Paycom Lawsuit: SEC Settlement, Beti Fraud Suit, and MOVEit Breach

Paycom Software and its subsidiary Paycom Payroll have been named in a range of lawsuits and one federal enforcement action over the past several years. The Paycom lawsuits on the public record include a settled SEC case over overbilling clients, an active securities fraud class action tied to the company’s Beti payroll product, a resolved data breach class action stemming from the MOVEit vulnerability, a background check accuracy suit, employment claims by former workers, and an older copyright fight with a co-founder.

SEC Settlement Over Client Overbilling

In July 2021, the Securities and Exchange Commission announced settled charges against Paycom for violating the books-and-records and internal accounting controls provisions of federal securities law. The SEC’s order described a sales practice called “reselling” that ran from 2011 to 2018: sales staff identified clients already paying for certain services but unaware they had access, then sold the same service back to them, sometimes deactivating existing access so the double billing would go unnoticed.¹

The practice inflated Paycom’s reported recurring revenues from 2011 through 2020. The SEC found that Paycom’s internal accounting controls were insufficient to prevent either the reselling or the inaccurate reporting that followed.²

Paycom settled without admitting or denying the findings. The company paid a $250,000 civil penalty and agreed to cease and desist from future violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. In September 2019, before the settlement, Paycom had already added an internal control requiring verification that a service had not previously been billed before new billing could start. The company returned roughly $2.8 million to affected clients: $2.4 million in overbilled fees and $385,000 in interest.¹

Securities Fraud Class Action Over the Beti Product

In November 2023, investors filed a securities fraud class action against Paycom in the Western District of Oklahoma, alleging the company concealed how its flagship Beti product was cutting into its other revenue. The consolidated case (No. 5:23-cv-01019) is before Judge Charles Goodwin.³

Beti (short for “Better Employee Transaction Interface”) is a self-service tool that lets employees manage their own payroll before submission. The complaint alleges that growing Beti adoption cannibalized Paycom’s existing services, especially the one-off payroll correction fees that had been a meaningful revenue driver, and that Paycom knew this but did not disclose it or warn investors of the risk.⁴

The stock moves cited in the complaint were sharp. On August 1, 2023, after Paycom announced declining gross margins and lower-than-expected revenue guidance, shares fell more than 19%. On October 31, 2023, when the company disclosed on its third-quarter earnings call that Beti adoption was cannibalizing payroll correction fees, the stock dropped more than 38% in a single day, losing $94.28 per share.⁴⁵

Dr. Calvin E. Mein was appointed lead plaintiff in April 2024, and an amended complaint followed in July 2024. As of mid-2025, the case remained ongoing.⁶³

MOVEit Data Breach Settlement

Between May 28 and June 2, 2023, a zero-day vulnerability in the MOVEit Transfer file-sharing application led to a breach affecting Paycom’s systems. About 21,451 people had personal information exposed, including full names, Social Security numbers, dates of birth, passport details, and employment authorization information.⁷

Two class actions followed: Trimble et al. v. Paycom Payroll LLC (No. 5:24-cv-00154) in Oklahoma federal court, filed in February 2024, and Carmen Johnson v. Paycom Payroll, LLC (No. CJ-2023-4763) in Oklahoma County District Court. They were resolved together through a settlement valued at up to $900,000 in direct benefits to class members.⁷⁸

Eligible class members could choose among these options:

Reimbursement of up to $2,500 per person for documented out-of-pocket losses such as credit freezing costs, notary fees, and postage.
Lost-time reimbursement of up to $100 (four hours at $25 per hour) for time spent addressing identity theft or fraud, counted within the $2,500 combined cap.
Up to $4,200 per person for documented, unreimbursed extraordinary losses from fraud or identity theft.
Three years of credit monitoring services.
A flat $25 cash payment in lieu of all other benefits.

