N.J.: New bill would protect insurance producers independence 

For months, PIANJ has been sounding the alarm about a proposed regulation that could upend the independent insurance agency system. Through meetings with lawmakers, public comments and direct engagement with the New Jersey Department of Labor, PIANJ has worked tirelessly to defend the status of licensed insurance producers as independent contractors. 

Now, there’s a new development in that fight: S-4839. This legislation, introduced by Sen. Gordon Johnson, D-37, chair of the Senate Labor Committee, offers a clear and much-needed fix to the growing threat posed by the state DOL’s expansive interpretation of the ABC test—a legal standard used to determine whether a worker is an employee or an independent contractor. 

What does the bill do? 

S-4839 is simple but powerful. It states that if licensed insurance producers would operate under a written agreement identifying them as an independent contractor, then they would be one—no additional tests or criteria would be required. The bill also would apply to other regulated professionals—such as broker-dealers and investment advisers—but for New Jersey’s insurance community, its impact would be especially critical. 

Why is it needed? 

This bill is a direct response to the state DOL’s proposed rule under N.J.A.C. 12:11, which would apply a rigid version of the ABC test across multiple labor laws. While the department claims the rule is meant to provide clarity, it actually introduces significant uncertainty for independent agencies. Under the proposed framework, even producers who are licensed, incorporated and operating independently could be reclassified as employees—simply for complying with carrier guidelines or regulatory requirements. 

PIANJ has made it clear that this approach is not only misguided, but dangerous. The independent agency model is built on autonomy and entrepreneurship. Producers are not employees of insurance companies—they are licensed professionals who run their own businesses, serve their communities and offer clients a wide range of coverage options. The proposed rule threatens to unravel that model by imposing a one-size-fits-all test that doesn’t reflect the realities of the insurance industry. If enacted, S-4839 would offer a legislative solution that restores clarity and protects the independence of producers. It would reinforce long-standing statutory exemptions under New Jersey’s Unemployment Compensation Law and would confirm what producers have always known—that they are independent contractors, not employees. The bill also would include a retroactive provision, meaning that past agreements would be protected, as well. 

What’s at stake? 

Without this legislation, producers could face legal uncertainty, increased compliance burdens and pressure to shift toward captive arrangements. That’s not just bad for agents—it’s bad for consumers, who rely on independent agencies for personalized service and competitive options. It also could discourage carriers from appointing in-state agents, weakening local service, and reducing access to coverage in underserved communities. 

PIANJ continues to advocate for this bill and for a regulatory framework that respects the unique nature of the insurance industry. The association has urged the department to either amend the proposed rule to include a clear exemption for licensed producers or withdraw it entirely and re-propose it with proper industry consultation. 

In the meantime, producers should stay informed and engaged. S-4839 isn’t just a technical fix—it’s a safeguard for the future of independent insurance in New Jersey. It’s about preserving a business model that has served consumers well for generations and ensuring that licensed professionals can continue to operate with the autonomy and flexibility that defines our industry.