New J-1 employer not respecting tax residency treaty

[Postdoc_scientist]

I have been in the US with an F-1 visa (2016-2018) and J1 visa (2018-current). I have passed the substantial presence test, but invoked the treaty to remain a resident for tax purposes in Canada because of substantial ties in Canada (personal belongings at my mom's address/my permanent address, drivers licence/car, TFSA and investment accounts). I filed 1040NR in the US and have had 14% withheld from my student stipend. I have recently graduated my PhD and started a postdoc position. I planned to stay a nonresident of the US at least until the new year when I would evaluate things for my best interest. However, my employer informed me that they do not follow the treaty because they are a private company and are taxing me like a US resident.
1) Is my employer allowed to do this?
2) Am I now a US resident for tax purposes because they decided to tax me that way?
3) If 1 and 2 are true, how can I avoid getting into trouble if Canada audits me and determines I should be a resident for tax purposes in Canada?

[nelsona]

J'a are never exempt from US tax on US employment. They are only exempt from SS and medicare for 5 years. You should have been filing a non-resident return in US, and a full return in Canada (if you are still considered resident there).

From what you say, you are NOT a Cdn tax resident. Your ties are minimal.

Your current employer is correct.