What changed in this filing

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Item 1. Business

2021-08-04 compared with 2020-08-05 · 147 added, 86 removed, 227 unchanged (51% of the section changed)

CORPORATE BACKGROUND

We were founded in 1949 on an innovative idea:

to help business owners focus on core business activities by freeing them up from certain non-core tasks such as payroll.

In 1949, our founders established ADP to shape the world of work with a simple, innovative idea:

help clients focus on their business by freeing them up from certain non-core tasks such as payroll.

Today, we are one of the world’s leading providers of cloud-based human capital management (HCM) solutions to employers, offering solutions to businesses of all sizes, whether they have simple or complex needs.

We serve over 860,000 clients in 140 countries and territories.

We serve over 920,000 clients and pay over 38 million workers in 140 countries and territories.

Our common stock is listed on the NASDAQ Global Select Market® under the symbol “ADP.”

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ADP’s Mission

As digital technology, globalization, new business models and other significant events and disruptions reshape the way people work, our mission is to power organizations with insightful solutions that meet the changing needs of our clients and their employees.

Our HCM technology, industry and compliance expertise and data insights deliver measurable results, peace-of-mind and an engaged, productive workforce.

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• Leverage our global presence to offer clients HCM solutions wherever they do business (Global Solutions).

We are expanding our international HCM and HRO businesses, comprised of our established local, in-country software solutions and our market-leading, cloud-based multi-country solutions.

We are expanding our international HCM and HRO businesses, comprised of our established local, in-country solutions and our market-leading, cloud-based multi-country solutions.

With a large and growing addressable market, we are strongly positioned to continue delivering sustainable long-term value across our strategic pillars.

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Our world-class platforms and multi-national solutions provide our clients with comprehensive HR and payroll capabilities that drive productivity and enable compliance globally.

Our cloud-based next-gen platforms are built to be person-centric, serve all worker types and support flexible work and on-demand pay, and deliver seamless global capabilities to dynamic, team-based organizations.

Our cloud-based next-gen platforms are built to be person-centric, serve all worker types, support flexible work and on-demand pay, and deliver seamless global capabilities to dynamic, team-based organizations.

Digital technology is transforming today's workplace and workforce.

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For over 70 years, we have reimagined the world of work by designing cutting-edge products, robust services and exceptional experiences that touch millions of people’s lives daily.

We pioneered automation in HCM, HCM in the cloud, mobile HCM and the establishment of an HCM marketplace.

We pioneered HCM automation, HCM in the cloud, mobile HCM and a digital HCM marketplace.

As the business and digital technology landscape rapidly evolves, what “work” means, how and where it gets done, and how workers are paid is changing as well.

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Our next-gen platforms are built for the ever-changing world of work.

Designed from the ground up to be cloud-native, global, scalable and secure, our next-gen platforms provide our clients with the flexibility they need to address today’s and tomorrow’s workplace challenges, regardless of their size and complexity.

Our next-gen HCM platform enables our clients to personalize their experience based on their needs.

Our award winning next-gen HCM platform enables our clients to personalize their experience based on their needs.

Built for dynamic teams, our next-gen HCM platform provides our clients with visibility into where work actually happens rather than into rigid organizational hierarchies and worker types.

With our next-gen HCM platform, we received the “Awesome New Tech” award at the 2019 HR Technology Conference for a record-breaking fifth straight year.

With our “HR your way” approach, clients can easily tailor the solution to their needs by deploying low-code applications.

Our next-gen payroll solution supports workers of all types and enables real-time, transparent, continuous payroll calculations.

In 2020, our next-gen payroll solution was named “Top HR Product” at the annual HR Technology Conference, marking the sixth consecutive year ADP has been honored for its innovative technology, an unprecedented achievement.

Recently expanded across North America to Canada and Mexico, this next-gen payroll solution supports workers of all types and enables real-time, transparent, continuous payroll calculations.

Our next-gen payroll solution also unlocks flexible pay choices for our clients so they can provide the best pay experience for their workers.

Compliance capabilities are built-in, enabling our clients to focus on managing their business.

As the regulatory environment rapidly changes, making it harder for companies to navigate the complexities of payroll, our next-gen payroll solution’s built-in compliance capabilities enable our clients to focus on managing their business.

Our next-gen platforms are designed to meet the needs of our clients in an ever-changing world of work.

