Payroll Giant ADP Sues Tech Startup Zenefits

An increasingly public battle between payroll giant ADP and Silicon Valley start-up Zenefits has taken a legal turn, with ADP suing Zenefits for defamation and the “intentional interference with prospective economic relations.”

Zenefits, which Forbes listed as one of the “Hottest Startups of 2014,” offers HR services — such as payroll, onboarding and insurance processing — to small and medium-sized businesses.

ADP (ADP), which was founded in 1949, is one of several companies that Zenefits said it collaborates with to provide its businesses with payroll processing, the service at the center of the defamation lawsuit that was filed Tuesday in U.S. District Court Northern District of California.

The conflict between the San Fransisco-based startup and ADP heated up last week when ADP de-activated Zenefits accounts within ADP’s payroll system, which Zenefitssaid its clients could previously access, Zenefits said.

ADP responded to Zenefit’s claims in a statement, saying it had never integrated with Zenefits to access their payroll system.

Additionally, ADP said they disabled Zenefits’ access to the system “due to unusual and alarming demand for data from Zenefits far out of proportion to the number of clients who have allowed them access to our system.”

Zenefits saw the situation differently.

“ADP… has cut thousands of their small business customers off from using Zenefits to automate their time-consuming payroll administration work,” the company said in a statement on Change.org.

Zenefits said it has partnered with ADP “amicably” since the start-up was founded in 2013 by Parker Conrad.

On the Change.org petition, Zenefits claims that ADP cut off access to gain a leg up on the start-up, who touts itself as “the new kids on the block.”

Zenefits just raised a new $500 million round of funding from Fidelity Management and TPG, swelling its valuation to $4.5 billion. Its business model is to offer free HR services to small business clients. If these clients buy insurance through the Zenefits system, the start-up gets a commission. It also gets a share of the revenue if it sends clients to certain payroll providers. Its fast growth has pushed it into some regulatory faceoffs with the established HR industry, including insurance brokers.

“We believe that small businesses deserve better,” Zenefits said. “They – and not just the Fortune 500 – should be able to have the latest technology to make running their companies easier … Zenefits will fight this anti-competitive behavior with all we’ve got.”

ADP disputes the claim, saying that small businesses should have the latest technology, but only if it is effective and secure, a promise that they said was compromised by the Zenefits access to the system.

Source Link

Recommended Articles

HHS Proposes New Cybersecurity Requirements As First Major HIPAA Update In 10 Years

The Department of Health and Human Services (HHS) proposed a rule days before the new year began that would hold healthcare organizations to a higher standard for protecting sensitive healthcare information from security threats like cyberattacks. The proposal would require that entities covered by the Health Information Portability and Accountability Act (HIPAA) achieve specific technical ...

Read More

Aetna Sues Drugmakers For Widespread Price-Fixing And Collusion

Aetna is taking legal action against Pfizer, Novartis, Teva Pharmaceuticals and others, saying the list of drugmakers conspired to overcharge the insurer, consumers and the federal government for generic drugs. The complaint (PDF), filed Dec. 31, claims the drugmakers communicated secretly at trade conferences or through phone calls, beginning in 2012, to determine the market share, prices ...

Read More

Biden Administration Bars Medical Debt From Credit Scores

The federal Consumer Financial Protection Bureau on Tuesday issued new regulations barring medical debts from American credit reports, enacting a major new consumer protection just days before President Joe Biden is set to leave office. The rules ban credit agencies from including medical debts on consumers’ credit reports and prohibit lenders from considering medical information ...

Read More

Two Employer Health Coverage Reporting Bills Become Law

President Joe Biden has signed two bills that will ease some Affordable Care Act health coverage reporting requirements for employers. One is the Paperwork Burden Reduction Act, and the other is the Employer Reporting Improvement Act bill. The new laws affect the Form 1095-B and Form 1095-C notices that employers use to tell employees and the Internal Revenue Service about ...

Read More
arrowcaret-downclosefacebook-squarehamburgerinstagram-squarelinkedin-squarepauseplaytwitter-squareyoutube-square