What Keeps Financial Protection Affordable for New Jersey Families?

In New Jersey, life insurers pay out $24.2 million every day in life insurance and annuity benefits. Behind that number are real relationships — between licensed professionals and the clients who trust them to help provide this financial protection for their families, their businesses, and their futures.

For more than a century, insurance agents and brokers have met this need as independent contractors. It’s a time-tested business model — one that allows licensed, highly regulated professionals to serve clients on their own terms, to provide options that meet their clients’ protection needs at the best price point.

The Problem: One Professional, Two Classifications

New Jersey law has long recognized the unique nature of insurance agents and securities brokers through an established exemption under the state’s Unemployment Compensation Law (UCL). But a new rule makes clear that this exemption does not extend to other areas of state labor law — including Wage and Hour, Wage Payment, and Earned Sick Leave statutes.

The result? A single insurance professional could be classified as an independent contractor for unemployment purposes yet treated as an employee under other state laws — all at the same time.

That kind of inconsistency doesn’t just create confusion for advisors. It creates real uncertainty for the companies they represent and — most critically — for the New Jersey consumers who rely on their guidance.

Good Intentions, Uncertain Outcomes

To be clear, the NJDOL’s intent to strengthen worker protections is well-founded. And ACLI appreciates the Department’s efforts to address some of our concerns raised during the rulemaking process.

The regulation as adopted, however, still leaves licensed producers and their clients with continued uncertainty. And throughout the rulemaking process, the Department acknowledged that it did not have the statutory authority to extend the UCL’s insurance and securities exemption to other areas of law.

That’s where the legislature comes in.

A Proven Path: What Other States Have Done

Other states have already addressed this exact issue through legislation:

• California’s AB 5 explicitly exempts insurance producers from its ABC test, preserving their independent contractor status while maintaining robust worker protections.
• Delaware, in 2022, enacted legislation that expressly defines insurance agents and brokers as independent contractors.

These states recognized what New Jersey lawmakers are now being asked to consider: that a one-size-fits-all classification framework doesn’t account for the realities of a licensed, regulated profession where independence is a feature, not a flaw.

Why S. 2782 Matters

New Jersey has an opportunity to take a similar path with S. 2782. Passage would accomplish three critical goals: regulatory coherence across New Jersey state law; consumer protection for families and businesses; and legal certainty for advisors and carriers.

We’re all committed to the same goal — helping New Jersey families and businesses access financial protection that’s affordable, sound, and tailored to their needs. Passing S. 2782 helps protect this access and preserves a model that can continue to serve New Jersey for decades to come.