In February 2021, we launched the “Roll™ by ADP” mobile-first solution - reimagining how small businesses do payroll.

This groundbreaking payroll solution utilizes an AI-powered chat interface to turn traditional payroll management into an intuitive conversation that can complete payroll in under a minute.

Leveraging ADP’s long-standing payroll expertise and data security, small business owners can download and self-purchase Roll and run payroll anywhere, anytime, quickly and compliantly, with no experience or training needed.

The conversational experience runs off simple chat prompts such as “Run my payroll,” offering a frictionless experience that also allows

clients to confidently handle compliance matters like tax filing and deposits.

Today, big data provides a real competitive advantage.

That is why we are accelerating the deployment of machine learning (ML) against our unmatched HCM dataset – the same HCM dataset that drives our renowned ADP National Employment Report®.

We are leading this innovation effort with ADP® DataCloud, an award-winning workforce analytics solution that provides clients with in-depth workforce and business insights that enables critical HR decisions.

ADP’s Skills Graph is ADP’s proprietary data structure that is based on more than 30 million employee records, 50 million resumes and 5 million job postings across more than 20 industries and 500 geographic areas.

Skills Graph extracts, aligns and normalizes key information such as skills, job titles, job levels, education and qualifications from non-structured data and infers missing skills and qualifications from context.

Skills Graph powers ADP’s candidate relevancy tool to help score, assess and predict candidates that are the

best fit for a job opening, as well as our new Organizational Benchmarking tool that assesses organizational structure and workforce investments.

In addition, we have extended our award-winning HR and compensation benchmarks to include non-traditional elements such as tips, commissions and benefits plans.

With the new capability of ADP’s Model-Based Benchmarks powered by Skills Graph, we also extend benchmarks to include compensation for up to 150 million working people.

That is why we have accelerated the deployment of machine learning (ML) against our unmatched HCM dataset – the same HCM dataset that drives our renowned ADP National Employment Report®.

We are leading this innovation effort with ADP® DataCloud, our award-winning ML and workforce analytics platform which is by far one of the largest repositories of payroll information available.

DataCloud analyzes aggregated, anonymized and timely HCM and compensation data from more than 920,000 organizations across the country, powering solutions that provide clients with in-depth workforce and business insights that enable critical HR decisions.

ADP DataCloud's Skills Graph, our proprietary data structure, is based on more than 30 million employee records, 50 million resumes and 5 million job postings across more than 20 industries and 500 geographic areas, and extracts, aligns and normalizes key information such as skills, job titles and levels, education and qualifications from non-structured data and infers missing skills and qualifications from context.

Skills Graph powers ADP’s Candidate Profile Relevancy tool to help score, assess and predict candidates who are the best fit for a job opening, as well as our new Organizational Benchmarking Dashboard which enables companies to decide how best to deploy their workers by comparing organizational metrics like headcount, labor costs and turnover against other similar businesses.

We offer similar solutions to clients outside the United States.

ADP’s Model-Based Benchmarks, powered by Skills Graph, also extend benchmarks to include compensation for up to 150 million workers.

Model-Based Benchmarks are driven by a set of deep learning models that extract patterns and knowledge from millions of payroll records and job profiles to provide accurate information that reflects the reality of the position being shown.

ADP’s award-winning Pay Equity Explorer combines analytics and benchmarking to help employers better understand potential pay gaps and provide them with real, up-to-date, aggregated and anonymized market data to understand how their compensation for a particular job compares to other similar employers.

ADP’s Pay Equity Storyboard combines analytics and benchmarking to help employers better understand potential pay gaps and provide them with real, up-to-date, aggregated and anonymized market data to understand how their compensation for a particular job compares to other similar employers.

We continue to leverage the powerful DataCloud platform to provide clients with relevant, actionable insights.

These insights are particularly important with respect to Diversity and Inclusion and, as part of our commitment to Diversity and Inclusion, this year we introduced the Diversity, Equity and Inclusion (DEI) Dashboard which can help businesses focus on the DEI issues that are most important to them by analyzing their diversity landscape through a simple question-and-answer format and easy-to-navigate user interface that allows them to better set, track and expand their DEI goals.

These innovative offerings combine HR expertise and data transparency in a way that connects HR to the bottom line.

