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ADP prevents Zenefits' clients from accessing payroll system

Zenefits, a human resources startup that is headquartered in California, is defending its business practices after ADP, a well-established corporate payroll services provider based in New Jersey, stopped sharing data with the startup, preventing some Zenefits clients from using the ADP payroll system called RUN. While the cutoff started on June 4, Zenefits says that conflict between the two companies started before then.

Zenefits provides HR services for small and medium companies, and it works with numerous third-party partners to deliver insurance and payroll services. ADP is one of the third-party businesses that it says it integrated with to offer payroll processing to its clients. However, ADP claims that it never partnered with Zenefits and that it never authorized the methods by which Zenefits extracts data.

ADP stated that Zenefits is taking sensitive information, such as employee bank information and Social Security numbers, in a way that does not comply with its data security standards. The company's move is allegedly in response to a jump in user traffic and security risk. However, Zenefits believes that ADP is being unfair and that its action was not a response to high traffic. Rather, it thinks that the actual reason is because ADP sees it as a business threat. This is because the companies are competitors that offer HR and insurance services. Additionally, Zenefits received $500 million in funding and a $4.5 billion valuation recently. The company plans to speak with each of its clients that are affected and suggest that they switch to other payroll providers.

Business conflicts that start out with one company preventing another from conducting business could eventually turn into litigation. When this happens, the businesses involved may each hire a team of lawyers to help them build their corporate dispute cases and to represent their best interests in court.

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