GOONEWARDENE v. ADP

Amicus Curiae Brief of PAY-NET; PAYROLL WORLD, INC.; ERIE CUSTOM COMPUTER APPLICATIONS, INC.; TASK HR-VA LLC; HCM CENTRIC LLC; ADMINASOURCE, INC.; QTS PAYROLL SERVICES, INC.; PROMERIO, INC.; and PAYALITY, INC.;

Cal.July 25, 2017

No. 8238941 IN THE SUPREME COURT OF CALIFORNIA SUPREME COURT FILED SHARMALEE GOONEWARDENE, JUL 25 2017 Plaintiff and Respondent Jorge Navarrete Clerk VS. Deputy ADP PAYROLL SERVICES,INC., ET AL., Defendants and Petitioners. After a Decision ofthe Court ofAppeal, Second Appellate District, Division Four Case No. B267010 Appeal from the Superior Court ofthe State of California County ofLos Angeles. Case No. TC026406 Honorable William Barry, Judge Presiding APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF PETITIONER; AMICUS CURIAE BRIEF RECEIVED KEVIN C. YOUNG (SBN 125298) wes O47 kevincyoungesq@aol.com 750 B STREET, SUITE 2550 CLERK SUPREME COURT SAN DIEGO,CA 92101 TELEPHONE:(619) 232-3090/FACSIMILE:(619)696-0045 Attorneys for Amicus Curiae PAY-NET,a California partnership; PAYROLL WORLD,INC., a California corporation; ERIE CUSTOM COMPUTER APPLICATIONS, INC., a Pennsylvania corporation; TASK HR-VA LLC,a Virginia limited liability company; HCM CENTRIC LLC,a California limited liability company; ADMINASOURCE,INC., a Delaware corporation; QTS PAYROLL SERVICES, INC.; a Nevada corporation, PROMERIO,INC., a California corporation; and PAYALITY,INC., a California corporation (hereinafter collectively referred to as “the TASLAR entities”) RECEIVED JUL 24 2017 sera No. 8238941 IN THE SUPREME COURTOF CALIFORNIA SHARMALEE GOONEWARDENE, Plaintiff and Respondent VS. ADP PAYROLL SERVICES, INC., ET AL.., Defendants and Petitioners. After a Decision ofthe Court ofAppeal, Second Appellate District, Division Four Case No. B267010 Appeal from the Superior Court of the State of California County ofLos Angeles. Case No. TC026406 Honorable William Barry, Judge Presiding APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEFIN SUPPORT OF PETITIONER; AMICUS CURIAE BRIEF KEVIN C. YOUNG (SBN 125298) kevincyoungesq@aol.com 750 B STREET, SUITE 2550 SAN DIEGO, CA 92101 TELEPHONE:(619) 232-3090/FACSIMILE:(619)696-0045 Attorneys for Amicus Curiae PAY-NET,a California partnership; PAYROLL WORLD,INC., a California corporation; ERIE CUSTOM COMPUTER APPLICATIONS, INC., a Pennsylvania corporation; TASK HR-VA LLC,a Virginia limited liability company; HCM CENTRIC LLC,a California limited liability company; ADMINASOURCE,INC., a Delaware corporation; QTS PAYROLL SERVICES,INC.; a Nevada corporation, PROMERIO,INC., a California corporation; and PAYALITY,INC., a California corporation (hereinafter collectively referred to as “the TASLAR entities”) TOPICAL INDEX Page APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF PETITIONER ............-.--02 eee eee tenes 1 IT INTRODUCTION ........ 0.0... cece cee ee eee eee 3 II PAYROLL SERVICE BUREAUS ............0 00. c eee eee 4 A. The Market Place ....... 0... ccc cece ee eee enes 8 B. The TASLAR California Based Payroll Providers ............ 9 C. The Sister State Based Payroll Providers .................. 10 | TIT DISCUSSION ...... 0.0... ccc ccc cence eee een eeee 11 A. Employees Are Not Intended Beneficiaries of the Services Provided to Employers by Payroll Service Providers ........ 12 B. Important Policy Consideration Mediate in Against Extending Contract Liability to Third Party Employees . ............. 15 C. The Decision to Allow a Claim for Negligent Misrepresentation Against Payroll Service Providers for Erroneous WageStatements is Ill-considered . ............ 17 D. Payroll Service Providers Should Not be Liable for Professional Negligence to Third Party Employees . .................. 18 IV CONCLUSION ...... 0...eece eee nee ees 20 CERTIFICATE OF COMPLIANCE . ...........2... 202 eee eee 22 TABLE OF AUTHORITIES STATUTORY AUTHORITY Page Cal. Civ. Code 1559 «1.6... eee eeeeect eee ee ee eens 12 Cal. Lab. Code §226 2.0... ccc ccc cece cece eens 17 Cal. R. Ct. rule 8.520 2...ceeee eee eee nee 1 CALIFORNIA SUPREME COURT DECISIONS Bily v. Arthur Young & Co... 00. ccc ccc cnn nnn nes 17,18 3 Cal.4th 370 (1992) TREATISES AND OTHER AUTHORITY Fortune.com ... 0... eee ce cee eee eee eee en eees 8 Dec. 2, 2015 Internal Revenue Manual5.1.24, Field Collecting Procedures, Third-Party Payer Arrangementsfor Employment Taxes ..........- 7 (Effective Nov. 6, 2015) IRS Data Book FY2012, Table 17 Civil Penalties ................ 5 Fiscal Year 2012 IRS National Taxpayer Advocate, Annual Report to Congress ...... 5 December31, 2012, p. 6. Morningstar.com 0.0... 0... eeecnet tee eee eee 8 NERA Economic Consulting, Trends in Wage andHour Settlements: 2015 Update ............ 