Gusto and Zenefits abruptly end key integrations; customers scramble

Payroll and HR software providers Gusto and Zenefits have abruptly ended their API integration with an email to customers on November 15. Accountants who depend on the integration have been left scrambling to manually transfer data and figure out how to fill the software gap left by the severed partnership.

A spokesperson from Zenefits told Accounting Today, “Zenefits still has an integration with Gusto for payroll.” It technically does, but the integration will no longer support onboarding a new employee, changes in employee bank or tax details, exemptions or employee salary changes.

The statement from Zenefits went on: “Gusto required that we modify our payroll integration using the latest version of their API, which does not support the same features as the current integration. Effective next month, joint customers who continue to use Gusto for payroll will need to manually enter information the API does not support, such as banking and tax details.”

In kind, a spokesperson from Gusto said, "We asked Zenefits to update their practices for how they were using the integration because the approach they were using created risk of sensitive customer information falling into the wrong hands. Our request was for Zenefits to comply with our existing policies, which all of our partners do. None of this is a result of any new changes that Gusto has implemented. All of our external API documentation is public at docs.gusto.com. These security protocols exist in order to keep customer information secure and private. We believe that keeping customer information secure and private is in fact, being customer first."

Around the time ZenPayroll changed its name to Gusto, in 2015, the company started offering benefits capabilities on top of payroll. But the startup had already established itself as a payroll software provider, and so its integration with Zenefits, another HR software platform, has been a key partnership for many accountant customers. The ending of their partnership, customer Scott Orn conjectures, may be a push by Gusto to make customers switch from Zenefits to their benefits offering.

Gusto payroll

Orn is chief operating officer of San Francisco-based accounting and professional services firm Kruze Consulting, which provides accounting and human resources services to more than 200 startups. Small, rapidly growing startups are a prime example of the type of company that is neither able nor willing to stop operations to sort out an interruption in services.

Orn said the two software platforms overlap in about 80 percent of their capabilities, and each offers about 20 percent of features that the other does not.

“It happened so fast we haven’t had time to react,” said Orn. “We really like the people at both companies, but this is one example of not putting the customer first — and both companies have built their brand on a ‘customer first’ approach.”

The first email Kruze Consulting received regarding the integration was from Zenefits. The email stated, “Gusto created an application programming interface which we are required to use for our joint customers. This latest connection does not support the same features as the integration you are currently using. As a result, in early December, some of the functionality that Zenefits has been able to provide to you through our current sync will no longer be available.”

Three days later, on November 18, Gusto sent an email to customers that appears to blame Zenefits’ unwillingness to comply with its requests around “security” for the severed integration: “Recently, we asked Zenefits to make changes to our shared integration so that it is in line with Gusto’s high security standards. As a result of the changes being made by Zenefits, some account information will no longer automatically sync between Zenefits and Gusto.”

It’s impossible to say what really happened behind the scenes, but the undeniable result is that firms and businesses that use the two apps together, with the integration, have had just about two weeks' notice before essential functionalities cease and they have to manually shift all the relevant data from one app to the other; or, as Orn points out, to another app altogether, because after going through a confusing and sudden change like this, users can sometimes lose trust completely and start seeking new options.

“The downside of this for both companies is it’s going to open up other options for customers,” Orn said. “You’re going to now look at Rippling or Justworks. That’s what Gusto and Zenefits should have thought about before they made this decision.”

Editor's note: An earlier version of this story did not include Gusto's comments. The story has been updated as of November 26th, 4:50 p.m., to include comments from Gusto.

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