Are You Misclassified? What New Jersey’s ABC Test Means for Rideshare and Delivery Drivers

Every app tells its drivers the same thing: you are an independent contractor. It is in the signup flow, the terms of service, and the 1099 that shows up at tax time. What the apps do not mention is that New Jersey law starts from the opposite position. Under the state’s ABC test, a person who performs work for a company is presumed to be an employee, and it is the company’s burden to prove otherwise.

The difference is not academic. Employees get a minimum wage floor, overtime pay, unemployment insurance, temporary disability and family leave coverage, and protection from unlawful paycheck deductions. Contractors get none of that by default. In our view, many rideshare and delivery drivers in New Jersey are misclassified employees, and the state’s own enforcement record points the same way.

New Jersey Has Already Gone After the Big Apps

Misclassification in the gig economy is not a fringe theory in New Jersey. The state has pursued it at the highest level: in 2022, the New Jersey Department of Labor and the Attorney General’s Office announced that Uber had paid $100 million in past-due contributions, penalties, and interest after state auditors concluded its drivers were misclassified, and in 2025 the same agencies announced that Lyft had paid $19.4 million to resolve the state’s misclassification findings against it.

The first of those cases alone covered nearly 300,000 driver positions. The money went where the law directs it: to the funds that pay for unemployment, temporary disability, and family leave benefits, the very programs that get shortchanged when a company treats its workforce as contractors.

Here is the part drivers should not miss. Those payments squared the companies’ accounts with the state. They did not put wages back in drivers’ pockets. Claims for unpaid minimum wage, overtime, and improperly shifted expenses belong to drivers individually, and they are separate from anything the state collected.

What Is New Jersey’s ABC Test?

The ABC test comes from New Jersey’s unemployment law, and the New Jersey Supreme Court held in Hargrove v. Sleepy’s in 2015 that the same test governs state wage claims. The court reinforced the test’s strict application again in 2022. The Department of Labor’s guidance for workers explains it in plain terms.

A worker is an employee unless the company proves every one of the following:

• A. The worker is free from the company’s control and direction in performing the work, both under the contract and in fact;
• B. The work performed is outside the usual course of the company’s business, or is performed outside all of the company’s places of business; and
• C. The worker is engaged in an independently established trade, occupation, profession, or business.

The company carries the burden on all three prongs. If it fails even one, the worker is an employee. That structure makes New Jersey’s test one of the most protective in the country, and it is why the state’s auditors keep reaching the same conclusion about app-based work.

Prong B Is the Apps’ Biggest Problem

Prong B asks whether the driver’s work is outside the usual course of the company’s business. A rideshare company’s business is rides. A delivery platform’s business is deliveries. The apps have long described themselves as technology companies that merely connect people, but in our opinion a company whose entire product is the trip cannot credibly say that the person making the trip is doing something outside its usual course of business. New Jersey courts have shown little patience for labels that do not match how a business actually makes its money.

Control Through an App Is Still Control

Prong A is about control and direction. Drivers do not set their own rates; the app prices every trip. Drivers do not build a customer base; the app assigns the next ride or delivery and decides how many offers a driver sees. The app tracks drivers turn by turn, scores them through ratings and acceptance metrics, and reserves the right to deactivate them at any time. In our view, that is supervision delivered through software instead of a foreman, and it looks much more like employment than independence.

Prong C asks whether the driver has a genuinely independent business that would survive apart from the platform. Most drivers have no business entity, no independent clientele, and no way to serve their riders or customers outside the app. Turning off the app does not pause an independent business; it ends the work entirely.

The Apps’ Favorite Defenses, and Why They May Not Hold Up

“Drivers have flexibility.” Choosing your own hours is not the test. Plenty of employees set their schedules. The ABC test asks who controls the work while it is happening, whose business the work serves, and whether the worker has an independent enterprise. Flexibility about when to log on answers none of those questions.

“We are a technology company.” The platforms earn their money when trips and deliveries happen. In our opinion, calling the software the business while the driving is treated as incidental gets the economics backwards, and state auditors appear to have seen it the same way.

“You signed a contractor agreement.” The label in the paperwork does not decide the question. New Jersey’s test looks at the working relationship as it exists in fact. Courts have found workers to be employees despite signed independent contractor agreements many times.

What Misclassified Drivers May Be Owed

• Minimum wage shortfalls. After unpaid waiting time, dead miles, and out-of-pocket costs, many drivers earn less than New Jersey’s minimum wage for some or all hours worked.
• Overtime. Employees are generally owed time and a half past 40 hours in a week, and plenty of full-time drivers clear 50 or 60. Read more about unpaid overtime claims.
• Expenses and deductions. Gas, tolls, insurance, vehicle wear, and phone costs sit on drivers today. New Jersey law limits what an employer may shift onto or deduct from an employee’s pay, and employee status may open the door to recovering some of those costs.
• Benefit coverage. Employee status also means coverage under unemployment, temporary disability, and family leave programs, the same funds the state rebuilt with the payments described above.

New Jersey sharpened the consequences in 2019 with its wage theft law. Wage claims may reach back up to six years, and the law allows for liquidated damages on top of what should have been paid. Deadlines still apply, so waiting has a real cost.

DoorDash, Grubhub, Instacart, and Amazon Flex Drivers Are in the Same Position

Nothing about the ABC test is limited to rideshare. Couriers for DoorDash and Grubhub, shoppers for Instacart, and drivers for Amazon Flex face the same three questions, and the answers tend to point the same direction: priced by the platform, dispatched by the platform, scored by the platform, deactivated by the platform.

The Arbitration Clause Is Not the End of the Road

Nearly every driver agreement contains an arbitration clause with a class action waiver, and the companies count on those clauses to keep claims from ever being filed. Our approach is to bring claims one driver at a time in individual arbitration. Under the major platforms’ own agreements, the company typically must pay most of the arbitration fees, and thousands of individual filings are far harder to ignore than a single lawsuit.

Frequently Asked Questions

I only drive part-time. Does the ABC test still apply to me?

Yes. Employee status under New Jersey law does not depend on hours worked. Part-time employees are still employees, with the same minimum wage and expense protections for the hours they put in.

Does my contractor agreement waive my rights?

A contract cannot turn an employee into a contractor if the working relationship fails the ABC test, and employees generally cannot sign away minimum wage and overtime rights at all. The paperwork matters far less than the reality of the work.

How long do I have to bring a claim?

It depends on the claim, but New Jersey wage claims may reach back up to six years. Records fade and deadlines run, so it makes sense to ask early rather than late.

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