Published by Punjabi Trucking USA | May 2026
A Long Road to October 1
For the thousands of Punjabi and South Asian owner-operators and fleet operators working in and around New Jersey — especially those serving the massive Port of New York and New Jersey — the past year has been one of anxiety, advocacy, and unanswered questions. Now, at least some of those questions have answers. On May 5, 2026, the New Jersey Department of Labor and Workforce Development (NJDOL) officially adopted its final rule codifying the state’s “ABC test” for independent contractor classification. The rule goes operative on October 1, 2026.
The path here was long and turbulent. The Murphy administration first proposed the rule in May 2025. It drew more than 9,500 public comments — over 99% of them in opposition — from truck drivers, freelancers, small business owners, and lawmakers from both parties. After Murphy left office, the incoming Governor, Mikie Sherrill, signed Executive Order No. 7 in January 2026, freezing all pending regulations for 90 days for review. Then, on May 5, the Department of Labor made its call: the rule moves forward, but with meaningful revisions.
The result is a rule that industry advocates and legal experts describe as improved from the original — but still one of the strictest ABC tests in the nation.
What Is the ABC Test? A Quick Refresher
New Jersey has used the ABC test to classify workers since 1936. A worker is presumed to be an employee unless the company engaging that worker can prove all three of the following prongs:
- Prong A: The worker is free from the company’s control or direction over the performance of services.
- Prong B: The work is either outside the company’s usual course of business or is performed outside all of the company’s places of business.
- Prong C: The worker is customarily engaged in an independently established trade, occupation, profession, or business.
Fail even one prong, and the worker is legally an employee — which means the company owes that worker benefits, unemployment contributions, and other protections under laws like New Jersey’s Wage & Hour Law, Wage Payment Law, Earned Sick Leave Law, and Temporary Disability Benefits Law.
What is new is not the test itself, but the detailed regulatory framework now defining what each prong means — and critically, what evidence counts for or against each one.
The Changes That Drew Praise
1. Complying With the Law Is No Longer a Trap
This was the single biggest flash point of the original proposal — and its removal from the final rule is being welcomed by nearly everyone in the trucking and logistics world.
The original draft stated that requiring a worker to comply with laws or regulations could itself be counted as “control” under Prong A — the same type of control that indicates an employment relationship. Legal experts called this not just unworkable, but potentially devastating. Attorney Richard Reibstein of the law firm Troutman Pepper Locke, who specializes in independent contractor law, wrote in his submitted comments that unless this provision was corrected, it would “foster the elimination of almost all independent contractors in this state.”
Why does this matter so directly to trucking? Trucking companies routinely require their owner-operators to follow federal safety regulations from the FMCSA, hours-of-service rules, drug testing protocols, and cargo security laws. Under the original rule, telling a driver to comply with federal law could have been used as evidence that the company was controlling that driver, pushing the relationship toward employee status.
The final rule removes that trap. The new language reads: actions taken “solely to comply with federal, state, or local laws or regulations shall not, standing alone, be considered evidence of control or direction” under Prong A. Industry attorneys note the two qualifiers — “solely” and “standing alone” — mean companies must still be careful. If regulatory compliance is combined with other forms of control, those can still count against IC status. But the blanket threat is gone.
2. Proprietary Apps No Longer Used Against You
The original proposal also singled out the use of proprietary apps as potential evidence of employer control under Prong A. In trucking and drayage, this is highly relevant. Dispatch apps, load boards, scanner apps, tracking software — these are standard tools in modern freight operations. Attorney and industry advocate Bill Feary, who works closely with transportation companies on IC issues, confirmed that the final rule deleted all mention of proprietary apps as control indicators.
“The proposed rule mentions proprietary apps as evidence of control,” Feary noted. “But they deleted all of that from the final rule. That’s a good thing.”
For an industry where digital dispatch and load management have become the norm — including among many Punjabi owner-operators who rely on apps to manage their operations — this is a significant relief.
3. The Truck Cab Is Not a “Place of Business.”
Prong B requires that work be performed outside the company’s “places of business.” The original proposal used such a broad definition of “places of business” that it could have included the cab of a truck as a location where the company conducts an “integral part of its business.” Had that definition survived, virtually every trucker hauling freight for a carrier would have failed Prong B on its face.
