Under New Jersey law, any employer that has an employee working in New Jersey is a New Jersey employer. It doesn't matter whether the employer has an office in New Jersey, it doesn't matter whether the employee is remote or on-site, and it doesn't matter where the employee lives. What matters is "where the service or employment is performed."
I didn't want to get into the employer's side of the issue, but this is why the conflict between New York and New Jersey tax laws becomes a problem for the employer, and why many New York employers simply ignore the New Jersey law if they can get away with it. If a company has even one employee who works in New Jersey, that company is a New Jersey employer. Not only does that mean that they have to withhold New Jersey tax from the employee's pay, and remit the tax to the state. It also means that the company itself becomes subject to New Jersey income tax. The company has to file a New Jersey tax return and allocate some portion of it's income to New Jersey, even if it's only a small portion. It doesn't matter whether the company has an office in New Jersey, or whether the New Jersey employee is working remotely. These rules apply simply because they have an employee who does his or her work in New Jersey.
At the same link:
"On and after October 1, 2021, the pre-pandemic Corporation Business Tax nexus standard applies whereby an employee working from home will create Corporation Business Tax nexus for an employer because working at a location in New Jersey is considered physical presence in this State."
It's a big mess. It's a problem for the employee and the employer. And it's not going to get straightened out anytime soon.
