Payroll service not considered additional employer

For purposes of Labor Code claims predicated on allegations that her direct employer failed to compensate her as required by the code, the direct employer’s payroll services provider was not an additional employer, absent an allegation that it took over functions beyond those ordinarily assigned to an employer’s internal payroll department. Under the economic reality test, payroll services provider was not an employer for purposes of the overtime compensation provisions of the Fair Labor Standards Act. Allegations that payroll services provider, under an unwritten contract with employer, undertook to discharge employer’s wage-related duties -- including calculation of employees’ wages and provision of earnings statements -- to employees for their benefit, stated a breach of contract claim against the provider predicated on a third-party beneficiary theory.

Goonewardene v. ADP, LLC