Reibstein described the original B Prong language as taking “an extraordinarily expansive view” of the place of business. The final rule pulled back from the most extreme version of that definition — a change Feary specifically highlighted as a positive development for the transportation sector.
4. Ride-Hailing Examples Were Removed
The original proposed rule included specific examples that called out drivers for ride-hailing services as likely to fail one or more prongs of the ABC test. Those examples do not appear in the adopted final rules. While this does not change the underlying analysis, their removal reduces the explicit targeting of app-based transportation workers.
What Remains — And Why Critics Are Not Satisfied
Despite the above revisions, the New Jersey Business & Industry Association (NJBIA) and other industry groups continue to push back hard. Their testimony before the Senate Labor Committee on May 11, 2026 — a four-hour hearing that drew unions, businesses, and freelancers — made clear that significant concerns remain.
Prong B: The “Usual Course of Business” Problem
The broad definition of “usual course of business” under Prong B was not changed. The final rule still defines it as covering any activity the employer “regularly engages in to generate revenue or develop, produce, sell, market, or provide goods or services.” For trucking companies and freight brokers whose entire revenue stream comes from moving freight — the same freight carried by their owner-operators — this creates a near-impossible hurdle to clear.
As law firm Morgan Lewis noted in its analysis, the definition of “places of business” as extending to locations where the enterprise “conducts an integral part of its business” also remains intact. For many transportation relationships, this means Prong B will continue to present serious challenges.
Prong C: The Death of Common Evidence
Under the final rules, none of the following individually satisfies Prong C:
- Holding a professional license
- Having multiple clients
- Registering a business entity (LLC, sole proprietorship, S-corp)
- Receiving a 1099 tax form
- Carrying commercial insurance
For many owner-operators in the Punjabi trucking community who have built their independence around these very markers — owning their truck, having their own authority, filing as a business — this is a gut punch. The rules emphasize the “duration, strength, and viability” of the worker’s business as the true measure, a standard that legal analysts warn could penalize newer entrepreneurs and anyone whose business history with other clients is thin.
Contracts Don’t Protect You
The final rules also retain provisions diminishing the weight of a contractor agreement when the company is the primary drafter, the terms are non-negotiable, or the company can modify or terminate the contract unilaterally. Since most carrier-contractor agreements in trucking are presented on a take-it-or-leave-it basis, this effectively reduces the value of written IC agreements as a defense.
The “Non-Exhaustive” Problem
Both business groups and freelancers raised alarm about the NJDOL’s broad disclaimer that the factors listed for each prong “are not exhaustive and additional factors may be considered.” Freelance writer Kim Kavin, a prominent critic of ABC regulations, put it bluntly: “New Jersey’s labor department says it may consider some factors in one case but not in another case, so who knows what matters?”
Jack Kelly of NJBIA called the rule — even as revised — “a sweeping and unilateral redefinition of settled legal standards, one that would dramatically narrow the pathways to independent work in the State.” The NJBIA has pledged to pursue legislative remedies during the 120-day window before October 1.
How Does This Compare to California’s AB5?
For Punjabi truckers, this question is personal. Many in the community have direct ties to California and are all too familiar with the chaos AB5 caused in the trucking sector — chaos that ultimately led a federal court to block AB5 from applying to trucking on preemption grounds.
