The key takeaway from this proposed rule is the codification of the DLWD's interpretation of the statutory ABC test, heavily relying on New Jersey Supreme Court opinions. This is intended to better inform employers and lead to more appropriate worker classification decisions.
Workers' Compensation Aspect:
While the proposed rules primarily address the Unemployment Compensation Law (UCL), the Temporary Disability Benefits Law (TDBL), the Wage and Hour Law (WHL), and the Wage Payment Law (WPL), it's also important to note the broader implications for workers' compensation.
The ABC test, as interpreted and codified by these proposed rules, is used by the Department for "other New Jersey statutes for which the Department uses the ABC test to determine independent contractor status". This means that a worker classified as an employee under the ABC test for purposes of unemployment or wage laws would also be considered an employee for workers' compensation purposes. If a worker is deemed an employee, they are generally covered by workers' compensation benefits if they suffer a work-related injury. Conversely, independent contractors are typically not covered by their hiring entity's workers' compensation insurance. Therefore, the enhanced clarity provided by these rules on independent contractor status will have a direct impact on whether an injured worker can claim workers' compensation benefits.
The proposed rule also explicitly mentions that "proof that the individual performing services for the putative employer has their own liability insurance and/or workers' compensation insurance, is not alone sufficient to meet Prong C" of the ABC test. Furthermore, if the putative employer "requires or encourages the individual to obtain such insurance, the existence of such insurance does not suggest independent contractor status". This directly addresses attempts by employers to shift the burden of workers' compensation coverage to individuals by requiring them to obtain their own insurance, without genuinely establishing an independent contractor relationship.
While the proposed rules primarily address the Unemployment Compensation Law (UCL), the Temporary Disability Benefits Law (TDBL), the Wage and Hour Law (WHL), and the Wage Payment Law (WPL), it's also important to note the broader implications for workers' compensation.
The ABC test, as interpreted and codified by these proposed rules, is used by the Department for "other New Jersey statutes for which the Department uses the ABC test to determine independent contractor status". This means that a worker classified as an employee under the ABC test for purposes of unemployment or wage laws would also be considered an employee for workers' compensation purposes. If a worker is deemed an employee, they are generally covered by workers' compensation benefits if they suffer a work-related injury. Conversely, independent contractors are typically not covered by their hiring entity's workers' compensation insurance. Therefore, the enhanced clarity provided by these rules on independent contractor status will have a direct impact on whether an injured worker can claim workers' compensation benefits.
The proposed rule also explicitly mentions that "proof that the individual performing services for the putative employer has their own liability insurance and/or workers' compensation insurance, is not alone sufficient to meet Prong C" of the ABC test. Furthermore, if the putative employer "requires or encourages the individual to obtain such insurance, the existence of such insurance does not suggest independent contractor status". This directly addresses attempts by employers to shift the burden of workers' compensation coverage to individuals by requiring them to obtain their own insurance, without genuinely establishing an independent contractor relationship.
Recommended Citation: Gelman, Jon, Navigating NJ's ABC Test Changes (06/02/2025) https://workers-compensation.blogspot.com/2025/06/navigating-njs-abc-test-changes.html
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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.
Blog: Workers' Compensation
LinkedIn: JonGelman
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Author: "Workers' Compensation Law" West-Thomson-Reuters
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