On May 5, 2026, the New Jersey Department of Labor and Workforce Development (the Department) adopted final regulations clarifying the application of the ABC test for determining whether a worker is an independent contractor or an employee (N.J.A.C. 12:11). Effective Oct. 1, 2026, the rules do not create a new test; rather, they formalize how the Department expects employers to assess and defend independent contractor classifications and underscore the Department’s substance-over-form approach.
The ABC test governs worker classification under the New Jersey Unemployment Compensation, Wage and Hour and Wage Payment Laws. The regulations apply across multiple laws the Department administers or enforces, including the New Jersey Temporary Disability Benefits Law, Earned Sick Leave Law and Call Center Jobs Act.
What the Final Rules Emphasize
To classify a worker as an independent contractor under New Jersey law, the presumed employer has the burden of proving that all three prongs of the ABC test are met.
The ABC Test
A) The worker has been and will continue to be free from control or direction over the performance of services, both under the worker’s contract of service and in fact;
B) The work performed is either outside the usual course of the business for which the work is being performed, or the work is performed outside all the places of business of the enterprise; and
C) The worker is customarily engaged in an independently established trade, occupation, profession or business.
Prong A
The rules call for a totality-of-the-relationship analysis and identify common indicators of control, including set hours or assignments, control over how work is performed, personal service requirements, pay set by the company, lack of worker risk of loss, on-call obligations, restrictions on outside work and training provided by the employer.
Prong B
The rules state that a company’s usual course of business can include activities it regularly performs to generate revenue or to develop, produce, sell, market or provide goods or services. Places of business include locations where the enterprise has a physical plant or conducts an integral part of its business. A worker’s home office is not the employer’s place of business, which is a helpful clarification for remote freelancer arrangements.
Prong C
The rules focus on whether the worker is operating a real, independently established business. Factors include the business’s duration and viability, customer base, relative income from the putative employer and other sources, number of employees and investment in tools, equipment, vehicles, infrastructure and similar resources. These factors are not exhaustive. Multiple jobs, outside work, licensure, business registration and insurance alone are not enough.
The rules emphasize substance over form. Neither an agreement labeling a worker an independent contractor nor a Form 1099 controls. The Department may consider who drafted the agreement, whether it was negotiable, whether one side could make unilateral changes and whether the agreement was terminable at will. Employers therefore should not rely on independent contractor labels where the actual working relationship reflects employee-like control.
What Employers Should Do Now
The Department explains that the rulemaking is intended to help businesses assess classification before a worker complaint or claim leads to an audit or investigation and to reduce exposure for unpaid contributions, unpaid wages, interest, penalties and related litigation costs.
Before Oct. 1, 2026, employers using contractors should review relationships involving core revenue-generating services, reporting, training, scheduling, non-compete restrictions, remote freelancer arrangements and workers who depend on a single company for income. Employers should update agreements and day-to-day practices to reflect independence and document facts showing that the worker operates a viable business independent of the relationship.
As a practical matter, independent contractor arrangements are likely to face greater scrutiny where the worker performs the same services as the business sells, where the company sets the worker’s schedule and where the worker relies on the company for most of their income.
In short, the final rules do not change New Jersey’s ABC test, though they codify a more exacting, substance-over-form framework for applying the test across a broad range of employment laws. For employers with significant contractor populations, now is the time to conduct contemporaneous classification analyses and align agreements, supervision practices and supporting documentation with the facts needed to show genuine business independence.
Employers are encouraged to consult with counsel to understand how these changes affect their operations and to ensure policies are compliant and strategically aligned. If you have any questions or would like additional information, please contact Jason Kaufman, Mallory Campbell, Rachel Kreutzer or any attorney in Bond’s labor and employment practice or the attorney at the firm with whom you are regularly in contact.
Throughout 2025, New York enacted several significant amendments to the state’s labor law, impacting contractors and subcontractors working on covered prevailing wage projects.
Expanding Coverage of Off-Site Custom Fabrication
On Dec. 20, 2025, Governor Hochul signed legislation amending New York’s prevailing wage law to expand coverage of off-site fabrication work.
Prior to this amendment, New York state regulators advised that prevailing wage requirements applied to off-site fabrication only if the work was "usually and customarily performed at the project site." Under this framework, off-site fabricators frequently could be treated appropriately as material suppliers and therefore falling outside the statute's coverage. In recent years, however, there has been a growing number of disputes over the coverage of off-site fabrication on public works projects in New York. The 2025 amendment is expected to put to rest some of these prior issues but may raise other new disputes based on the legislative drafting.