Here is a side-by-side look at the two frameworks:
| Feature | NJ ABC Rule (Final, 2026) | California AB5 (2019) |
|---|---|---|
| Legal form | Regulatory rule (not a law) | State statute (law passed by legislature) |
| Origin | Built from decades of court precedent, codified by NJDOL | Legislatively enacted; codified the Dynamex court ruling |
| Effective for trucking | Oct. 1, 2026 (subject to legal challenge) | Blocked for trucking by federal courts (FAAAA preemption) |
| Test used | ABC test | ABC test |
| Key difference in Prong B | “Usual course of business” and “places of business” broadly defined | No equivalent provision; compliance is generally not used as control |
| Exemptions | Statutory exemptions preserved (e.g., insurance producers, certain professionals); no trucking-specific exemption | Required over 100 specific industry exemptions after passage |
| Regulatory compliance as control | Removed from final rule (positive change for NJ) | Removed from the final rule |
| Proprietary apps as control | NJBIA is pursuing concurrent resolutions; statute may override rule | Not specifically addressed in AB5 |
| Contracts | Reduced weight if non-negotiable | Mass industry opposition led to the Prop. 22 exemption for rideshare |
| 1099 / business registration | Insufficient alone for Prong C | Insufficient alone |
| Public backlash | 9,500+ comments; 99%+ opposed | Also, not sufficient alone |
| Legislative response | NJBIA pursuing concurrent resolutions; statute may override rule | Legislature passed 100+ exemptions; voters passed Prop. 22 |
The most important structural difference: AB5 is a law, passed by the California legislature. New Jersey’s rule is a regulation, adopted by an executive agency. That means it can potentially be overturned by a concurrent legislative resolution — which is exactly what NJBIA is pursuing. It also means it is more vulnerable to a court challenge on the grounds that it exceeds the agency’s rulemaking authority.
The most important practical difference for truckers: AB5 was blocked from applying to truck drivers by federal courts under the Federal Aviation Administration Authorization Act (FAAAA), which preempts state laws related to routes, rates, and services of motor carriers. That same federal preemption argument may be available against the New Jersey rule — and several legal observers expect it to be tested in court before October 1.
Acting Labor Commissioner Kevin Jarvis has insisted the rule simply “codifies existing law” and that industries already exempt from unemployment and other requirements “continue to be exempt.” But the NJBIA and Morgan Lewis, among others, argue the rule represents a meaningful departure from — not a summary of — prior case law.
What Should NJ-Based Owner-Operators and Carriers Do Now?
You have until October 1, 2026. That is your window to get your house in order. Here is what legal and industry experts are advising:
Audit your contractor relationships now. Don’t wait for an enforcement action. Review every owner-operator relationship against all three prongs as the final rule now defines them. Pay particular attention to how much direction your dispatchers are actually exercising in day-to-day operations.
Document IC business independence. Help your owner-operators document their business activity beyond your loads: other clients they haul for, their own operating authority (if any), their own business accounts and branding, and how long they have been in business. The rule’s Prong C analysis weighs the “duration, strength, and viability” of the contractor’s business.
Separate compliance from operations. When you require a driver to follow FMCSA hours-of-service rules or drug testing protocols, document that the requirement flows from a legal obligation, not operational preference. The new language protects compliance-based requirements — but only when they are clearly tied to a law or regulation.
Review your contracts. IC agreements that are entirely one-sided, include non-competes, or reserve broad modification rights will work against you. Consider revising agreements to allow more genuine negotiation of terms where possible.
Watch the legislature. NJBIA is pushing for concurrent resolutions that could void the regulation, and for statutory changes that would create a more workable framework. The next 120 days are critical politically.
Consult an attorney familiar with FAAAA preemption. If your operation qualifies as a motor carrier under federal law, the same federal preemption that protected California truckers from AB5 may be available to you here.
The Bigger Picture
Around 1.7 million New Jerseyans currently work as independent contractors. The trucking community — including the large and economically vital Punjabi trucking community that moves goods in and out of one of the busiest port complexes in the world — is a substantial part of that number. The fear driving most opposition to this rule is not opposition to worker protections. It is the hard lesson from California: when reclassification becomes legally mandatory and economically unfeasible, companies do not hire employees. They cut ties with contractors altogether. The jobs disappear.
That is the warning echoing from California to Trenton. Whether New Jersey’s legislature, courts, or next round of rulemaking will deliver a more workable outcome remains to be seen. What is certain is that October 1 is coming — and the trucking community’s window to prepare, advocate, and litigate is now.
Punjabi Trucking USA will continue to track developments in the New Jersey IC rule, legislative challenges, and any court action as October 1 approaches. For questions about how this rule may affect your operation, consult a licensed attorney familiar with New Jersey labor law and federal motor carrier regulations.
