I have been building in the employee benefits industry for quite some time, and I have had a front-row seat to how some payroll providers are structuring their ecosystems in ways that can give the payroll provider greater control over which outside technologies employers are able to use.
To understand how this happens, we first need to understand the role payroll plays within an employer's technology ecosystem.
Payroll is often the center of employee data within a company. It contains some of the most current information regarding employees, employment status, addresses, compensation and other critical workforce information.
When an employer hires or terminates an employee, payroll is frequently one of the first systems they update.
Think of your payroll system like a bank.
The bank provides the infrastructure where your money is stored and managed, but the money still belongs to you. Payroll works similarly. The provider hosts and manages the system, but the employer is providing the underlying employee and company data. Of course there is privacy and security to consider as well with Payroll data. But the underlying question is similar: After safeguards are met, should the bank or payroll provider be able to dictate which other companies you can share your money or data with?
There Are Two Very Different Approaches
Payroll providers generally approach third-party integrations in one of two ways.
The employer chooses.
The employer determines which providers can access their information, what information can be accessed and which services they want to use.
The payroll provider chooses.
The payroll provider decides which vendors are permitted to integrate, steering employers toward products and services they alone have elected to approve.
The second model gives a payroll provider tremendous influence over the employer's broader technology stack.
For example, if a payroll provider sells its own time tracking product, it has an obvious financial incentive to encourage employers to use that product instead of an independent competitor. That incentive does not establish that any individual restriction is anticompetitive, but it creates a potential conflict when the provider is both a downstream competitor and the party controlling access.
The real question is simple: should the company storing your data decide which other companies you are allowed to share it with?
Imagine if your bank prevented you from using your debit card at a competing ATM because it wanted you to use its own ATM instead.
Or imagine if your bank only allowed you to shop at a grocery store in which it had a financial interest.
That is fundamentally the concern with restrictive payroll ecosystems.
Why Employers May Not Notice These Restrictions?
Because most employers have little reason to think about API permissions when choosing a payroll provider.
A provider may advertise hundreds of integrations and describe itself as an open ecosystem. But the number of integrations alone does not tell the whole story.
The more important questions are:
Which integrations are actually allowed? What data can they access? And who ultimately gets to decide?
Employers should be free to select the products they believe provide the best experience, service and value. Not only the products the payroll provider has chosen to approve.
Regardless of how data ownership is characterized legally, employers should have meaningful control over authorizing secure access to the workforce information they provide and maintain through their payroll system to downstream services.
I am actively working with payroll and HR providers that give employers greater control over which systems they choose to connect.
You can see the integrations I currently maintain and the scope available from each provider here: Active Payroll API Connections .
Another Problem: Functionally Limited API Access
Restricting an integration entirely is not the only method providers can use.
Another approach is allowing an integration while limiting the scope of data available through it.
On the surface, the integration exists. Technically, the payroll provider can point to it as evidence that its ecosystem is open.
But if the third-party application cannot access the data required to perform its core functionality, the integration may be far less useful than it appears.
That is why I publicly document both the API permissions requested and the permissions actually granted for the payroll integrations Sanus Benefits maintains.
Providers With Documented Provider Controlled API Approval & Restrictive Access Policies
Based on my experience attempting to build payroll and benefits integrations, I have encountered restrictions involving API access, available scopes, and provider approval of third-party applications.
What Can Employers Do About It?
These practices are unlikely to change unless customers begin treating data portability and integration access as part of the payroll buying decision.
Before selecting a payroll provider, employers should be asking whether they retain control over their data, whether third-party API access is available and whether integrations can be restricted at the payroll provider's discretion.
Competition works best when products compete on their merits. Employers should be able to choose the payroll, benefits, time tracking, HR and other technology vendors that work best for their organization.
See Which Payroll Systems We Connect With
Review Sanus Benefits' active payroll and HR integrations along with the API scope currently available through each provider.
View Payroll API Connections