I have a new employee who is working with 2 different clients in 2 different states and each state has their own tax rate. How do I calculate the employees pay check under these circumstances?

It really depends on the nature of his work and where he is physically located when he works with the clients. If he perfoms his work while physically located in a particular state for more time than just incidental meetings then he owes taxes to that state for the work he performs there. General rule of thumb - if he spends more than 30 days physically in the state then he most lkley owed insome taxes there. But if he works via telephone and PC while located from his home state for a client in a different state then he doesn't owe the client's state any taxes. There are exceptions however - for professional athletes ans entertainers, and for telecommuters who work from home at their own convenience.

If it turns out that he does owe taxes in both states then you should withhold for each based on the hours he is located in each.