In any event, the new law expressly expands the scope of “public work” to now include certain "custom fabrication" performed off-site, even if that fabrication work takes place in a different state or jurisdiction. This extraterritorial application of the amendment is particularly notable, considering the limited authority and jurisdiction of state regulators in New York.
Nevertheless, under the amendment, workers performing covered off-site fabrication work must be paid the prevailing wage rate and fringe benefits established for the New York county where the project is located. (Note: The amendment appears to exempt projects falling under federal Davis-Bacon prevailing wage requirements.)
The statute defines “custom fabrication” as work that is solely and specifically designed and engineered for a covered public works building or work. Under the new law, covered custom fabrication includes, but is not limited to:
exterior and interior wall panel systems;
woodwork;
electrical systems;
plumbing systems;
heating, cooling, ventilation or exhaust duct systems;
rebar cages; and
mechanical insulation.
To be covered custom fabrication, the work must also constitute a “significant portion of the building or work" as delivered for installation or assembly. Under the new law, a "significant portion of the building or work" means portions or modules of the building or work – as opposed to smaller prefabricated components – that are delivered to the project site with minimal construction work remaining, other than the installation and assembly of such portions or modules.
It remains to be seen how effectively these cross-referenced definitions and (at times somewhat vague) terms can be applied in the real world on a construction project.
The amendment also impose new, extensive certified payroll obligations on contractors and subcontractors performing covered off‑site custom fabrication work. Further, the statute requires municipalities and state entities – the project owners – to report the following information to the Commissioner of the New York State Department of Labor (NYSDOL): (a) the name and address of off-site fabricators; (b) identification of the custom materials and quantities manufactured; (c) estimated and actual costs of fabricated materials; and (d) the number of workers used in fabrication.
The Governor’s Approval Memo noted an agreement with the legislature to clarify the scope of this bill, including exemptions for certain transportation and affordable housing related projects to mitigate costs associated with these essential projects. So, we expect to see further legislation addressing these points.
This new law becomes effective on June 18, 2026 (180 days from Dec. 20, 2025). In preparation for implementation, business entities should assess the impact and increased costs which will be associated with off-site fabrication work, as well as ensure compliance with heightened certified payroll documentation requirements and anticipate closer bid stage and construction phase scrutiny of whether off-site prefabricated work is covered under New York’s prevailing wage law.
Prevailing Wage Coverage for Delivery and Hauling of Concrete and Asphalt in NYC and Certain Other Counties
On Dec. 12, 2025, Governor Hochul signed legislation, requiring payment of prevailing wages and fringe benefits to drivers who are delivering and hauling concrete and asphalt to and from certain public worksites.
The law applies to covered activities in the five boroughs of New York City, as well as the counties of Nassau, Putnam, Suffolk, and Westchester. Covered activities include delivery, hauling, return trips (whether loaded or empty) and time spent loading and unloading.
(This amendment expands on prior recent changes to Section 220(3-a) of the New York labor law, which extended prevailing wage requirements to the hauling of "aggregates," i.e., sand, gravel, stone, crushed stone, dirt, soil, millings and fill to and from project sites. Historically such hauling had only been covered in limited circumstances.)
The 2025 legislation explicitly extends comparable coverage to now also includes concrete and asphalt hauling in the specified jurisdictions. The law took effect immediately on Dec. 12, 2025.
Contractors, subcontractors and hauling providers engaged in public works in the covered regions must comply with these new requirements. And they should anticipate potential cost impacts, bid adjustments and heightened scrutiny of certified payrolls and hauling arrangements from New York regulators. Among other things, businesses working in this area should consider:
Updating procurement and contracting workflows to appropriately incorporate the new prevailing wage obligations for concrete and asphalt hauling in the covered jurisdictions;
Ensuring certified payroll processes capture loading and unloading time and return hauls;
Reviewing subcontractor and trucking agreements to require prevailing wage compliance and adequate recordkeeping; and
Revisiting bid pricing, project budgets and schedules to account for the expanded coverage.
New Apprenticeship Requirements for Covered Renewable Energy Systems
Another new law - which took effect immediately upon Governor Hochul’s signature on Sept. 5, 2025 - imposes new apprenticeship requirements on all contractors and subcontractors performing construction work on “covered renewable energy systems,” which include:
Renewable energy systems (including solar and photovoltaic installations) of 1 MW or greater that receive renewable energy credits;
Offshore wind supply chain projects receiving funding from the New York State Energy Research & Development Authority (NYSERDA);
Certain “thermal energy networks”; and
Major utility transmission facilities.
This legislation extends the apprenticeship requirement – previously applicable only to thermal energy networks – to a broader renewable energy sector. For thermal energy networks specifically, the new law additionally requires the use of pre-apprenticeship direct entry providers registered with NYSDOL.
