PIANJ has submitted formal comments in strong opposition to a proposed rule by the New Jersey Department of Labor and Workforce Development that would expand the application of the ABC test for determining independent contractor status under state labor laws significantly.
If adopted, the new regulation—N.J.A.C. 12:11—would codify and reinterpret the ABC test across multiple labor laws, including those governing unemployment compensation, wage payments and earned sick leave. While the department claims the rule would clarify classification standards, PIANJ warns that the proposal would instead threaten the future of New Jersey’s independent insurance agency system.
A clear threat to independent agencies
PIANJ argues that the rule misinterprets the realities of the insurance industry, imposes unreasonable burdens on licensed professionals and disregards long-standing statutory exemptions. Independent insurance producers are regulated entrepreneurs—not employees of insurance carriers—and they have historically operated under a business model that benefits consumers and local economies through competition, choice and personalized service.
Under the proposed rule, regulatory compliance—such as following mandatory insurance licensing or consumer protection requirements—could be misconstrued as evidence of employer control under Prong A of the ABC test. Prong B and C reinterpretations also raise red flags—they would blur the distinct roles of insurers and producers and would undermine the legitimacy of licensure, business incorporation and client diversification as indicators of independence.
Ignoring statutory exemptions
PIANJ highlights that since 1941, New Jersey’s Unemployment Compensation Law has explicitly exempted insurance producers who are compensated solely by commission. The proposed rule would fail to incorporate this exemption and could, therefore, subject licensed producers to a misaligned classification standard, potentially dismantling a long-standing, legally recognized business model.
Advocacy in action
This is not PIANJ’s first warning about the proposed rule. In May, the association published an article on PIA Northeast News & Media, outlining its concerns and calling the proposal “a fundamental reclassification risk” that could collapse the independent agency channel by treating agents as employees of the insurers they represent.
Since then, PIANJ has stepped up its advocacy efforts—meeting with Gov. Phil Murphy’s office and key legislators, requesting and securing a public hearing, launching a grassroots letter-writing campaign and pushing for either explicit exemptions in the final rule or a full re-proposal with industry input.
PIANJ’s complete comments submitted to the state’s Department of Labor and Workforce Development are available online. These comments include a proposed amendment that would preserve the statutory exemption and affirm the independent status of licensed producers regulated by the Department of Banking and Insurance.
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
