Judging by my employer, small businesses are able to have their payroll companies take care of all that hassle without much cost, so it’s not really a problem.
It depends on scale. I moved during my last job, post-COVID, and the HR department has to make sure the state I was moving to was approved. If not, I was going to have to switch to contracting (fewer hours, fewer employer/employee type rules, more rigidly defined tasks, etc.) because the cost of setting up payroll and taxation in another state was too onerous for just one person, even at the higher levels of the development staff.
Your company could've solved this with using a solution from ADP, gusto, rippling, and the shit ton of other companies to do this.
They used ADP for payroll. I have to believe if it was as simple as checking a box they would have just done it.
That's just HR being lazy. The process for handling it is an afternoon of filling out some state forms and handing them off to the payroll company.
I am the employer, and it is a problem even after using a PEO. Plus, having an employee somewhere creates a nexus which is another whole set of problems.