19 p. 14 -ii- No.S$238941 IN THE SUPREME COURT OF CALIFORNIA SHARMALEE GOONEWARDENE, Plaintiff and Respondent Vs. ADP PAYROLL SERVICES, INC., ET AL., Defendants and Petitioners. APPLICATION FOR LEAVE TO FILE AM IC US CURIAE BRIEF I N SUPPORT OF PETITIONER Pursuant to rule 8.520(f) of the California Rules of Court, TASLAR respectfully requests leave to file the attached amicus curiae brief in support of Petitioners ADP Payroll Services, Inc., ADP, LLC and AD Processing, LLC (hereinafter collectivelyreferred to as “ADP”) on the issue as to which the Court granted review: “Does the aggrieved employee in a lawsuit based on unpaid [wages] have viable claims against the outside vendor[i.e., the payroll service bureau] that performed payroll services under a contract with the employer?” (Order, Feb. 15, 2017.) The TASLAR entities are each independently owned small businesses operating a payroll service providers. Some ofthese small businesses are located in California and others are located in sisterstates, and all process payroll checks for California employers. The TASLAR -j- entities seek to file their brief out of concern over the unprecedented imposition ofliability by the appellate court upon payroll service providers under both contractual and tort theories to employees for violation of the duties imposed upon employers under Labor Code. The TASLAR entities believe the information and viewsprovidedin its brief will assist the court by addressing the scope and effect of the appellate decision as well as its unintended consequences. The TASLAR entities have no interest in or connection to either side of this case. In fact, petitioners are in competitors with the TASLAR entities’ businesses. No party or party's counsel authored the attached amicuscuriae brief in whole or in part. Other than the TASLAR entities, no personor entity, including any party or party's counsel, made a monetary contribution intended to fund the preparation or submission ofthis brief. Dated: July 20, 2017 Respectfully submitted, “Revi oung, Esq. A s for Amicus Curiae PA T; PAYROLL WORLD,INC.; ERIE CUSTOM COMPUTER APPLICATIONS,INC.; TASK HR-VA LLC; HCM CENTRIC LLC; ADMINASOURCE,INC.; QTS PAYROLL SERVICES,INC.; PROMERIO,INC.; and PAYALITY, ~ INC. -2- AMICUS CURIAE BRIEF I INTRODUCTION In granting review,this Court will decide whether payroll service providers, which provide business services to employers, can be held liable under contract and negligence theories ofliability to the employers’ employees for violation of statutory duties imposed upon employers under the Labor Code in the payment ofwages. The decision by the Court of Appeal extending suchliability against payroll service providers is based on a misunderstanding of the role and the mechanics ofthe services provided by payroll service providers. The TASLAR entities are extremely concerned for the survival of their businesses which is threatened by such a drastic judicial extension of liability for employers’ duties under the Labor Code to encompass vendors, i.e., payroll service providers. In the present case, the Court ofAppeal applied third party beneficiary concepts to extend an employer’s statutory wage duties without a sufficient understanding of the services provided by payroll service providers. There has been no legislative change to the express provisions of Labor Code whichlimit liability to employers. The Court of Appeal did not hold that the requirements of the wages laws within the Labor Code were intended to apply to, or encompassedthe services provided to the employer by vendorpayroll service providers. This brief explains, from the perspective of small independentpayroll service providers, why the extension ofliability to employees for the violation of an employers’ statutory wage obligations bootstrapping contract and negligence theoriesis bad law, why this court should stop it and the financial effect of the concomitant litigations costs on small independentpayroll service providers would drive thousands ofpayroll processors out of the market decreasing competition and consequently increasing the payroll processing costs to employers. II PAYROLL SERVICE PROVIDERS The primary function of payroll service providers is the administration of payroll taxes for third party employers. While employers also utilize payroll service providers to assist them with someoftheir employee payrolls, that function is derivative of, and secondary to the calculation and assistance in satisfying employer employmenttax requirements. Employers rely on payroll service providers to comply with complex federal, state and local tax deposit requirements, which vary significantly by jurisdiction and tax type in terms of deadlines, electronic formats and filing requirements. Payroll service providers also typically handle quarterly state unemployment insurance wage and tax reporting and paymentas well as annual W-2 filings and reconciliations. Absent payroll service providers, employers would otherwise have to make significant investments in legal assistance, technology and support staff to comply with frequent employment tax changes.’ In this respect, the Internal Revenue Service (hereinafter “IRS”) and most states require payroll taxes to be filed and paid electronically, in diverse formats and protocols which often change annually. The failure of an employer to comply with any oneofits employmenttax obligations mayresult in significant penalties. Employers use payroll service providers to prevent costly IRS and state tax penalties. Statistically, each U.S. employer receives at least one IRS payroll tax deposit penalty every year, with an average penalty of nearly $700.2 Payroll service providers are historically at least 10 times more accurate in tax filings than the employer population(i.e., incur less than one-tenth the number ofpenalty notices per return filed). Accordingto the IRS,“there have been approximately 4,680 changes to the tax code since 2001, an average of more than one a day.” IRS National Taxpayer Advocate, Annual Report to Congress, December 31, 2012,p. 6. ? IRS Data Book FY2012, Table 17. Civil Penalties, Fiscal Year 2012. -5- Payroll service providers serve an importantrole in our nation's tax collection system as a conduit between employers and the IRS. Payroll service providers improvethe efficiency of IRS tax collection and compliance assisting employers in making required tax deposits and tax information filings to the federal governmentandto state and local governments, greatly streamline business operations. Payroll service providers are regulated by the Internal Revenue Service which defines these the scope of these businessesas follows: 1. A payroll service provider (PSP)is a third party that can help an employer administer payroll and employment taxes on behalf of an employer. 2. An employer mayenter into an agreement with a PSP under which the employer authorizes the PSP to perform one of moreofthe following acts on the employer's behalf: e Prepare the paychecks for the employees ofthe employer. e Prepare Forms 940 and 941 for the employer using the employer's EIN. © File Forms 940 and 941 for the employer, which are signed by the employer. e Make federal tax deposits (FTDs) and federal tax payments and submit this information for the taxes reported on the Forms 940 and 941. e Prepare Form W-3 and Forms W-2 for the employees ofthe employer using the employer's EIN. 3. A PSPis not liable for an employer's employment taxes as either an employer or an agent. -6- H A B E 4. An employer's use of a PSP doesnot relieve the employer of its employmenttax obligations or liability for employment taxes. Internal Revenue Manual 5.1.24, Field Collecting Procedures, Third-Party Payer Arrangementsfor Employment Taxes (Effective Nov. 6, 2015) (Emphasis added.). Under the IRS regulations, the role of payroll service providers can best be described as mechanical in nature. The data for payroll processing is provided by employers. Therole ofpayroll service providers is to perform the mathematical calculations for the payrolls, employment taxes and benefits from the data provided by the employers, and thereafter, printout the resulting payroll calculations for review and use by the employers. Employers collect and supply all payroll data from their employees, and thereafter, convey that data, including wages and hours,to payroll service providers. Payroll service providers do no act as an audit of employers’ payroll data. In most instances, employers perform their own data entry using on-line internet portals furnished via licensed computer software by which employersto input their payroll data using their own computers. After that payroll data is entered, licensed computer softwareis used to calculate gross wages, deductions and payrolltax liabilities, to draft ce payroll checks and employee wage statements. make direct deposits, preparation of reports for employer management. The resulting productis then delivered to the employer. Employer are charged with reviewing and approving the work product received from the payroll service provider. In . short, payroll service providers’ work product is carried out for employers. Employers are responsible for providing the payment of their employees and supplying payroll statements to their employees. A. The Market Place. ADP dominates the payroll service provider industry commanding a thirty percent (30%) market share.? As of 2015, ADP had more than 610,000 business clients who employed roughly 24 million employees in the United States.* The next biggest payroll service provider is Paychex which has roughly a ten percent (10%) market share.