All payouts were subject to pro rata reduction if approved claims exceeded the $900,000 fund. The claim deadline was November 7, 2024.⁹ Preliminary approval was granted on August 9, 2024, with a final approval hearing scheduled for December 13, 2024, in Oklahoma City. Paycom also agreed to enhance its data security measures.⁷

Background Check Accuracy Suit

In late April 2025, a plaintiff identified as Rodney sued Paycom in Indiana federal court (No. 3:25-cv-359), alleging Paycom produced an inaccurate background check that cost him a job. The report attributed misdemeanor and felony charges belonging to Rodney’s twin brother to the plaintiff. The two share the same birthdate, which the complaint suggests contributed to the mix-up.¹⁰

A manufacturing company had extended Rodney a conditional job offer, then rescinded it after receiving the report. The lawsuit alleges the employer declined to hire him even after the report was corrected. The claims rest on federal law requiring consumer reporting agencies to maintain procedures that ensure the “maximum possible accuracy” of their reports. Paycom did not respond to requests for comment on the case, according to the reporting.¹⁰

Employment Lawsuits

Paycom has been sued by its own workers as well. McKeown v. Paycom Payroll LLC (No. 5:24-cv-00301), filed in the Western District of Oklahoma in March 2024, brings claims under the Family and Medical Leave Act. In March 2025, Judge Patrick R. Wyrick granted the company’s motion to dismiss in part and denied it in part, giving the plaintiff leave to amend. Subsequent filings show the case continued through the amendment process.¹¹

Snowder v. Paycom Payroll LLC (No. 5:25-cv-01322), filed in November 2025 in the Western District of Oklahoma before Judge Joe L. Heaton, is an employment discrimination action under the Americans with Disabilities Act brought by Olivia Snowder. The case remained ongoing as of mid-2026, with a jury trial demanded.¹²

In October 2025, Paycom laid off about 500 employees at its Oklahoma City headquarters, citing replacement of those roles with artificial intelligence. Departing employees received WARN Act notices and severance packages, with severance agreements including nondisparagement clauses prohibiting public discussion of their separation or Paycom’s personnel decisions. No litigation stemming from the layoffs has been publicly reported.¹³

Copyright Fight With a Co-Founder

One of Paycom’s older cases was against its own co-founder. David Richison co-founded the Ernest Group, Inc. (doing business as Paycom Payroll) in the 1990s with family members and wrote payroll software programs called “BOSS” and “Independence.” After leaving in 2001, he moved to Maryland and founded a competing firm, Period Financial Corporation, where he wrote new software called “Period Indy” and later “Cromwell.”¹⁴

The Ernest Group, which held the Independence copyrights by assignment, sued Richison for copyright infringement, alleging his newer programs were substantially similar. A special master appointed by the district court concluded infringement had occurred, and the district court adopted that finding. Richison appealed.

In July 2014, the U.S. Court of Appeals for the Tenth Circuit vacated the district court’s order, finding the special master’s report inadequate because it failed to properly apply the “abstraction-filtration-comparison” test used to separate protectable creative expression in software from unprotectable ideas. The court remanded for a more thorough and properly documented analysis, but declined Richison’s request to appoint a new special master.¹⁴

1
U.S. Securities and Exchange Commission. In the Matter of Paycom Software, Inc., Release No. 34-92527
2
U.S. Securities and Exchange Commission. Administrative Proceeding File No. 3-20443
3
Stanford Law School Securities Class Action Clearinghouse. Paycom Software, Inc. Securities Litigation
4
BusinessWire. Robbins Geller Rudman and Dowd LLP Files Class Action Lawsuit Against Paycom Software
5
Newsfile Corp. Paycom Software Faces Investor Fraud Lawsuit
6
Zlk.com. Update for Paycom Software Inc. Shareholders
7
ClassAction.org. $900K Settlement Resolves Paycom Payroll Data Breach Lawsuit
8
Paycom Data Settlement. Carmen Johnson v. Paycom Payroll LLC Settlement
9
Paycom Data Settlement. Carmen Johnson v. Paycom Payroll LLC Settlement FAQ
10
HR Dive. Background Check Errors Paycom
11
CourtListener. McKeown v. Paycom Payroll LLC
12
CourtListener. Snowder v. Paycom Payroll LLC
13
KOSU. Paycom Lays Off 500 Employees, Will Replace Jobs With AI
14
FindLaw. Paycom Payroll LLC v. Richison