In harnessing the power of big data through ML, ADP recognizes the importance of accountability, transparency, privacy, explainability and governance, and in furtherance of those goals has established an active AI & Data Ethics Committee, comprised of both industry leaders and ADP experts, which advises on emerging industry trends and concerns and provides guidance with respect to compliance with the principles that ADP should follow while developing products, systems and applications that involve artificial intelligence, ML and big data.

With WorkMarket, a cloud-based workforce management solution, we are the first HCM provider with robust freelancer management functionality and reporting insights, enabling clients to manage their extended workforce effectively.

Wisely® is our latest advancement in the future of pay.

Our innovative payment offerings support an employer’s need for flexible payment solutions in order to meet the individual needs of its workers.

WorkMarket, a cloud-based workforce management solution, provides robust freelancer management functionality and reporting insights, enabling clients to organize, manage and pay their extended workforce.

Our innovative Wisely® payment offerings support an employer’s need for flexible payment solutions in order to meet the individual needs of its workers.

The Wisely® Pay payroll card is a network-branded payroll card and digital account that enables employers to pay their employees, and enables employees to access their payroll funds immediately, including via a network member bank or an ATM, make purchases or pay bills, load additional funds onto the card, such as tax refunds and military pensions, and transfer funds to a bank account in the United States.

We also offer Wisely® Direct, a network-branded general purpose reloadable card and digital account, which provides similar features and functionality as Wisely Pay but is offered directly to consumers.

Our digital card offerings are true banking alternatives that feature innovative services such

as savings, budgeting, digital wallet and other personal financial management features.

In addition, our mobile apps simplify how work gets done by enabling clients to process their payroll, and giving millions of their employees convenient access to their payroll and HR information around the world and in 28 languages.

We have also opened access for developers and system integrators to some of our platforms’ application programming interface libraries through ADP Marketplace.

With ADP Marketplace, clients can integrate employee data from our core services across their other business systems or platforms.

This access enables the exchange of client data housed in our databases, and creates a unified HCM ecosystem for clients informed by a single, comprehensive repository of their workforce data.

Clients can choose from 445 apps and integrations, allowing them to choose solutions that are tailored to their needs, industry requirements and preferences.

Meeting the Needs of Clients and their Employees during the COVID-19 Global Pandemic

The COVID-19 global pandemic has created extremely challenging circumstances for our clients and their employees, and our priority has been to provide support that aligns to their key challenges – business continuity, compliance and a careful and safe return to the workplace.

We quickly developed and provided – at no charge – reporting capabilities designed to provide clients around the world with data they needed to benefit from legislation providing financial assistance to enable them to stay in business.

The Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security (CARES) Act provided forgivable loans to assist employers in continuing their businesses.

We were one of the first HCM companies to provide tools and reports that would have enabled our clients to apply for loans of more than $115 billion – ultimately helping approximately 400,000

employers apply for this essential assistance.

We also provided tools and support to over 47,000 employers in applying for approximately $1.2 billion in tax credits in the U.S.

We enabled over 52,000 employers in the U.S.

to defer over $27.5 billion in federal employer taxes, and enabled thousands of employers in Canada to reduce payroll federal income tax obligations by more than C$100 million, helping critical funds stay in their hands to keep their people on payroll and their businesses running.

Our digital card offerings are true banking alternatives that feature innovative services such as savings, budgeting and cash-back rewards, are digital wallet-enabled and, through the companion myWisely app, offer other personal financial management features.

In addition, our ADP Mobile apps simplify how work gets done by enabling clients to process their payroll anywhere, and giving millions of their employees worldwide convenient access to their payroll and HR information in 28 languages.

We have also given third-party developers and system integrators access to some of our platforms’ API (application programming interface) libraries through ADP Marketplace in order to enable secure data sharing between ADP and other solutions across the HR and business ecosystem.

ADP Marketplace is a digital HR storefront where clients can discover the best-fit apps for their industry;

browse by solution-types such as learning management, financial wellness, time and attendance, and benefits administration;

or connect HR software they already use.

The pre-built integrations help clients simplify their processes, create a single system of record, and reduce data errors, freeing up time and resources to focus on growing their business and taking care of their people.

With approximately 600 apps and integrations to choose from, ADP Marketplace offers ADP clients a modern HR experience that they can tailor to their specific needs.

Helping Clients and their Employees Emerge Stronger from the COVID-19 Global Pandemic

The COVID-19 global pandemic has continued to create extremely challenging circumstances for our clients and their employees, and our priority has been to provide the support they need to navigate these challenges.

