NY Appellate Court Rules Government Mandate Not 'Employer Necessity,' Upholding Tax on Remote Workers

For non-resident professionals drawing a salary from a New York-based employer, the legal threshold to escape the state's income tax has just been cemented at an exceptionally high standard. Employees who worked from out-of-state homes during the pandemic—even when government mandates legally barred them from entering their New York offices—are still liable for New York state income tax on those earnings. On July 2, 2026, the New York Supreme Court, Appellate Division, Third Department ruled that a government-ordered office closure does not satisfy the state's strict 'employer necessity' test. The decision leaves thousands of multi-state commuters and remote workers on the hook for New York taxation, reinforcing a policy that aggressively sources remote wages back to the Empire State.[1]

The ruling stems from Matter of Zelinsky v. Commissioner of Taxation and Finance, a high-profile challenge brought by Edward A. Zelinsky, a Connecticut resident and law professor at the Benjamin N. Cardozo School of Law in Manhattan. During the 2019 and 2020 tax years, Zelinsky split his time between the New York campus and his Connecticut home. When former Governor Andrew Cuomo issued Executive Order 202.8 in March 2020, mandating a 100 percent reduction in in-person workforce levels, Zelinsky was forced to teach his classes entirely via Zoom from Connecticut. He subsequently sought a refund for the New York taxes withheld on the income he earned while physically working outside the state, arguing that the government mandate fundamentally altered his work arrangement from one of personal convenience to one of absolute necessity.[1]

The appellate court unanimously rejected that argument, drawing a sharp distinction between a public health emergency and an employer's specific business requirements. Under New York's long-standing 'convenience of the employer' rule, out-of-state workdays are treated as in-state workdays for tax purposes unless the remote work was undertaken due to the employer's absolute necessity. The court observed that while the executive order required Cardozo Law School to implement remote instruction, the school itself was 'indifferent' to where its faculty physically sat while delivering videoconference lectures. Because the employer derived no specific benefit from Zelinsky teaching from Connecticut rather than any other location, the remote work remained a matter of the employee's convenience under the law.[1]

Zelinsky, who represented himself in the proceedings, also mounted constitutional challenges against the tax assessment, arguing that taxing income earned entirely outside New York's borders violated the dormant Commerce Clause and the Due Process Clause of the U.S. Constitution. He contended that the state was engaging in egregious extraterritorial taxation by sending a tax bill across a border he was legally forbidden to cross during the lockdown. However, the appellate panel dismissed these claims, ruling that nonresidents do not implicate themselves in interstate commerce merely by working from home. The court found that Zelinsky maintained sufficient minimum connections to New York through his continued employment, his professional affiliation, and the tangible benefits of his position at a New York institution.[1][2]

New York is one of only a handful of states—alongside Connecticut, Delaware, Nebraska, and Pennsylvania—that aggressively enforce a convenience of the employer rule. For the vast majority of the country, state income tax is based on where the employee is physically located while performing the work. New York's outlier status has long been a point of friction for neighboring states, as it effectively allows New York to capture tax revenue from individuals who consume public services in New Jersey or Connecticut. The National Taxpayers Union Foundation has consistently ranked New York's tax code as one of the most burdensome for remote and mobile workers, noting that the state's refusal to suspend the convenience rule during the pandemic created a unique financial trap for out-of-state commuters.[2]

The practical stakes of this ruling are immediate and costly for remote workers. If an employee is assigned to a New York office but works remotely from another state for personal reasons—even if those reasons include a global pandemic or a general corporate shift toward hybrid work—New York will treat those remote days as New York workdays. To successfully claim the employer necessity exemption, an employee must prove that their specific job duties could not possibly be performed in New York and required specialized facilities out-of-state. Simply being hired as a remote worker because the candidate prefers to live in Florida or Texas does not shield that income from New York's reach.

For corporate human resources and payroll departments, the decision underscores the critical importance of tracking employee locations and understanding the strict limitations of state tax exemptions. The New York Department of Taxation and Finance has maintained a rigorous audit program targeting high-income nonresidents who attempt to allocate their wages outside the state. Tax advisors warn that a reclassification of an employee's tax return by New York authorities often occurs years after the fact, resulting in substantial assessments for back taxes, accompanied by interest and potential penalties. Employers are advised to coordinate their legal and payroll functions closely before approving broad remote-work arrangements for employees officially attached to a New York office.

While the Third Department's ruling provides a definitive victory for New York's tax authorities, the legal battle may not be entirely over. Zelinsky, who previously challenged the convenience rule in a 2003 case that reached the New York Court of Appeals, is widely expected to seek further review from the state's highest court. In the meantime, the decision serves as a binding precedent: a government mandate to stay home does not rewrite the tax code, and the burden of proving employer necessity remains squarely on the shoulders of the remote worker.[1]