Assuming we're assigning one employee per room, this is what is known, in advanced combinatorics, as a 'derangement' problem. The answer is 44, so is not among the answer choices. A complete solution is complicated (there are a few cases, none of them all that simple). This kind of problem is also well beyond the scope of the GMAT. What is the source?
I can at least show how you'd get started on the problem. We need to move the employee from room '1' to a new room, so we have 4 choices. Let's call that new room 'W'. Now the employee from room W has to move to a new room. Here's where you first have two cases - that employee could move to room 1, or could move to a room we haven't considered yet. If you just focus on the second case, where the employee from W goes to a new room (not room 1, but instead some other room 'X'), you then have 3 choices for that new room. And if you continue to assume that each employee goes to a room you haven't considered yet, you next have 2 choices, and finally 1 choice, for a total of 4*3*2*1 = 24 options. This is what we're really doing:
1 --> W (four choices)
W --> X (three choices)
X --> Y (two choices)
Y --> Z
Z --> 1
and since W, X, Y and Z need to be distinct room numbers from 2, 3, 4, and 5, there are 4! = 24 ways to choose their values.
But that's just one of three cases you need to analyze to solve this problem. You also have to count the case where employee 1 and employee X simply swap rooms, and then the cases where employee Y moves back to either room 1 or room X. If you add on those other two cases, you'll get 44 total possibilities. This is far too hard to be a real GMAT problem, so it is not worth worrying about.