All covered contractors and subcontractors must use apprenticeship agreements as defined under Article 23 of the New York Labor Law. Among other things, such apprenticeship programs and agreements are subject to review and approval from NYSDOL.
This is a significant requirement for many contractors and subcontractors who have limited access to apprentices and approved apprenticeship programs in New York.
The Governor's Approval Memo acknowledged that the immediate effective date "poses challenges" and indicated that the state Legislature agreed to enact subsequent amendments to provide flexibility where apprentice availability may be insufficient. We intend to report on this issue.
Owners, developers and contractors engaged in covered renewable energy projects should verify that all contractors and subcontractors hold compliant apprenticeship agreements for construction work as necessary. For thermal energy network projects, these entities must additionally confirm the use of NYSDOL registered pre-apprenticeship direct entry providers.
We expect further changes to New York’s prevailing wage law in the future. Impacted businesses should work with legal counsel to assess their potential compliance obligations arising under the above amendments. If you have questions about the legislation discussed above, please also feel free to contact Andy Bobrek or Rebecca J. LaPoint.
On Dec. 3, 2024, the U.S. Department of Labor’s Wage and Hour Division (WHD) released a Notice of Proposed Rulemaking to phase out the issuance of Fair Labor Standards Act (FLSA) Section 14(c) certificates that allow employers to pay employees with disabilities subminimum wages.
The proposed rule would end the issuance of new Section 14(c) certificates and would only allow certificate holders to apply for renewals for three years after the effective date. At the end of the three-year phase out period, all Section 14(c) certificates will expire and all workers that were paid subminimum wages under Section 14(c) certificates will be required to be paid at or above the minimum wage. The WHD has emphasized that this rule will not require workers to leave their places of employment or require current certificate holders to alter any additional services they provide to these employees.
The FLSA created a guaranteed, non-waivable, federal minimum wage which is currently $7.25 per hour “except as otherwise provided.” Pursuant to Section 14(c)(1) of the FLSA, the Secretary of Labor has a limited power to issue certificates that allow employers to pay subminimum wages if it is determined that the certificates are necessary to prevent the curtailment of employment opportunities for individuals with disabilities. The WHD proposed this new rule to phase out the issuance of Section 14(c) certificates because it has determined that this statutory condition is no longer met.
The WHD based this determination on several factors. First, since the FLSA was signed into law in 1938 and since the most recent substantive revisions to Section 14(c) were made in 1989, the WHD noted that there have been significant steps to promote employment opportunities for individuals with disabilities through advances in technology, community advocacy and legislation.
Second, the WHD cited the steady decline in current certificate holders and subminimum wage employees as evidence of a lack of curtailment of employment opportunities for individuals with disabilities. According to data gathered by the WHD, there were 424,000 workers paid subminimum wages under Section 14(c) certificates and 5,612 certificate holders in 2001, compared to 40,579 workers paid subminimum wages and 801 certificate holders in 2024.
Third, the WHD noted that 33 states have already prohibited or further restricted the payment of subminimum wages to individuals with disabilities.
Finally, the WHD cited several studies suggesting misuse of Section 14(c) certificates and indicating that the work done by the employees working under those certificates often lacks opportunities for advancement or does not provide transferable skills. Based on those studies, the WHD concluded that the use of Section 14(c) certificates may have the counterproductive effect of curtailing employment opportunities for individuals with disabilities.
The WHD has invited the public to comment on all aspects of the proposed rule. The public comment period will be open until Jan. 17, 2025.
On Jan. 20, 2024, The New York City Council amended the City’s Earned Safe and Sick Time Act (ESSTA), to create a private right of action for employees claiming violations of ESSTA. The new law amends Section 20-924 of the New York City Administrative Code and allows employees to commence a civil action alleging a violation of ESSTA within two years of the date the employee knew or should have known of the alleged violation. The new law becomes effective March 20, 2024.
Currently, the sole redress for employees alleging violations of ESSTA is to submit an administrative complaint to the New York City Department of Consumer and Worker Protection (DCWP). The new amendment will allow employees to file both an administrative complaint with the DCWP and a civil action in a court of competent jurisdiction for the same alleged ESSTA violation. Employees are not required to file an administrative complaint with the DCWP prior to commencing an action in court for alleged ESSTA violations.
