On May 29, 2026, the U.S. District Court for the District of New Jersey issued a significant opinion in Tomasello v. ICF Technology, Inc., ruling that adult performers who livestream on online streaming platforms should be classified as independent contractors under the Fair Labor Standards Act (FLSA) but qualify as employees under New Jersey’s Fair Labor Standards Act. The Court’s analysis underscores the growing divergence between federal and New Jersey worker classification standards — and the heightened risks employers face when engaging workers in the Garden State.
The Court’s differing analysis of federal and state law claims
In evaluating the threshold classification question, the Court applied two distinct legal frameworks and reached opposite conclusions when evaluating claims made by a class of adult entertainers under the FLSA and New Jersey’s Wage and Hour Law (NJWHL) and Wage Payment Law (NJWPL).
Under the FLSA's "Economic Reality" test, the Court found the performers were independent contractors. Three of the six factors — including the degree of the employer's control, the performers' opportunity for profit or loss, and the lack of permanence — favored independent contractor status. The Court emphasized that performers set their own schedules, chose their own streaming locations, set their own prices, and were free to simultaneously perform on competing platforms. While the defendants did exercise some degree of monitoring and enforcement over performer conduct, the Court concluded that this supervision was "nominal" compared to the performers' "pervasive managerial and scheduling autonomy.”
However, under New Jersey's ABC test, the Court reached the opposite result, finding the performers to be statutory employees. Unlike the flexible, multi-factor federal framework, New Jersey's ABC test establishes a presumption of employment: a worker is deemed an employee unless the hiring entity satisfies all three prongs of the test. While the defendants successfully carried their burden under Prong A (freedom from control), they failed as a matter of law under Prong B, which requires proof that the service is either outside the usual course of the hiring entity’s business or performed outside all places of business of the enterprise. The Court found that the performers' livestreaming services were squarely within the defendants' usual course of business, which was designed to provide continuous web-based adult content. The Court further explained that the digital platform itself constituted a "place of business" because the web-based platform “distributed and policed” live content while “aggregate[ing]” its customers and “execut[ing]” financial transactions. The defendants’ failure to satisfy Prong B was dispositive; thus, the Court held that the defendants improperly classified the performers as independent contractors rather than employees.
Key takeaways for employers
This decision should concern any business operating in New Jersey that engages workers through digital platforms or independent contractor arrangements. Several aspects of the ruling are particularly noteworthy.
New Jersey’s ABC test is far more stringent than the federal standard. The Court itself acknowledged that "a worker may possess sufficient operational autonomy to be classified as an independent contractor under the flexible federal balancing framework, yet still fail to overcome the strict legal hurdles required to strip away statutory employee status under New Jersey law.” Employers that have structured their relationships to comply with federal standards cannot assume they are compliant with New Jersey law.
Digital platforms may be "places of business." The Court's expansive interpretation of Prong B suggests that an enterprise's "place of business" can extend to proprietary digital infrastructure that serves as the primary commercial venue for the company's operations. For platform-based businesses, this reading may make it impossible to satisfy Prong B, even where workers operate remotely with substantial geographic freedom.
New regulations reinforce the Court’s analysis. The Court noted that the New Jersey Department of Labor and Workforce Development recently finalized regulations under N.J.A.C. 12:11, with an operative date of October 1, 2026, which the Court treated as “highly persuasive guidance reflecting the State's established policy on worker classification.” Additional analysis of these regulations is available at reedsmith.com.
Employers using independent contractor models — particularly those operating digital platforms or engaging remote workers who perform services within the company’s core business — should carefully reassess their classification practices in light of this decision and the forthcoming New Jersey regulations.