Acting DOL commissioner defends ABC contractor rules as unions and businesses clash

Acting Department of Labor Commissioner Kevin Jarvis told the Senate Labor Committee on May 5 that the agency's newly adopted ABC independent-contractor regulations simply codify decades of court precedent and do not alter statutory exemptions.

Jarvis said the department consolidated case law into a single regulatory text to give businesses "one place for information" and to improve compliance and enforcement. "The only thing we did was codify 90 years of case law and final agency decisions," he said, adding that the rules "do not create a presumption of employment" and were not intended to target freelancers.

The commissioner cited enforcement statistics to underscore the department's rationale: more than 3,100 field audits last year, identified unreported wages he said amounted to about $1.3 billion, and payments of roughly $19.6 million in unemployment benefits to gig workers in recent years.

Business groups and independent workers said the regulations, as adopted, create uncertainty and could unintentionally disrupt small entrepreneurs, app-based workers and nonprofit arts organizations. Jack Kelly, a policy analyst for the New Jersey Business & Industry Association, urged the legislature to reconsider the rules and pursue legislative solutions rather than leave what he called a "highly fact-sensitive" test solely in administrative hands.

"There's no quantifiable metric to pass a certain threshold" under prong C, Kelly warned, arguing the rules favor established firms and make it harder for micro-businesses and new entrepreneurs to qualify as independent contractors.

Speakers representing insurers, financial advisers and freelance professionals also asked for statutory exemptions or clarifications. Several witnesses noted that existing statutory exemptions in the unemployment compensation law do not automatically carry over to wage-and-hour and related laws unless the legislature acts.

Labor unions and worker advocates sharply disagreed. Eric Richard of the New Jersey State AFL-CIO and other union witnesses said clear regulations will protect workers from being denied unemployment insurance, overtime and other protections when employers misclassify staff as independent contractors. "Clarifying classification laws through these regulations not only assists stakeholders to better understand and follow the law," Richard said, "but protects workers and state revenue."

Committee members pressed the commissioner on practical questions, including whether employers can request advisory opinions from the department. Jarvis said the department generally does not issue advisory opinions because each case requires a fact-intensive, three-prong analysis, but that the rules are meant to centralize the factors courts consider. He also said statutory exemptions (for example, owner-operator truckers and licensed insurance agents under unemployment insurance law) remain in force and could not be undone by regulation.

The committee heard requests on both sides to either invalidate the rulemaking through a concurrent resolution or to pursue legislative fixes that would clarify industry-specific exemptions. Several senators asked the department and stakeholders to provide specific, itemized differences between the situation on May 4 and the adopted rules on May 5 so lawmakers could target changes if needed.

The committee did not take final action on the ABC regulations during the hearing; committee leaders said they expected further conversations this summer and possible legislative proposals. The rules are scheduled to take effect Oct. 1 unless modified by the department or the legislature.

Sources: Testimony and exchanges at the Senate Labor Committee hearing, May 5, 2026.