New Jersey Adopts Strict ABC Test for Independent Contractors, Threatening Advisor Businesses
New Jersey has finalized a stringent rule implementing the ABC test for worker classification, effective October 1, 2026. The regulation requires firms to prove that workers are free from control, perform work outside the company's normal business, and are independently established. This shift places the burden of proof on employers, raising significant concerns within the independent financial advice industry. The Financial Services Institute (FSI) argues the rule mischaracterizes licensed professional advisors as gig workers, potentially forcing them into employee status. A study by FSI and Oxford Economics reveals that 65% of New Jersey-based independent advisors are considering relocating their businesses to avoid compliance issues. Furthermore, 91% anticipate negative impacts on clients, including reduced services or higher fees. Industry leaders contend that securities supervision requirements could be misconstrued as employer control under the new framework. This development threatens the existing business model for tens of thousands of advisors who value the flexibility and ownership associated with independent contractor status, signaling a potential reshaping of the local financial advice landscape.
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New Jersey Adopts Strict ABC Test for Independent Contractors, Threatening Advisor Businesses
New Jersey has finalized a stringent rule implementing the ABC test for worker classification, effective October 1, 2026. The regulation requires firms to prove that workers are free from control, perform work outside the company's normal business, and are independently established. This shift places the burden of proof on employers, raising significant concerns within the independent financial advice industry. The Financial Services Institute (FSI) argues the rule mischaracterizes licensed professional advisors as gig workers, potentially forcing them into employee status. A study by FSI and Oxford Economics reveals that 65% of New Jersey-based independent advisors are considering relocating their businesses to avoid compliance issues. Furthermore, 91% anticipate negative impacts on clients, including reduced services or higher fees. Industry leaders contend that securities supervision requirements could be misconstrued as employer control under the new framework. This development threatens the existing business model for tens of thousands of advisors who value the flexibility and ownership associated with independent contractor status, signaling a potential reshaping of the local financial advice landscape.
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