Skip providing benefits (like health insurance or paid leave)

Avoid paying into unemployment or workers' compensation

Employees pay 7.65% of their wages in payroll tax.

Contractors pay the full 15.3% on their own.

You can’t deduct health insurance premiums your employer might have covered.

You lose access to employer-matched retirement accounts.

You may pay more for healthcare without access to group coverage.

New Jersey’s ABC Test: How the State Determines Worker Status

Denial of paid sick leave or family leave

Common Red Flags You’ve Been Misclassified

You work regular hours set by your employer.

You’re required to follow specific company rules or use company-provided tools.

You don’t have the ability to hire others or negotiate your own rates.

You do the same work as employees but without the benefits.

You receive a 1099-NEC instead of a W-2 at the end of the year.

What to Do if You’ve Been Misclassified in NJ

Demanding your employer pay their share of employment taxes

Filing for unemployment insurance or workers’ comp benefits

Contact Us for Legal Advice and a Free Consultation

How Misclassification Affects Your Taxes in NJ

What’s the Big Deal About Misclassification?

Employer-provided benefits like health insurance or retirement options (if offered)

Legal protections against discrimination and retaliation

New Jersey’s Strict Worker Classification Test

A. Control: Rideshare apps often control key parts of the work — setting fare structures, assigning rides, enforcing quality standards through ratings, and even deactivating drivers. That may indicate a lack of independence.

B. Business Model: Uber and Lyft are in the business of providing rides. So, drivers are central to the company’s operations, not doing something outside its usual course of business.

C. Independent Trade: Most rideshare drivers don’t have their own ride-hailing business. They work through the app — meaning they’re not usually running an independent trade or business of their own.

What Misclassification Looks Like on the Ground

Do you set your own rates, or are they controlled by the platform?

Can you choose your clients freely, or are jobs assigned to you?

Do you perform work that's central to the company's services (like driving for a rideshare company)?

Are you allowed to build your own customer base outside of the platform?

Can you be penalized, deactivated, or “fired” based on customer feedback or performance metrics?

No minimum wage: Independent contractors are paid per job, not per hour, and there’s no guaranteed floor.

No overtime: If you put in 50+ hours a week across multiple gigs, you may still earn less than a full-time minimum wage — and you can’t collect overtime.

No paid leave or benefits: Independent contractors don’t qualify for paid sick time, family leave, or employer health insurance.

You pay your own taxes: Employees get taxes withheld and may qualify for tax credits. Contractors must pay self-employment tax and cover Social Security and Medicare contributions on their own.

Worker Protections and Your Right to Speak Up

Asking questions about your classification

Filing a complaint about unpaid wages or denied benefits with the <a href="https://www.nj.gov/labor/">NJ Department of Labor and Workforce Development</a>

Participating in a misclassification audit or investigation

Holding companies accountable for unpaid taxes and benefits

Supporting workers through education and outreach

Not Sure If You’re Really an Independent Contractor? Let’s Talk.

Uber, Lyft, and Gig Work: Misclassification Battles in NJ

What Does “Misclassification” Actually Mean?

You work regular hours set by your boss, but you’re paid without taxes taken out.

You use company tools or equipment every day but are told you’re “on your own.”

You’re expected to follow company policies and procedures but aren’t on the payroll.

Providing workers’ compensation or disability insurance

Complying with minimum wage and overtime laws

Offering benefits like health insurance or paid time off

The ABC Test: How NJ Determines Worker Status

A — The worker is free from control or direction over how they do their work.

B — The work is performed outside the usual course of the company’s business or outside all the company’s places of business.

C — The worker is engaged in an independently established trade, occupation, or business.

If you report to a site every day and take instructions from a foreman, you’re likely not free from control.

If your work is part of the company’s main business — like framing houses for a contractor — you’re probably not working outside the usual course.

If you don’t have your own established business (with your own clients, insurance, and business cards), you’re probably not independent.

Overtime pay — As an employee, you’re entitled to time-and-a-half after 40 hours a week. Misclassified workers often get no overtime.

Minimum wage protections — Employers might pay a flat rate or piece rate that ends up below minimum wage <a href="https://www.nj.gov/labor/wageandhour/support/faqs/wageandhourworkerfaqs.shtml">(currently $15.49/hour in 2025)</a>.

Workers’ compensation — If you’re injured on the job and misclassified, you might be denied medical care and wage replacement.

Unemployment benefits — Laid-off misclassified workers may not be eligible for unemployment.

Legal protections — Employees have rights to family leave, discrimination protections, and more. Independent contractors do not.

Lawsuits from workers seeking unpaid wages or benefits

Criminal charges in cases of intentional fraud

Your employer controls your hours, tasks, or how you do your work.

You wear a uniform or badge with the company’s name.

You use tools or equipment owned by the company.

You don’t advertise your own business or have other clients.

You’re paid by the hour or week, not by contract.

Taxes aren’t taken out of your paycheck, and you get a 1099 form at tax time instead of a W-2.

