entity object cannot be referenced by multiple instances of IEntityChangeTracker. while adding related objects to entity in Entity Framework 4.1

Because these two lines ...

EmployeeService es = new EmployeeService();
CityService cs = new CityService();

... don't take a parameter in the constructor, I guess that you create a context within the classes. When you load the city1...

Payroll.Entities.City city1 = cs.SelectCity(...);

...you attach the city1 to the context in CityService. Later you add a city1 as a reference to the new Employee e1 and add e1 including this reference to city1 to the context in EmployeeService. As a result you have city1 attached to two different context which is what the exception complains about.

You can fix this by creating a context outside of the service classes and injecting and using it in both services:

EmployeeService es = new EmployeeService(context);
CityService cs = new CityService(context); // same context instance

Your service classes look a bit like repositories which are responsible for only a single entity type. In such a case you will always have trouble as soon as relationships between entities are involved when you use separate contexts for the services.

You can also create a single service which is responsible for a set of closely related entities, like an EmployeeCityService (which has a single context) and delegate the whole operation in your Button1_Click method to a method of this service.

Steps to reproduce can be simplified to this:

var contextOne = new EntityContext();
var contextTwo = new EntityContext();

var user = contextOne.Users.FirstOrDefault();

var group = new Group();
group.User = user;

contextTwo.Groups.Add(group);
contextTwo.SaveChanges();

Code without error:

var context = new EntityContext();

var user = context.Users.FirstOrDefault();

var group = new Group();
group.User = user; // Be careful when you set entity properties. 
// Be sure that all objects came from the same context

context.Groups.Add(group);
context.SaveChanges();

Using only one EntityContext can solve this. Refer to other answers for other solutions.

This is an old thread, but another solution, which I prefer, is just update the cityId and not assign the hole model City to Employee... to do that Employee should look like:

public class Employee{
    ...
    public int? CityId; //The ? is for allow City nullable
    public virtual City City;
}

Then it's enough assigning:

e1.CityId=city1.ID;