Unless it is illegal under a state constitution or state law, a city, town, village, county, or township can impose a tax on income earned in the entity. it could be a two-tiered tax with a lower rate for non-residents or it could be a uniform rate. It could actually be a higher "effective" rate for non-residents by giving residents a "homestead exemption"..
What restrains an entity from unbridled greed and exploitation of non-residents is the real possibility that the non-resident employees may band together and coerce their employer to un-ass the jurisdiction.
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