* For added context, there are approximately 5900 payroll service providers in the country. In contrast to the services provided by the market share leaders, the monthly fee charged for payroll processing services by small independentpayroll service providers is approximately four dollars ($4) per employee. Morningstar.com 4 Fortune.com, Dec. 2, 2015 Morningstar.com B. The TASLARCalifornia Based Payroll Providers. Pay-Net and Payroll World are both established payroll service providers, providing payroll services to small and mid-sized businesses throughout San Diego County. Pay-Net and Payroll World, which were both established in 1995, are family run small businesses. Pay-Net and Payroll World do not possess insurance which would provide coverage to lawsuits by its clients’ employees relying instead upon contractual provisionslimiting their liability to their employerclients. HCMCentric and Promerio are located in Los Angeles County. HCMCentric services approximately 1600 employers with approximately 25,000 employees and Promerio processes payrolls for about 500 employers. The operator ofHCM Centric has over 22 years experience as a payroll processing provider. Promerio has been processing third party employer payrolls for over 16 years and its two principals have over 45 years experience in payroll processing between them. The operator of Payality has over 27 years experienceas a payroll processing provider. Payality, which operates in Fresno County, services over 700 employer clients with approximately 20,000 employees combined. Ofthose employees data entry is performed by the employers for more than 92% ofthe employers’ employees. As with Pay-Net and Payroll World, Payality does not possess insurance which would provide insurance coverage for lawsuits by its clients’ employees depending instead upon contractual limitations ofliability with their employerclients. C. The TASLAR Sister State Based Payroll Providers. Erie Custom Computer Applications (hereinafter “ECCA”) has been a family owned andoperated payroll service provider since 1975. Located in Erie, Pennsylvania, ECCA processes payrolls for some 1,550 employers with approximately 75,000 employees. Ofthose, only someten (10) employers for whom ECCAprocessespayrolls have offices and employees in California. Task HR-VA has been a father and son owned andoperated payroll service provider since 1985. Task HR-VAis based in Virginia processing payrolls for approximately 1,519 employers with combined employees of around 96,000. Ofthose employers fifteen (15) have a total of eighty (80) California employees. All of the payroll data processed by Tash HR-VA for those 80 California employees is entered on-line by the employers. Adminasourcehas payroll processing operations in New Jersey and Texas. The operator ofAdminasource has over 30 years experience as a payroll processing provider. Adminasource processes payrolls for 350 employer clients ofwhich on one (1) has California employees. -10- QTSPayroll Services has been processing third party employer payrolls since 1986. QTS Payroll Services has operations in Nevada, Idaho and Arizona providing payroll services to more than 900 employerclients with some 20,000 employees. Of those employers and employees, approximately 50 have California operations with between 500-600 total California employees. iit DISCUSSION This brief argues that the Court ofAppeal has made bad law from misunderstanding the function, economic role and mechanicsofpayroll service providers. The substance of the decision by the Court ofAppealis to expandliability for violation of employers’ wage related duties under the Labor Code to encompass employers’ payroll service providers. Without any legislative change, the Court ofAppeal has countenancedlitigation against payroll services providers for employers’ infractions of the Labor Code under both contract and tort theories ofliability. The result the Court of Appeal will inevitably be the reduction in competition through the withdrawalofpayroll service providers from California, increased costs to employers for payroll processing services and increases in employment litigation. A. Employees Are Not Intended Beneficiaries of the Services Provided to Employers by Payroll Service Providers. In California, the rule permitting third party beneficiaries to a contract is codified. Cal. Civ. Code 1559 (Deerings 2017). Thestatute requires that unless a contract is made expressly for the benefit of a third person, no action may be broughtby that third person. That is, a person whois only incidentally benefitted has notright of action. In its decision the Court of Appeal clings to the antiquated concept of creditor and donee beneficiaries which are obsolete and deviate from the seminalissue: Ia a service provider agreement made expressly for the intendedbenefit ofthe employees? Unless the payroll service provider agreementis made for the intended for the benefit of an