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Blocking Zenefits Harms Small Businesses

  • date icon June 22, 2015
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In the past two weeks, Zenefits, an innovative Internet-based HR platform, and ADP, one of the world’s largest payroll systems, have become locked in a public dispute over Zenefits’ access to ADP’s payroll system. While several factors contributing to the disagreement between the two parties are nuanced, one troubling aspect of the dispute is not: ADP is seeking to limit competition and choice for the small businesses that rely on its services by creating a harmful bias against Internet-based platforms.

At the request of their customers, ADP routinely allows third-party vendors of all forms and sizes—from local accountants to large human resources companies—access to their databases to facilitate payroll processing on behalf of their clients. Until recently, these vendors included Internet-enabled platforms, such as Zenefits, which meant that small businesses could designate Zenefits to manage their payroll accounts on their behalf.  Less than a month ago, however, ADP chose to treat Internet platforms differently when it began blocking Zenefits’ human resources (HR) software from accessing ADP’s payroll system. By doing so, ADP prevented the small businesses that use Zenefits from executing even the most basic HR related functions.

ADP’s actions have not only contributed to hours of wasted time for businesses across the United States, but they have also resulted in a loss of competition and choice for the thousands of companies that take advantage of Zenefits user-friendly, Internet-based HR services. Causing a major headache for businesses, in order to create a competitive disadvantage for Zenefits and other Internet-enabled companies, is a bad precedent for the Internet and harms the small businesses that rely on ADP services.

While ADP may argue that their reasoning for blocking access to Zenefits centers on concerns over data security, this claim does not hold water. Like every member of the Internet Association, Zenefits is committed to securing the data of its customers, and it has the track record to prove it. In this instance, Zenefits was accessing ADP’s data in the same legitimate fashion as the numerous other bookkeepers and platforms that use ADP.

Zenefits should not be unfairly targeted by existing players in the HR space for innovating and leading the push for these services to move online. Regardless of the industry, if companies like ADP are allowed to set the rules of the game, then we will surely see the advance of innovative approaches and technologies slow significantly, which would be a loss for businesses and consumers nationwide.