Convenience of the Employer Rule for Remote Workers (2026)
Which states apply the convenience of the employer rule to nonresident wage income, and what each rule actually says — verified from primary sources.
Last updated
Overview
The convenience of the employer rule is a legal doctrine used by a minority of states to treat certain nonresident telecommuting wages as if they were earned within the state, solely because the employee works from home for their own convenience.
As of October 2026, five states have a verified convenience of the employer rule in force: New York (full rule), Delaware (full rule), Nebraska (full rule), Connecticut (reciprocal rule), and New Jersey (reciprocal rule). Alabama and Pennsylvania do not apply the rule.
A "full rule" means the state applies the test regardless of the employee's home state. A "reciprocal rule" means the state applies the test only if the employee's home state has a similar convenience of the employer rule.
States Applying the Rule
| State | Rule Type | Key Citation | De Minimis / Exception |
|---|---|---|---|
| New York | Full | 20 NYCRR § 132.18(a); N.Y. Tax Law § 601(e) | No day-count threshold. Rule applies only if the employee's assigned or primary work location is a bona fide employer office in New York State. |
| Delaware | Full | 30 Del. C. § 1124(b)(1) | No day-count threshold. Temporary COVID-19 carve-out (Mar. 22–May 31, 2020) has expired. |
| Nebraska | Full | 316 Neb. Admin. Code, ch. 22, § 003.01C(1) | No day-count threshold. Rule also requires that the employee's base of operations or place from which services are directed is in Nebraska. |
| Connecticut | Reciprocal | Conn. Gen. Stat. § 12-711(b)(2)(C) | 15-day de minimis rule: compensation for ≤15 days of convenience work per year is not Connecticut-source. Once exceeded, all in-state compensation becomes Connecticut-source under the rule. |
| New Jersey | Reciprocal | N.J.S.A. 54A:5-8(e), as amended by P.L. 2023, c.125 | No day-count threshold. Applies only if the employee's home state has a similar rule. Effective for tax years beginning on/after Jan. 1, 2023. |
New York Detail
New York's convenience of the employer rule is codified in regulation and statute. The rule reaches income only when the employee works from home for their own convenience, not because the employer requires it.
"If a nonresident employee . . . performs services for his employer both within and without New York State, his income derived from New York State sources includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York State bears to the total number of working days employed both within and without New York State. . . However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience,obligate the employee to out-of-state duties in the service of his employer."
Source: NYS Dept. of Taxation & Finance, TSB-M-06(5)I, 5/15/2006 (https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf)
Key limitation: The rule applies only if "the employee's assigned or primary work location is at an established office or other bona fide place of business of the employer . . . in New York State." If the assigned office is outside NY, "any normal work day worked at home would be treated as a day worked outside New York State."
Connecticut Detail
"For purposes of determining the compensation derived from or connected with sources within this state, a nonresident natural person shall include income from days worked outside this state for such person's convenience if such person's state of domicile uses a similar test."
Source: Conn. Gen. Stat. § 12-711(b)(2)(C) (https://www.cga.ct.gov/current/pub/chap_229.htm)
De minimis: § 12-711(b)(2)(A) excludes compensation for personal services rendered in Connecticut by a nonresident employee present in the state for not more than fifteen days during a taxable year. Once the 15-day threshold is exceeded, all in-state compensation becomes Connecticut-source.
New Jersey Detail
"For an individual who is a nonresident of this State and who has income from employee compensation from a New Jersey employer for the performance of personal services performed outside of New Jersey that were not required by the employer to be performed outside of New Jersey, and whose state of residence imposes an income or wage tax that requires employee compensation to be sourced to an employer's location if the nonresident renders the personal services from an out-of-state location for the convenience of the nonresident employee and not due to the necessity of the employer, this State shall impose a similar New Jersey sourcing rule on that income of the nonresident."
Source: P.L. 2023, c.125 (approved July 21, 2023) (https://pub.njleg.state.nj.us/Bills/2022/AL23/125_.HTM)
Agency confirmation: New Jersey Division of Taxation states that New Jersey does not have its own rule but will apply another state's rule on nonresidents under this law. Applies to residents of Delaware, Nebraska, and New York (but not Pennsylvania due to the reciprocal agreement). (https://www.nj.gov/treasury/taxation/conveniencerulefaq.shtml)
Delaware Detail
"Compensation, other than pensions, as an employee in the conduct of the business of an employer, for personal services: a. Rendered in this State, or b.Attributable to employment in this State and not required to be performed elsewhere;"
Source: 30 Del. C. § 1124(b)(1) (https://delcode.delaware.gov/title30/c011/sc03/index.html)
Agency guidance: The Delaware Division of Revenue has long considered work done by employees from their homes to be 'attributable' to Delaware employment when the employee is working from home for their own convenience and not because the work is required by the employer to be performed from home. (https://revenuefiles.delaware.gov/2021/TIM%202021-2%20-%20treatment%20of%20remote%20work%20in%202020.pdf)
Nebraska Detail
"If the nonresident's service is performed without Nebraska for his or her convenience, but the service is directly related to a business, trade, or profession carried on within Nebraska and except for the nonresident's convenience, the service could have been performed within Nebraska, the compensation for such services shall be Nebraska source income."
Source: 316 Neb. Admin. Code, ch. 22, § 003.01C(1) (https://www.law.cornell.edu/regulations/nebraska/316-Neb-Admin-Code-ch-22-SS-003)
States Not Applying the Rule
The following states were investigated and found not to apply a convenience of the employer rule to nonresident wage income (as of October 2026):
- Alabama — The state briefly acquired a convenience rule via a 2023 Tax Tribunal decision (Bollinger), but the Alabama Department of Revenue issued guidance (Aug. 25, 2026) confirming it will not follow that ruling. Alabama now withholds income tax only to the extent wages are attributable to services physically performed in Alabama.
Source: ALDOR Notice (https://www.revenue.alabama.gov/notice-alabama-income-tax-withholding-guidance-for-nonresident-employees/) - Pennsylvania — Pennsylvania's regulation contains "of necessity" language (61 Pa. Code § 109.8), but the Department of Revenue instructs the opposite result: a non-resident employee required to telework full-time from home in another state should treat compensation as non-Pennsylvania source income even if the employer is located in Pennsylvania.
Source: PA DOR Telework Guidance (https://www.pa.gov/agencies/revenue/resources/tax-law-policies-bulletins-notices/telework-guidance)