Can Remote Freelancers Be Misclassified Under NJ Law?

The rise of remote work has blurred many lines in the modern workplace. From tech developers and content writers to marketing consultants and virtual assistants, more people than ever are working from home on flexible schedules. But that flexibility doesn’t always mean freedom. In some cases, what’s called “freelance” work may actually be employee work in disguise.

Worker misclassification is a growing issue in New Jersey. It often means that workers are denied basic legal protections, such as minimum wage, overtime pay, unemployment benefits, and even health and safety coverage. Many companies, intentionally or not, label someone an “independent contractor” when, under the law, they should be classified as an employee.

In this blog, we explore why the label matters — whether you're considered a gig worker or an employee — and how remote freelancers in New Jersey can be misclassified.

What Is Worker Misclassification?

Worker misclassification happens when a company labels someone as an independent contractor — but treats them like an employee. This allows the business to avoid paying payroll taxes, providing benefits, or complying with wage and hour laws, and in turn it affects the employees taxes as well.

Misclassified workers often:

• Are told when and how to work
• Can’t control their own schedules
• Use company equipment
• Can’t work for other clients
• Rely solely on one employer for income
• Get paid hourly or weekly like employees

While some workers are genuinely independent, others are freelancers in name only. This is a particular problem with remote freelance misclassification in NJ, where supervision and control can still be present even across a screen.

Why It Matters for Freelancers

Being labeled a “freelancer” might seem appealing at first — flexible hours, work-from-anywhere perks, and independence. But if you’re misclassified, here’s what you might be losing out on:

• Minimum wage and overtime protections
• Unemployment insurance if your job ends
• Paid sick leave, which is required under NJ law for many employees
• Workers’ compensation if you get injured while working
• Employer contributions to Social Security and Medicare

When companies misclassify workers, they save money… but the worker carries the burden. If you’ve been misclassified as an independent contractor, you may be entitled to compensation. 

The “ABC Test” Under New Jersey Law

New Jersey uses the ABC Test to determine whether a worker is truly an independent contractor. This is one of the strictest standards in the country.

To classify someone as an independent contractor, all three parts of the ABC Test must be satisfied:

A. The worker is free from control or direction over the performance of the work.

This means the worker must have genuine independence. The hiring company cannot control how, when, or where the work is done. If you're required to use company software, work certain hours, or report progress regularly, this prong might not be met.

B. The work is outside the usual course of the hiring entity’s business.

If the freelancer is doing work that is core to the company’s business, they are more likely to be an employee. For example:

• A remote writer for a media company likely falls within the core business.
• A freelance plumber hired by a clothing store likely does not.

C. The worker is customarily engaged in an independently established trade or business.

The worker must be running their own business — with multiple clients, their own branding, and the ability to accept or reject work. If the freelancer relies mostly on one company for income and doesn’t market themselves independently, this requirement isn’t met.

The ABC Test matters in worker misclassification cases: failing any part of the test means the worker should be classified as an employee.

Signs a Remote Freelancer May Be Misclassified

Here’s a quick checklist. If several of these apply, you might be a misclassified employee:

• You work for one company full-time
• The company tells you what hours to work
• You use their email address or tools
• You attend staff meetings regularly
• You report to a manager
• You can’t take on other clients
• You’ve worked there for months or years without a formal contract
• You’re paid like an employee (weekly, biweekly)

Don’t assume that a “freelancer” label makes it legal. The reality of the working relationship matters more than the paperwork. Watch for red flags in your contract that could signal misclassification.

Recent NJ Crackdowns on Misclassification

A 2000 study by the U.S. Department of Labor found that worker misclassification in New Jersey’s construction industry alone caused major losses in unpaid state income taxes and underreported wages. 

Since then, misclassification has grown significantly — increasing by roughly 40% over the past decade. As a result, the state likely loses tens of millions of dollars annually in unpaid taxes and missing contributions to unemployment and disability funds.

To fight the growing problem, New Jersey has stepped up enforcement of misclassification. Governor Phil Murphy has called it a form of “wage theft,” and the state has created a Misclassification Task Force to investigate and penalize employers.

Since then, the state has increased audits of industries known for misclassification — especially gig work like Uber and Lyft, tech, construction, and media.

What to Do If You Think You’ve Been Misclassified

If you're a remote freelancer in New Jersey and suspect that your employer is misclassifying you, here are steps to take:

1. Gather Documentation

Save contracts, emails, schedules, pay stubs, client communications, and any proof of how your work is assigned and supervised.

2. Compare Duties with Employees

Look at others doing similar work at the company. Are you performing the same tasks as employees but being labeled differently?

3. File a Complaint

You can report misclassification to:

• The New Jersey Department of Labor and Workforce Development (NJDOL)
• The U.S. Department of Labor

These agencies may investigate your claim and help recover unpaid wages or benefits.

4. Speak to a Lawyer

A qualified misclassification lawyer in New Jersey can help you determine if you have a case, and protect you from retaliation if you decide to take legal action.

A Home Office Doesn’t Mean You’re On Your Own

Being a remote freelancer shouldn’t mean giving up your rights. New Jersey law looks beyond job titles and tax forms to see what’s really going on in the work relationship.

If your freelance gig walks, talks, and feels like a full-time job — you deserve the same protections as anyone else working for an employer. And if that employer isn’t following the rules, you have every right to push back.

This issue isn’t limited to remote work — misclassification has long been a problem in industries like construction, where it has cost workers fair wages and the state millions in lost tax revenue. If an employer isn’t playing by the rules, you have every right to speak up and take action.

Contact Us for Legal Advice and a Free Consultation

If you believe you’ve been misclassified as a remote freelancer, you may be missing out on pay, benefits, and legal protections. 

We represent workers who’ve been denied their rights through misclassification, wage theft, and unfair labor practices. Our misclassification attorney in New Jersey can review your situation and explain your options — with no pressure and no cost to get started.

Contact us today for a free, confidential consultation. Let’s make sure you’re classified.