PIANJ pushes back on proposed ABC test rule that could shake up independent agencies

PIANJ, along with a coalition of other insurance associations, sat down with legal counsel for Gov. Phil Murphy earlier this week, to raise serious concerns about a proposed regulation from the New Jersey Department of Labor and Workforce Development. The topic? A sweeping new rule that would redefine the ABC test used to determine whether a worker is an employee or an independent contractor. 

And, if you’re an independent insurance agent in New Jersey—or anywhere in the Northeast—this one’s worth your attention.

[PHOTO TO RIGHT, CAPTION: (L-R) David Pascrell, Gibbons P.C.; Dennis Cuccinelli, National Association of Insurance and Financial Advisors; Gary La Spisa, Insurance Council of New Jersey; Mary Kay Roberts, Riker Danzig; PIANJ’s Brad Lachut; Roger Moore, NAIFA; and Vincent Ryan, American Council of Life Insurers.]

What’s the ABC test, and why does it matter? 

The ABC test is a legal standard used to decide if someone is truly an independent contractor or if the person should be classified as an employee. The proposed rule would expand how the test is applied across multiple labor laws, including wage, hour and sick leave laws. 

Here’s the kicker: If finalized as written, the rule could make it nearly impossible for many independent insurance agents to maintain their independent contractor status. 

Why PIANJ is sounding the alarm 

PIANJ made it clear in the meeting—and in its formal comments—that the proposed rule is a direct threat to the independent agency system that’s served New Jersey consumers for over a century. Here’s why: 

• It ignores existing law. New Jersey law already exempts insurance producers paid solely by commission from being classified as employees under the Unemployment Compensation Law. The proposed rule doesn’t acknowledge this. 

• It misinterprets regulatory oversight. The rule treats compliance with Department of Banking and Insurance regulations as a sign of employer control. But following the law shouldn’t be used against agents. 

• It blurs the lines between insurers and agents. Under Prong B of the ABC test, the rule could wrongly classify agents as employees just because they help generate revenue—even though agents and insurers serve very different roles. 

• It sets unrealistic standards. Even agents with licenses, business registrations and diverse client bases might not qualify as independent under the new test. 

What’s at stake? 

If this rule goes through unchanged, the ripple effects could be huge: 

• Carriers might stop appointing in-state agents. 

• Agencies could be forced to shut down due to legal uncertainty. 

• Consumers—especially in underserved areas—could lose access to local, personalized service. 

• The market could shift toward captive agents—reducing competition and choice. 

PIANJ’s position: Fix it or scrap it 

PIANJ isn’t against protecting workers from misclassification. But this rule, as written, casts too wide a net and pulls in professionals who were never the problem. 

That’s why PIANJ is urging the department to either: 

1. Add a clear exemption for licensed insurance producers, or  

2. Withdraw and rework the rule with proper industry input. 

The association has even proposed specific language that would preserve the current exemption and protect the independent agency model. 

What’s next? 

The conversation with the Governor’s Counsel was a critical step in making sure the administration understands what’s at stake. PIANJ will continue to advocate for a fair, balanced approach that protects both workers and the businesses that serve New Jersey’s communities.