The collapse of Silicon Valley Bank has also impacted the workforce ecosystem. However, it appears industry companies are weathering the storm. While contingent workforce managers will likely see minimal disruption from their suppliers, experts advise they inquire about their suppliers’ financial institutions.
The events raise the issue of whether contingent workforce programs should concern themselves with their suppliers’ financial institutions. “Although it is rare for an enterprise buyer to know or even inquire about the bank their partners or suppliers use, they may want to reconsider,” advises Dawn McCartney, SIA’s VP, Contingent Workforce Strategies Council. “Not only should they want to, they actually need to know if there is anything that may prohibit their contingent workers from being paid.”
Still, actual disruptions appear minimal among staffing firms.
Some firms announced they were touched to some degree by the bank’s failure; others released announcements aimed at making it clear they weren’t. However, it was the announcement on Sunday by the Federal Reserve, Treasury Department and Federal Deposit Insurance Corp. that all depositors at SVB will have access to all their money that helped avert a financial crisis.
In one case, SFGate.com reported employer-of-record provider Rippling had to delay payments after the collapse of SVB.
Rippling General Counsel Vanessa Wu also wrote in a blog post on Saturday that the collapse of SVB froze the wages of workers across the country — including workers making an average of less than $50,000 per year — and the company is moving to get payroll funds released.
“We’re working through the weekend to ensure that the customer payroll funds currently locked up with SVB are released to employees,” Wu wrote. “We will continue to send regular status updates directly to impacted customers via email.”
Rippling has taken other steps, Wu wrote, including the completion of a transition to JP Morgan Chase, extending its own capital to cover March 10 and March 13 pay runs and filing an FDIC claim on behalf of all customer payroll funds held at SVB.
Professional employer organization TriNet reported its cash and cash equivalents are distributed across several large financial institutions but that it had a limited amount of cash and cash equivalents at SVB. However, it said not having access to those funds for a period of time, or even at all, won’t impede its operations.
The company also stressed its PEO business is not affiliated with SVB.
“However, we do have some PEO clients that use Silicon Valley Bank, and while details regarding the Silicon Valley Bank receivership unfold, this period may be challenging for these clients,” according to TriNet’s statement. “For TriNet PEO customers who use Silicon Valley Bank for their operating accounts, we are assisting those customers as needed.”
TriNet continued, “Additionally, some of our TriNet Zenefits operations previously used Silicon Valley Bank. For customers of TriNet Zenefits, banking operations have been migrated to another of our banking partners.”
The California Department of Financial Protection and Innovation announced Friday that it has taken possession of SVB, citing inadequate liquidity and insolvency. It appointed the Federal Deposit Insurance Corp. as receiver. Things have moved quickly in the wake of the bank’s collapse. The Federal Reserve and FDIC reported that depositors should have access to their money starting today, and no losses associated with the resolution of SVB will be borne by taxpayers. It also announced that depositors in Signature Bank, New York, will be made whole; Signature was a second bank that was closed. Separately, CNN announced that HSBC had acquired SVB’s business in the UK for £1.
Several companies in the workforce ecosystem reported their operations are not affected by the SVB collapse, or they are working with customers who are impacted.
In a post on LinkedIn, employer-of-record provider Oyster said, “For those who are inquiring, Oyster holds no funds with SVB.” Meanwhile, Papaya Global, another employer-of-record provider, said in a post that it is reaching out to help firms affected by the collapse of SVB.
ADP reported its ability to process payroll is not impacted by the closure of SVB but said it is working to support its clients who do fund payroll with SVB. Payroll provider Paychex also announced its ability to process payroll was unaffected.
TechCrunch reported that Deel, a payroll and compliance firm, plans to provide $120 million of its own cash to support the payrolls of startups in the wake of the SVB shutdown.
PEO provider Insperity reported it does not use SVB.
“We want to reassure you that Insperity does not bank with Silicon Valley Bank, nor do we process payroll through them,” Insperity said in a statement. “We use a major national banking institution for our PEO payroll operations.”
The company continued, “We recognize that some of our clients have banking relationships with SVB and may be concerned about the timely processing of payrolls. Our team has been working diligently since first hearing the news of this unfortunate situation to proactively contact these clients to assist them in the processing of payrolls.”