N.J. Stat. § 40:62-135.1
Any ordinance, resolution, rule, regulation, order, or directive establishing, as may be permitted by law, a residency requirement for employees of a commission operating a water system that serves more than one municipality shall provide that any person employed or to be hired by the commission may reside within any municipality served by the water system, and shall further provide that a non-resident of the municipalities served by the water system may be hired if the commission is unable to hire a qualified resident. Any provision of an ordinance, resolution, rule, regulation, order, or directive to the contrary shall be void and have no force or effect.
Nothing in this section shall be construed as prohibiting a commission from employing or hiring a non-resident of the municipalities served by its water system if no residency requirement is established.
N.J.S. § 40:62-135.1