N.J. Stat. § 40A:31-5.1
Any ordinance, resolution, rule, regulation, order, or directive establishing, as may be permitted by law, a residency requirement for employees of a local unit operating a water system that serves more than one municipality shall provide that any person employed or to be hired by the local unit in relation to the operation of its water system 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 local unit 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 local unit from employing or hiring a non-resident of the municipalities served by its water system if no residency requirement is established.
N.J.S. § 40A:31-5.1