As they pivot their focus from seeking essential relief to evolving their business models and operations to address changes in the economy and workplace, we continue to provide trusted solutions, data and expertise to help them emerge stronger.

At the onset of the pandemic, we quickly developed and provided – at no charge – reporting capabilities designed to provide clients around the world with data they needed to benefit from legislation providing financial assistance to enable them to stay in business.

We were one of the first HCM companies to provide tools and reports that enabled our clients to apply for Paycheck Protection Program loans under the Coronavirus Aid, Relief and Economic Security (CARES) Act of more than $115 billion – ultimately helping approximately 400,000 employers apply for this essential assistance.

To help employers confidently manage compliance, our teams analyzed more than 2,000 legislative updates associated with COVID-19 across the globe in order to provide them with easy to understand and actionable guidance and updated reporting tools.

As many employers start to develop strategies for returning to the workplace, we are supporting their efforts by providing our clients – at no charge – a Return to Work toolkit that includes the following:

A Return to Workplace guide that provides worker readiness surveys to assess sentiment toward returning to the workplace and worker health attestations.

A Return to Work dashboard powered by ADP DataCloud that uses data analytics to allow clients to monitor workforce trends based on survey results;

As COVID-19 restrictions ease, many employers are returning to the workplace and designing new policies that reflect the demand for remote and hybrid work models, we are supporting their efforts by providing our clients with tools that can help them manage compliance confidently, achieve business continuity, and support employee wellness and engagement.

Our Return to Workplace dashboard powered by ADP DataCloud uses data analytics and employee surveys to allow clients to monitor workforce trends including availability, health attestation results, and worker readiness and sentiment toward returning to the workplace;

identify and schedule workers based on availability, location, job title and other attributes;

and facilitate contact tracing to help them keep their workforce healthy.

The new ADP Time Kiosk that will help employers manage safe levels of occupancy by equipping workers with time & attendance tracking without touching a device.

As COVID-19 reshapes the way people work and the needs of our clients and their employees change, our teams have swiftly adapted and adjusted workflows to deliver the content, resources and support that employers and their workforce need, when they need it.

Our expertise and innovative technology, as well as established financial relationships with our clients, financial institutions and employees, ensure ADP is well positioned to support employers and their workforce through these challenging times – and we fully embrace that role.

track vaccination status;

and facilitate contact tracing, in order to help transition workers back to workplaces with more clarity and confidence.

With ADP® Compliance on Demand, clients can easily tap into a knowledge base for compliance — from new leave laws and time tracking requirements, to record-keeping and more.

The new ADP Time Kiosk helps employers manage safe levels of occupancy by equipping workers with time & attendance tracking without touching a device.

The Time Kiosk uses optional facial recognition to log workers in compliantly and voice activation to start/end a shift, take a meal break, transfer jobs and more.

As the economy recovers and the way people work is reshaped, our teams continue to swiftly adapt and adjust workflows to deliver the content, resources and support that employers and their workforce need, when they need it.

Our expertise, innovative technology and data, as well as established financial relationships with our clients, financial institutions and employees, make ADP the partner that clients trust as they adapt to new world of work and create workplaces where everyone can thrive.

Reportable Segments

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We address these broad market needs with our cloud-based strategic platforms:

RUN Powered by ADP®, serving over 690,000 small businesses;

ADP Workforce Now®, serving approximately 75,000 mid-sized and large businesses across our strategic pillars;

RUN Powered by ADP®, serving approximately 750,000 small businesses;

ADP Workforce Now®, serving over 75,000 mid-sized and large businesses across our strategic pillars;

and ADP Vantage HCM®, serving over 500 large enterprise businesses.

All of these solutions can be combined with ADP SmartCompliance® to address the increasingly broad and complex needs of employers.

Outside the United States, we address the needs of over 60,000 clients with premier global solutions consisting of local in-country solutions and multinational offerings, including ADP GlobalView®, ADP Celergo® and ADP Streamline®.

Outside the United States, we address the needs of over 60,000 clients with premier global solutions consisting of in-country solutions and multinational offerings, including ADP GlobalView®, ADP Celergo®/Streamline® and ADP iHCM.

Strategic Cloud-based Products and Solutions Across Client Size and Geography

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Payroll Services .

We pay approximately 22 million (approximately 1 out of every 6) workers in the United States.

We pay over 23 million (approximately 1 out of every 6) workers in the United States.

