contractors lost work, and lawmakers were forced to carve out more than 100 exemptions to address the economic fallout. The result was a patchwork system that hurt small businesses, workers, and consumers.
GSI warns that New Jersey risks repeating these same mistakes—particularly as 99% of public comments submitted on the proposed rule expressed opposition.
Who Would Be Harmed
The proposed rule would disproportionately affect:
- Parents and caregivers who rely on flexible schedules;
- Retirees who continue part-time consulting or contract work;
- Immigrants and minorities who use gig work as a first step into the workforce; and
- Independent professionals, from writers and trainers to financial advisors, who depend on client trust and autonomy.
A Better Path Forward
In its analysis, GSI recommends three practical policy alternatives to strengthen protections without eliminating flexibility or independence:
- Develop Portable Benefits
- Target Real Abuse
- Encourage Innovation in Work Models:
Protecting Economic Freedom
Surveys show that 84% of full-time independent workers report being happier, and more than half say they would never return to a traditional job. Forcing workers into rigid employment structures will only raise costs, limit opportunity, and undermine economic freedom. Worse, the workers negatively impacted the most tend to be women, minorities, young people, and others trying to make their way up the socioeconomic ladder.
GSI urges policymakers to reject the proposed rule and instead advance solutions that empower workers, encourage entrepreneurship, and sustain New Jersey’s competitiveness.