If an employee files both a civil suit and a DCWP complaint against the employer for the same alleged ESSTA violation, the DCWP will stay its investigation until it receives notice that the civil suit has been withdrawn or dismissed without prejudice. Once DCWP receives notice of a final judgment or settlement of the civil action, DCWP may dismiss the complaint unless it determines that the complaint alleges a violation that was not resolved by such judgment or settlement. The employee must notify DCWP within 30 days after the time for any appeal has lapsed that such complaint is withdrawn, dismissed without prejudice, or resolved by final judgment or settlement.
Employees who prove a violation of ESSTA may recover:
Three times the wages that should have been paid pursuant to ESSTA or $250, whichever is greater, for every instance where an employee is not compensated properly by the employer for safe and sick time taken.
$500 for every instance where an employee requested safe and sick time that was (a) wrongfully denied by the employer and not taken by the employee; (b) wrongfully conditioned upon a requirement that the employee search or find a replacement worker prior to approval; or (c) wrongfully subjected to a requirement that the employee work additional hours to make up for the original hours for which the employee was scheduled, without the mutual consent of the employer and employee.
Full compensation for wages and benefits lost, plus $500 and equitable relief as deemed appropriate, for every instance of retaliation and interference.
$2,500, full compensation, including wages and benefits lost; and equitable relief, including reinstatement, as deemed appropriate for each instance of unlawful discharge from employment.
$500 for each employee covered by a policy that does not provide or allow for the use of safe and sick time pursuant to ESSTA.
In addition, the amendment permits an employee to seek injunctive relief and declaratory relief, attorney’s fees and costs, and any other relief that the court deems appropriate.
The amendment also expands ESSTA’s civil penalty provisions for entities found to be in violation of provisions regarding the accrual and use of sick or safe time or retaliation, on a per employee basis, of up to $500 to be paid to the city for the first violation. Subsequent violations that occur within two (2) years of any previous violation, entities will be liable of up to $750, not to exceed $1,000 for each succeeding violation.
If you have any questions about the information presented in this news alert, please contact Lance Willoughby-Hudson, any attorney in Bond’s labor and employment practice or the Bond attorney with whom you are regularly in contact.
On Jan. 17, 2024, the New York State Appellate Division, Second Department decided a pivotal case for employers after years of uncertainty. In Grant v. Global Aircraft Dispatch, Inc., the Second Department decided against following Vega v. CM & Associates Construction Management, LLC, a First Department decision that carried steep consequences for employers in New York for violations of New York Labor Law Section 191 (Section 191).
On Dec. 27, 2023, the New York State Department of Labor (NYSDOL) published a Notice of Adoption of its proposed regulations in the State Register, which means the minimum weekly salary to qualify for the executive and administrative exemptions will officially increase effective Jan. 1, 2024. The NYSDOL did not make any changes to its proposed regulations, so the following increases will occur:
Effective on Jan. 1, 2024, the minimum hourly wage in New York will increase from $15 to $16 in downstate New York (New York City and Nassau, Suffolk and Westchester counties), and from $14.20 to $15 in upstate New York. In all regions of New York, the minimum wage will increase by $0.50 on Jan. 1, 2025, and by another $0.50 on Jan. 1, 2026.
New York State's pay transparency law becomes effective on Sept. 17, 2023. Labor Law § 194-b requires employers to disclose salary and wage ranges for advertised jobs and promotions.
The law applies to employers with four or more employees and covers jobs that will be physically performed, at least in part, in New York State, as well as remote-work positions that report to a supervisor in New York.
The following article by Bond attorney Alice Stock was published by Law360
Can an employer give employees a wage increase or benefits improvement during a union organizing campaign or while negotiating a first collective bargaining agreement after a union has won an election? At present, in most situations, it will be unlawful for an employer to do so.
On March 3, 2023, a bill amending the New York State pay transparency law was signed into law by Gov. Hochul, reflecting changes that the governor requested in exchange for her approval of the law in December 2022. The effective date of the amendments are the same as the original version of law, Sept. 17, 2023.
On Feb. 22, 2023, the Supreme Court of the United States (SCOTUS) decided Hewitt v. Helix Energy Sols. Grp., Inc.[1] In granting certiorari, the Court addressed the following question: Is a supervisor, who makes over $200,000 annually, calculated on a daily rate, considered a “Highly Compensated Employee” (HCE) who is overtime exempt under the FLSA? In a 6-3 decision, the Court ruled that the supervisor is not an HCE and is not overtime exempt.
On Dec. 21, 2022, Gov. Kathy Hochul signed the Warehouse Worker Protection Act (WWPA), S.8922/A 10020, into law. This new legislation aims to protect warehouse distribution workers from undisclosed or unlawful work speed quotas and includes protections for workers who fail to meet these quotas. The law takes effect 60 days after its signing, i.e., Feb. 19, 2023.
