California law provides that a payroll service provider cannot be held liable for labor code violations – but, a California appeals court recently held that employees may pursue tort claims against payroll service providers under a theory that the payroll service provider is a third-party beneficiary of the employer’s contract with the employee. On December 5, 2018, payroll services provider ADP LLC urged an en banc California Supreme Court panel to reverse the lower court’s ruling, arguing among other things that payroll service providers do not have a duty to provide employees with compliant wage statements, and such a decision not only impacts thousands of California businesses, but it also runs contrary to legislative intent. Snell & Wilmer is monitoring the decision closely.
The case is Goonewardene v. ADP LLC et al., case number S238941 in the Supreme Court of the State of California. The docket report can be accessed here.