What You Can Do If You’re Misclassified

The Risks of Misclassification in NJ’s Construction Industry

Missing out on minimum wage <a href="https://www.nj.gov/labor/wageandhour/support/faqs/wageandhourworkerfaqs.shtml">(currently $15.49/hour in 2025)</a> and overtime protections

Losing unemployment or disability benefits if you’re laid off or injured

Paying self-employment taxes you shouldn’t owe

Not having access to workplace protections under state and federal law

The ABC Test: New Jersey’s Standard for Classification

You’re denied overtime pay even if you’re working 50-60 hours a week.

You don’t get unemployment benefits if you lose your job.

You may not have access to paid sick leave or other benefits required by NJ law.

You lose important legal protections, including the right to be free from workplace discrimination and harassment under the New Jersey Law Against Discrimination.

What Employers Risk If They Misclassify Workers

Liability for unpaid minimum wage or overtime

Fines and penalties from the NJ Department of Labor and Workforce Development

Back taxes, including unemployment and disability insurance contributions

Lawsuits from employees seeking lost wages or benefits

Potential criminal charges for willful violations in extreme cases

Common Myths About Independent Contractors

Your employer tells you how, when, and where to work.

You use company equipment or work at company locations.

You don’t invoice your employer — they just send you checks.

You can’t advertise or work for others.

You’re paid hourly or on a set salary, not by project.

What You Can Do If You Think You’re Misclassified

Review Your Work SituationLook at whether you control your work, whether your duties align with your employer’s main business, and whether you operate as an independent business.

Collect DocumentationKeep pay stubs, contracts, schedules, emails, and any other evidence of your working relationship.

Contact the NJ Department of LaborYou can file a complaint if you suspect misclassification. The <a href="https://www.nj.gov/labor/">NJDOL</a> investigates and enforces wage and hour laws.

Know the Statute of LimitationsUnder New Jersey law, you generally have six years to pursue claims for unpaid wages or benefits resulting from misclassification.

Consider Talking to a Legal ProfessionalIf you’re unsure whether you’ve been misclassified, speaking with a misclassification lawyer in New Jersey can help you understand your options. A lawyer can also calculate what you might be owed in unpaid wages, overtime, or benefits.

Why NJ’s ABC Test Matters in Worker Misclassification Cases

Why It Matters: Employee vs. Independent Contractor

Employer-paid taxes like Social Security and Medicare

Protection under anti-discrimination laws

New Jersey’s “ABC Test” for Worker Classification

2. You’re Doing the Same Work as Employees

3. They Restrict You from Taking Other Clients

4. They Provide All Tools, Equipment, and Training

5. No Mention of Business Insurance or Taxes

Claim unemployment or workers’ compensation benefits

File a complaint with the New Jersey Department of Labor (NJDOL)

How to Take Action if You Suspect Misclassification

Suspect You're Misclassified? Talk to Someone Who Knows the Law

Independent Contractor vs. Employee: 5 Red Flags in Your Contract

Workers’ compensation and unemployment benefits

Protection against workplace discrimination and harassment

Employer tax contributions (like Social Security and Medicare)

You wear a company uniform or follow detailed instructions about how to do your work

You perform the core duties of the business (like delivering for a delivery company)

You don’t work for other clients or operate a separate business

You’re paid hourly or regularly, not by project

You’re penalized for not accepting assignments

Legal remedies for discrimination or retaliation

Not Sure If You’re Misclassified? Let’s Talk.

Gig Worker or Employee? Why the Label Matters in NJ

Employer-paid health insurance or retirement contributions

How New Jersey Defines “Employee” vs. “Independent Contractor”

Are you free to set your own hours and methods?

Are you doing work that’s unrelated to the company’s main business?

Do you run your own business doing this kind of work for others, not just for them?

Examples of Misclassification in New Jersey

Healthcare (especially nurses and home health aides)

Gig work (rideshare, food delivery, freelance labor apps)

You’re required to work specific hours or shifts

You report to a manager or supervisor regularly

You’re trained by the company or must follow strict procedures

You use tools, equipment, or uniforms provided by the company

You’re not allowed to subcontract or take on other clients

You’re paid by the hour, not by the job or project

Taxes are not withheld from your paycheck — and you’re given a 1099 form instead of a W-2

What Are Your Rights If You’ve Been Misclassified?

Unpaid overtime: If you worked more than 40 hours in a week, you may be entitled to “time-and-a-half” pay

Minimum wage: If you were paid below New Jersey’s minimum wage (<a href="https://www.nj.gov/labor/wageandhour/support/faqs/wageandhourworkerfaqs.shtml">currently $15.49/hour in 2025</a>), you may be able to recover the difference

Reimbursement for work expenses: Employees shouldn’t be forced to pay for their own tools, mileage, or uniforms

Back pay and benefits: Including sick leave, family leave, or unemployment

Damages and penalties: Under New Jersey law, you may be entitled to double the unpaid wages and your employee vs contractor lawyer’s fees

What to Do If You Think You’ve Been Misclassified

Emails, contracts, or messages about your job

Anything that shows how much control the company has over your work

Can I Be Fired for Reporting Misclassification?

Think You’ve Been Misclassified as an Independent Contractor in NJ? Let’s Figure This Out.

Employment Law Insights & Resources

Recent Posts