We provide flexible payroll services to employers of all sizes, including the preparation of employee paychecks, pay statements, supporting journals, summaries, and management reports.

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These options include health and welfare administration services, leave administration services, insurance carrier enrollment services, employee communication services, and dependent verification services.

In addition, ADP benefits administration solutions offer employers a simple and flexible cloud-

based eligibility and enrollment system that provides their employees with tools, communications, and other resources they need to understand their benefits options and make informed choices.

In addition, ADP benefits administration solutions offer employers a simple and flexible cloud-based eligibility and enrollment system that provides their employees with tools, communications, and other resources they need to understand their benefits options and make informed choices.

Talent Management.

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Our solutions provide performance, learning, succession and compensation management tools that help employers align goals to outcomes, and enable managers to identify and mitigate potential retention risks.

Our talent activation solutions include ADP’s StandOut® and Compass® solutions, which provide team leaders with data and insights to drive employee engagement and leadership development, which in turn help drive employee performance.

Our talent activation solutions include StandOut® powered by ADP, which provides team leaders with data and

insights to drive employee engagement and leadership development, which in turn help drive employee performance.

Workforce Management.

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These tools automate the calculation and reporting of hours worked, helping employers prepare payroll, control costs and overtime, and manage compliance with wage and hour regulations.

Absence management tools include accrued time off, attendance policy and leave case modules.

Our employee scheduling tools simplify visibility, offer shift-swapping capabilities and can assist

managers with optimizing schedules to boost productivity and minimize under- and over-staffing.

Absence management tools include accrued time off, attendance policy and leave case management modules.

Our employee scheduling tools simplify visibility, offer shift-swapping capabilities and can assist managers with optimizing schedules to boost productivity and minimize under- and over-staffing.

We also offer analytics and reporting tools that provide clients with insights, benchmarks and performance metrics so they can better manage their workforce.

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Insurance Services.

ADP’s Insurance Services business, in conjunction with our licensed insurance agency, Automatic Data Processing Insurance Agency, Inc., facilitates access in the United States to workers’ compensation and group health insurance for small and mid-sized clients through a variety of insurance carriers.

ADP’s Insurance Services business, in conjunction with our licensed insurance agency,

Automatic Data Processing Insurance Agency, Inc., facilitates access in the United States to workers’ compensation and group health insurance for small and mid-sized clients through a variety of insurance carriers.

Our automated Pay-by-Pay® premium payment program calculates and collects workers’ compensation premium payments each pay period, simplifying this task for employers.

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Professional Employer Organization.

ADP TotalSource, our PEO business that is enabled by ADP Workforce Now, offers small and mid-sized businesses a comprehensive HR outsourcing solution through a co-employment model.

ADP TotalSource is enabled by ADP Workforce Now and offers small and mid-sized businesses a comprehensive HR outsourcing solution through a co-employment model.

With a PEO, both ADP and the client have a co-employment relationship with the client’s employees.

We assume certain employer responsibilities such as payroll processing and tax filings, and the client maintains control of its business and all management responsibilities.

ADP TotalSource clients are able to offer their employees services and benefits on par with those of much larger enterprises, without the need to staff an enterprise-size HR department.

With our cloud-based HCM software at the core, we serve more than 13,000 clients and more than 530,000 worksite employees in all 50 U.S.

ADP TotalSource clients are able to offer their employees services and benefits on par with those of much larger enterprises, without the need to staff a full HR department.

With our cloud-based HCM software at the core, we serve more than 14,500 clients and

more than 620,000 worksite employees in all 50 U.S.

ADP TotalSource is the largest PEO certified by the Internal Revenue Service as meeting the requirements to operate as a Certified Professional Employer Organization under the Internal Revenue Code.

As a full-service PEO, ADP TotalSource provides complete HR management and core administrative services while the client continues to direct the day-to-day job-related duties of the employees.

With constantly changing business regulations, global economies and technology, our clients benefit from partnering with ADP TotalSource to help them protect their business and drive growth and success.

As a full-service PEO, ADP TotalSource provides a broad range of HR administrative services, including payroll and payroll tax, employer compliance, HR guidance, employee benefits and benefit administration, talent strategies, and workers’ compensation insurance including risk and claims management.

Some of the rich offerings available through ADP TotalSource to address today’s workplace challenges include:

• Better Benefits:

• Better Employee Benefits:

Through our PEO, many of our clients discover that they can offer a richer overall benefits package than they could afford to offer on their own.

