Payroll nexus is the legal connection between your company and a state that obligates you to register as an employer, withhold income tax, and pay unemployment insurance on behalf of employees working in that state. This guide explains the difference between physical nexus (triggered by an employee’s physical location) and economic nexus (triggered by revenue thresholds), and walks through how each type of nexus creates specific compliance obligations — including timelines, penalties for non-compliance, and first steps for employers who discover they’re out of compliance.
New York’s “convenience of employer” doctrine is one of the most aggressive tax positions in the country: if your employee works remotely from another state for their own convenience — rather than because your company requires it — New York treats those remote days as New York workdays and taxes the wages accordingly. This article explains the doctrine, how New York defines “employer necessity,” the litigation history of the rule, how New Jersey applies a similar standard, and what steps employers can take to document bona fide remote work arrangements that may withstand scrutiny.
Reciprocity agreements between states allow employees who live in one state but work in another to pay income tax only to their resident state — eliminating double-state filing and simplifying employer withholding. But reciprocity is not automatic: it requires a properly executed certificate of non-residence on file with the employer, and it applies only to income tax withholding, not to SUTA or other employer obligations. This guide covers all 57 active state-to-state agreements, the mechanics of how they work, required employee documentation, and what happens when an agreement is suspended or terminated.