$35M vanishes as payroll company abruptly closes
A cloud-based payroll processing firm abruptly shut down operations this week, leaving hundreds of thousands of employees without paychecks, according to a report from KrebsOnSecurity.
New York-based MyPayrollHR allegedly vanished with nearly $35 million in payroll funds from customer firms, directly impacting employees who had been receiving direct deposits from the firm on a bi-weekly basis. Not only did money from payroll funds disappear, but so did money belonging to employees, according to the report.
In some cases, employees were missing funds from two payroll periods.
Now, as the FBI asks for information, companies are left grappling to find the resources to cover them.
In a message sent to roughly 4,000 clients, MyPayrollHR said it would be closing its virtual doors. Companies who relied on the firm to process payroll payments were instructed to find another means to provide such services.
Cachet Financial Services, which facilitated payments to employee accounts for MyPayrollHR for the last 12 years, said it is owed $26 million by MyPayrollHR.
Cachet's general counsel Wendy Slavkin confirmed to FOX Business that the company is responsible for all of the transactions that take place, which means they had to turn to their own accounts in order to replenish the missing funds, instead of the money coming from the employer.
Slavkin added that the company is in the process of taking legal action, but that its first goal is to make sure employees have been made whole.
Competing data processing companies such as Automatic Data Processing, Inc. quickly offered their services. "ADP is here to help and prepared to make your transition fast and easy," the company tweeted.
Cachet Financial Services has not returned FOX Business' request for comment at the time of publication.