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Clients can also access data-driven benchmarks in areas such as turnover and overtime, staffing and understanding profit leaks, and have their ADP HR expert help tailor recommendations to continue to drive their business forward.

A payroll specialist is also available to clients to help them ensure their workers are paid correctly, on time and in compliance.

ADP Comprehensive Services.

Leveraging our market-leading ADP Workforce Now platform, ADP Comprehensive Services partners with clients of all types and sizes to tackle their HR, talent, benefits administration and pay challenges with help from our proven expertise, deep experience and best practices.

Leveraging our market-leading ADP Workforce Now platform, ADP Comprehensive Services partners with clients of all types and sizes to tackle their HR, talent, benefits administration

and pay challenges with help from our proven expertise, deep experience and best practices.

ADP Comprehensive Services is flexible – enabling clients to partner with us for managed services for one, some or all areas across HR, talent, benefits administration and pay.

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This improves visibility, control and operational efficiency, giving organizations the insight and confidence to adapt to changing local needs, while helping to drive overall organizational agility and engagement.

We also offer comprehensive HCM solutions on local, country-specific platforms.

These suites of services offer various combinations of payroll services, HR management, time and attendance management, talent management and benefits management, depending on the country in which the solution is provided.

We pay over 14 million workers outside the United States with our local in-country solutions and with ADP GlobalView, ADP Celergo and ADP Streamline – our simplified and intuitive multi-country payroll solutions.

We also offer comprehensive, country-specific HCM solutions that combine innovative technology with deep local expertise.

By operating a flexible service model, we help customers manage various combinations of payroll services, HR management, time and attendance management, talent management and benefits management, depending on the country in which the solution is provided.

We pay over 14 million workers outside the United States with our in-country solutions and with ADP GlobalView, ADP Celergo/Streamline and ADP iHCM – our simplified and intuitive multi-country payroll solutions.

As part of our global payroll services, we supply year-end regulatory and legislative tax statements and other forms to our clients’ employees.

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The major components of our offerings throughout these geographies are payroll, HR outsourcing and time and attendance management.

In addition, we offer wage and tax collection and remittance services in the United States, Canada, the United Kingdom, Australia, India and China.

In addition, we offer wage and tax collection and/or remittance services in the United States, Canada, the United Kingdom, Australia, India and China.

Our PEO business offers services exclusively in the United States.

We market our solutions primarily through our direct sales force.

We also market HCM Solutions, Global Solutions and HRO Solutions (other than PEO) through indirect sales channels, such as marketing relationships with certified public accountants and banks, among others.

We also market HCM Solutions, Global Solutions and HRO Solutions through indirect sales channels, such as marketing relationships with certified public accountants and banks, among others.

None of our major business units has a single homogeneous client base or market.

While concentrations of clients exist in specific industries, no one client, industry or industry group is material to our overall revenues.

While concentrations of clients exist in specific industries, no one client, industry or industry group is material to our overall

We are a leader in each of our major service offerings and do not believe any of our major services or business units is subject to unique market risk.

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We are, therefore, subject to compliance obligations under federal, state and foreign privacy, data protection and cybersecurity-related laws, including federal, state and foreign security breach notification laws with respect to both client employee data and our own employee data.

The changing nature of these laws in the United States, Europe and elsewhere, including the European Union’s (the “EU”) General Data Protection Regulation (the “GDPR”) and the California Consumer Privacy Act (the “CCPA”), impact our processing of personal information of our employees and on behalf of our clients.

The changing nature of these comprehensive laws in the United States, Europe and elsewhere, including the European Union’s (the “EU”) General Data Protection Regulation (the “GDPR”) and the California Consumer Privacy Act (the “CCPA”), which will be replaced by the voter-approved California Privacy Rights Act of 2020 (the “CPRA”), impact our processing of personal information of our employees and on behalf of our clients.

The GDPR imposes strict and comprehensive requirements on us as both a data controller and a data processor.

As part of our overall data protection compliance program, including with respect to data protection laws in the EU, we have implemented Binding Corporate Rules (“BCRs”).

As part of our overall data protection compliance program, including with respect to data protection laws in the EU, we are one of the few companies in the world to have implemented Binding Corporate Rules (“BCRs”).