employee, no action for breach of contract can bestated. In determining whether employees were intended beneficiaries, the appellate court focused on essentially two aspects of the alleged agreement, i.e., petitioner performed the mathematical calculations of respondent’s wages for the employer and provided respondent’s wage statement for her employer. The Court ofAppeal did not look at the agreement as a whole, but only two ofthe alleged provisions. And,as set forth abovethe principal role of a payroll service provider is employmenttax calculations, et cetera, -12- ofwhich the payroll services are derived as a secondary function. The determination of whether a third party is an intended or incidental beneficiary must be made from the contact as a whole, and not merely from one or twoalleged provisions. Furthermore, the appellate improperly considered generalized advertising in reaching its conclusion. The Court of Appeal does notassert that the promotional materials to prospective employer clients were part of the agreement, but nevertheless, the appellate court based its decision that employees were intended beneficiaries in part on advertising, and did not instead of the alleged agreement as a whole. The methodology of the appellate court presents the potential for widespread third-party impact that is inherent in the contractual relationship between employers and payroll service providers. Given the conceivably millions ofpotential ofpersons who could claim liability for any particular payroll service providers contract with their respective employers, additional factors must be present if persons from within this broad class will be contractually entitled to rely on the work product arising from a particular engagementfor payroll services. That is, the class of inherent third-party beneficiaries is not the class of express third-party beneficiaries, or else the distinction between incidental and express beneficiaries would -13- lose all meaning in the payroll services context. As a matter both of policy and of reality there should be no “express third party beneficiaries” of an ordinary, standard payroll processing contract. The employeris the entity for whom the payroll calculations are generated and to whom those calculations are reported and approved. Thereare only incidental beneficiaries who havenolegal rights arising from the contract. By way of example, when a vendor of goods knowsa buyerintends to resell the goods to a third party, that does not establish that the vendor intends to benefit the third party. The fact that vendor knowsa buyer intendsto resell to third party is not sufficient to make third party an intended beneficiary ofthe agreement betweenseller and buyer. The same rule should apply where the vendor provides services. In other words, there is an important difference between knowledgethat a certain outcome will occur, and an intent to bring about that result. In order to establish third party beneficiary status, the contracting parties must have acted with more than the mere knowledgethat a third party would derive benefit from the agreement. The benefit to the third party must have been a consequence whichthe parties affirmatively sought. The benefit to the third party must have been, to some material extent, a motivating factor in the decision to enter into the contract. -14- B. Important Policy Consideration Mediate in Against Extending Contract Liability to Third Party Employees. First, breach of contract in this context is not an insurable occurrence under a Commercial General Liability (hereinafter “CGL”) policy. That is, where,as in the case of a third party beneficiary action for breach of a payroll service provider agreement, the damages being demandedarise due to failure to meet an agreed upon obligation, there 1s no insurance coverage to provide a defense. Indeed, avoiding coverage for breach of contract claimsis the very reason CGLpolicies first exclude all contractual coverage. Otherwise stated, claims for breach of contract to provide payroll services are not covered by CGL insurance. Similarly, while errors and omissions insurance is designed to complement CGL Insurance to provide coverage for claims arising from the provision of “professional services,” errors and omissions insurance likewise excludes coverage for breach of contract by a customeragainst an insured. Even though most companiessell their goods and services under a contract, errors and omissions insurance often excludes coverage for actions arising from breach of contract. Theresult is that payroll service providers who are brought into wage disputes between an employee and employer will have to bear their -15- own defense costs which can be staggering for a small business. The litigation defense costs of only a few such lawsuits would be enough to cripple