ADP 2015 Annual Report Download - page 9

COMPETITION
The industries in which ADP operates are highly competitive. ADP knows of no reliable statistics by which it can determine the number of its
competitors, but it believes that it is one of the largest providers of HR outsourcing solutions in the world. Employer Services competes with other business
outsourcing companies, companies providing ERP services, providers of cloud-based HCM solutions and financial institutions. PEO Services competes with other
PEOs providing similar services, as well as business outsourcing companies, companies providing ERP services and providers of cloud-based HCM solutions.
Other competitive factors include a company’s in-house function, whereby a company installs and operates its own business processing systems.
Competition for business outsourcing solutions is primarily based on service and product quality, reputation, ease of use and accessibility of technology,
breadth of services and products, and price. We believe that ADP is competitive in each of these areas and that our commitment to service excellence, together
with our leading-edge technology, distinguishes us from our competitors.
INDUSTRY REGULATION
Our business is subject to a wide range of complex U.S. and foreign laws and regulations. In addition, many of our solutions are designed to assist clients
with their compliance with certain U.S. and foreign laws and regulations that apply to them. We have, and continue to enhance, compliance programs and policies
to monitor and address the legal and regulatory requirements applicable to our operations and client solutions, including dedicated compliance personnel and
training programs.
As one of the world’s largest providers of HR outsourcing solutions, our systems contain a significant amount of sensitive data related to clients,
employees of our clients, vendors and our employees. We are, therefore, subject to compliance obligations under federal, state and foreign privacy and data
security-related laws. For instance, in the United States, the Health Insurance Portability and Accountability Act of 1996 applies to our COBRA, flexible spending
account and insurance services businesses, and ADP TotalSource. We are also subject to federal, state and foreign security breach notification laws with respect to
both our own employee data and client employee data. Additionally, the changing nature of privacy laws in the United States, the European Union and elsewhere,
including the invalidation in the European Union of the Safe Harbor Principles for the transfer of personal data between the European Union and the United States
and the adoption by the European Union of a general data protection regulation, will impact our processing of personal information of our employees and on behalf
of our clients.
As part of our payroll and payroll tax management services, we move client funds to taxing authorities and our clients’ employees via electronic transfer,
direct deposit, prepaid access and ADPCheck. Certain elements of our U.S. money transmission activities, including our electronic payment and prepaid access
(payroll pay card) offerings, are subject to certain licensing requirements. In addition, our U.S. prepaid access offering is subject to the anti-money laundering and
reporting provisions of The Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2000 (the “BSA”). Elements of our money transmission
activities outside of the United States are subject to similar licensing and anti-money laundering and reporting laws and requirements in the countries in which we
provide such services. Our employee screening and selection services business offers background checking services that are subject to the Fair Credit Reporting
Act. ADP TotalSource is subject to various state licensing requirements. Because ADP TotalSource is a co-employer with respect to its clients’ worksite
employees, we may be subject to certain obligations and responsibilities of an employer under federal and state tax, insurance and employment laws.
In addition, many of our businesses offer solutions that assist our clients in complying with certain U.S. and foreign laws and regulations that apply to
them. Although these laws and regulations apply to our clients and not to ADP, changes in such laws or regulations may affect our operations, products and
services. For example, our HCM solutions help clients manage their compliance with certain requirements of the Patient Protection and Affordable Care Act in the
United States. Our COBRA administration services and flexible spending account services in the United States are designed to help our clients comply with
relevant federal guidelines relating to, respectively, employers’ benefits continuation obligations and the requirements of Section 125 of the Internal Revenue
Code. Similarly, our Tax Credit Services business, which helps clients in the United States take advantage of tax credit opportunities as they hire new employees,
is based on federal, state, or local tax laws and regulations allowing for tax credits.
The foregoing description does not include an exhaustive list of the laws and regulations governing and impacting our business. See the discussion
contained in the “Risk Factors” section in Part I, Item 1A of this Annual Report on Form 10-K for
8