a small, independent payroll service provider such as one of TASLAR’s ilk. Even where such a payroll service provider did have insurance coverage defending such actions, the deductible and the cost of the insurance would present a major financial drag on payroll service providers resulting higher costs, and higher service fees, in the industry. There would necessarily be a loss of competition as the added costs to payroll service providers took a financial toll. Those payroll service providers unfortunate enough to service employers who have wage and LaborCodelitigation will likely be forced out of business as the costs of defending 3 or more lawsuits at time would be financially prohibitive to the business model ofTASLAR typepayroll service providers. There will be a loss of competition in the market. Noneofthe sister state payroll service providers which have only a tangential, small number of employers with California employees can justify the risk ofpotentially devastating litigation costs for such a small amount of revenuein California. This loss of competition will obviously result in increased costs to employers in California for payroll services. -16- Cc. The Decision to Allow a Claim for Negligent Misrepresentation Against Payroll Service Providers for Erroneous Wage Statementsis ill-considered. The problem with the appellate ruling on negligent misrepresentation is two-fold. Payroll service providers play a “secondary”role to their employer clients and, by the express language ofthe statute, Labor code section 226 applies specifically to employers, and payroll service providers whoare not liable underthe statute for the alleged Labor Codeviolation. The Court of Appeal acknowledges that those who provide financial reports and opinionstoclients, i.c., employers, based upon information provided by the clients, including its agents, are deemedto have played a “secondary”role. (Decision of the Court of Appeal, at p. 30.) And, that those whoplay a “secondary role” are not subject to an action for negligent misrepresentation unless the claimantis a “specifically intended beneficiary.” (Decision of the Court ofAppeal, at p. 31.) The Court of Appeal also recognizes that the employer andits agents,i.e., its employees, provided the data, i.e., information, to the payroll service provider. (Decision of the Court ofAppeal, at p. 32.) Thus, under Bily v. Arthur Young & Co., 3 Cal.4th 370 (1992), payroll service providers would be deemedto play a “secondary”roleas it relates to third party employees. -17- However, the Court of Appeal viewsthe allegations that the payroll service provider mathematically miscalculated respondent’s wages from the data and information supplied to the payroll service provider by the employer as transmuting the role of the payroll service provider from secondary to primary. (Decision of the Court ofAppeal, at p. 32.) In essence, the mere allegation, which would likely be present in every action for negligent misrepresentation, that the professional made a mistake with the data it was provided effectively engrosses the entire distinction. An alleged mathematical mistake from data supplied by an employerandits agents should not changethe “secondary”role of a payroll service provider. D. Payroll Service Providers Should Not be Liable for Professional Negligence to Third Party Employees. The Court ofAppeal relies upon the three factors in Bily v. Arthur Young & Co., supra, 3 Cal.4th at p. 398 to impose professionalliability upon payroll service providers to third party employees. The appellate court’s reliance is misplaced. In Bily the California Supreme Court declared that because the imposition of professionalliability for auditors to third parties against auditors would likely increase costs and reduce the availability of auditors, that professional liability should remain confined to auditors’ clients. Citing nostatistics or other evidence, the Court ofAppeal -18- blithely declared that in its view the imposition ofprofessional liability upon payroll service providers to third party employees would notresult in either a reduction ofavailable service or an increase in the costs ofthose services. The Court ofAppeal could not be more wrong. There are a plethora of employee wagescases in California every year. In fact, California wage claims make up more than half ofthe employment wage claim settlementdollars in 2014.° Thelitigation cost exposure presented by even a small fraction of those cases is sufficient to drive small providers, such as the sister state providers out of California’s market. For in-state providers, some would go out of business and while other would have to increase their prices to accountfor the probablelitigation costs. Those litigation costs would also be expected to reduce or preclude new payroll service providers from entering the California market. The decision to impose professionalliability to third party employees by the Court of Appealrepresents a change to entire payroll processing industry in this state. \\A \\A\ NERA Economic Consulting, Trends in Wage and HourSettlements: 2015 Update p. 14. -19- IV CONCLUSION In rendering its decision, the Court of Appeal deviated from stare decisis declaring rights of action by third party employees against payroll service providers where none hadbefore existed. The appellate decision before this Court has created instability where there had been stability, inconsistency where there had been consistency and unpredictability where there had been predictability within out judicial system. The consequences to the payroll services market and California’s economy in permitting contract and negligence actions against payroll service providers by third party employees should be a matter for our legislative process, and not the result of an appellate court’s decision on a narrow set of facts. The appellate decision before this court involves significant legal issues having a wide-reaching effect on the rights and obligations ofthousands of businesses and their payroll costs. Overthelast fifteen years, nine states (Alabama, Arizona, California, Minnesota, Nevada, New York, Oklahoma, Utah & Virginia) have considered and rejected new legislation over the payroll service provider industry. This Court need not blaze a new trail. TASLAR urges the Court reverse the extension ofliability imposed b the Court ofAppeal. -20- Payroll service providers are rightly concerned about being named as defendants in the numerous wagecases filed every year in California and the litigations costs they will incur, whether they will be able to pass those costs on to employers, the effect on competition with the larger market share payroll service providers and whether they will be able to remain in business. Dated: July 20, 2017 Respectfully submitted, a Kevin C Esq. Attorney for AmicHs Curiae PAY-NET; PAYROLL WORLD,INC.; ERIE CUSTOM COMPUTER APPLICATIONS,INC.; TASK HR-VA LLC; HCM CENTRIC LLC; ADMINASOURCE,INC.; QTS PAYROLL SERVICES,INC.; PROMERIO,INC.; and PAYALITY, INC. -21- R R CERTIFICATE OF COMPLIANCE (Cal. Rules of Court, rule 8.520(f)) Pursuant to California Rules of Court, the foregoing Brief of Amicus Curiae in Support of Petitioner contains 3,749 words, including footnotes, but excluding the Application, caption page, and tables. This is fewer than the 14,000-word and 8,400-wordlimits set by rule 8.520(c)(1) of the California Rules of Court. In preparing this certificate, I relied on the word count generated by Corel WordPerfect version 12 word-processing program used to generate thebrief. Dated: July 20, 2017 ERIE CUSTOM COMPUTER APPLICATIONS, INC.; TASK HR-VA LLC; HCM CENTRIC LLC; ADMINASOURCE,INC.; QTS PAYROLL SERVICES,INC.; PROMERIO,INC.; and PAYALITY, INC. -22- PROOF OF SERVICE Sharmalee Goonewardene, v. ADP, LLC, etal. California Supreme Court No. 8238941 Second Appellate District, Division Four No. B267010 I, Kevin C. Young,declare: I am employed in the County of San Diego, State of California. I am over the age of 18 and not a party to the within action. My business address is 750 B Street, Suite 2550, San Diego, California 92101. On July 20, 2017, I served the document(s) described as APPLICATION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT OF PETITIONER; AMICUS CURIAE BRIEFonthe interested parties in this action addressed as follows: ‘ SEE ATTACHED LIST XX. BY MAIL: Byplacing a true copy thereof enclosed in a sealed envelope. The envelope was mailed with postage thereon fully prepaid. I am readily familiar with the firm's practice of collection and processing correspondence for mailing. Underthat practiceit would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Grass Valley, California, in the ordinary course of business. I am aware that on motion ofthe party served, service is presumedinvalid ifthe postal cancellation date or postage meter date is more than one day after service of deposit for mailing in affidavit. I declare under penalty of perjury under the laws ofthe State of California that the aboveis true and correct. Executed on July 20, 2017, at San Diego, California. -23- SERVICE LIST Sharmalee Goonewardene, v. ADP, LLC,etal. California Supreme Court No. 8238941 Second Appellate District, Division Four No. B267010 Glen Robert Broemer 135 West 225th Street, Apartment F Bronx, NY 10463 Robert A. Lewis Morgan, Lewis & Bockius LLP One Market Street, Spear Tower San Francisco, CA Los Angeles County Superior Court Re: Case No. TC026406 275 Magnolia Long Beach, CA 90802 Court of Appeal, Second Appellate District Division Four, Case No. B267010 300 S. Spring Street 2nd Floor, North Tower Los Angeles, CA 90013 -24-