Compliance with our BCRs permits us to process and transfer personal data across borders in accordance with the GDPR and other data protection laws in the EU.

The CCPA became effective on January 1, 2020 and requires companies to provide new data disclosure, access, deletion and opt-out rights to consumers in California.

The CCPA and CPRA require companies to provide new data disclosure, access, deletion and opt-out rights to consumers in California.

In addition, in the United States, the Health Insurance Portability and Accountability Act of 1996 applies to our insurance services businesses and ADP TotalSource.

As part of our payroll and payroll tax management services, we move client funds to taxing authorities, our clients’ employees and other payees via electronic transfer, direct deposit, prepaid access and ADPCheck.

In September 2019, the Office of the Comptroller of Currency (the “OCC”) authorized us to open ADP Trust Company, National Association (the “ADP Trust Bank”), via a national trust bank charter pursuant to the National Bank Act.

In 2019, the Office of the Comptroller of Currency (the “OCC”) authorized us to open ADP Trust Company, National Association (the “ADP Trust Bank”), via a national trust bank charter pursuant to the National Bank Act.

The ADP Trust Bank is the sole trustee of ADP Client Trust, our grantor trust which holds client funds, and is responsible for the oversight and management of those client funds.

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money movement it oversees and manages via ADP Client Trust, is subject to comprehensive ongoing oversight and regulation by the OCC.

We have surrendered all state money transmitter

licenses that we historically maintained as the activity previously managed through those state money transmission licenses was moved into the ADP Client Trust managed by ADP Trust Bank, which is federally exempt from state money transmitter regulation with respect to the client money movement activity that ADP Trust Bank manages.

We have surrendered all state money transmitter licenses as the activity previously managed through those licenses was moved into the ADP Client Trust managed by ADP Trust Bank, which is federally exempt from state money transmitter regulation with respect to the client money movement activity that it manages.

In addition, our U.S.

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prepaid access offering are subject to the anti-money laundering and reporting provisions of The Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2001 (the “BSA”).

Elements of our money movement 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.

Elements of our money

movement activities outside of the United States are subject to licensing and similar 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.

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Similarly, our Tax Credit Services business, which helps clients in the United States take advantage of tax credit opportunities in connection with the hiring of new employees and certain other activities, is based on federal, state or local tax laws and regulations allowing for tax credits, which are subject to renewal, amendment or rescission.

We believe that key components of our compliance programs provide real competitive differentiators.

For instance, our BCRs have enabled ADP to apply a global standard of data protection, simplifying data transfer processes and assisting our clients in meeting the demanding standards of data protection expected in Europe – a solution that most competitors cannot provide.

Similarly, the ADP Client Trust and ADP Trust Bank provide client funds with a level of protection that most competitors cannot offer.

We continue to expand our approach to compliance and are adopting “Compliance by design” as a tenet that prioritizes compliance in designing and developing new solutions to support our clients.

The foregoing description does not include an exhaustive list of the laws and regulations governing or 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 information regarding changes in laws and regulations that could have a materially adverse effect

on our reputation, results of operations or financial condition or have other adverse consequences.

See the discussion contained in the “Risk Factors” section in Part I, Item 1A of this Annual Report on Form 10-K for information regarding changes in laws

and regulations that could have a materially adverse effect on our reputation, results of operations or financial condition or have other adverse consequences.

CLIENTS AND CLIENT CONTRACTS

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No one price quotation or service agreement is material to us.

Our client retention is estimated at approximately 11 years in Employer Services, and approximately 7 years in PEO, and has not varied significantly from period to period.

Based on our retention levels in fiscal 2021, our client retention is estimated at approximately 13 years in Employer Services, and approximately 7 years in PEO.

While our client retention rate historically has not varied significantly from year to year, we experienced an increase in our Employer Services rate in fiscal 2021 that we believe was driven primarily by a combination of improvement in client satisfaction and a decrease in clients switching providers during the Covid-19 pandemic.

PRODUCT DEVELOPMENT

We continually upgrade, enhance, and expand our solutions and services.

In general, new solutions and services supplement rather than replace our existing solutions and services and, given our recurring revenue model, do not have a material and immediate effect on our revenues.

In general, new solutions and services supplement rather than replace our existing

solutions and services and, given our recurring revenue model, do not have a material and immediate effect on our revenues.

We believe that our strategic solutions and services have significant remaining life cycles.

SYSTEMS DEVELOPMENT AND PROGRAMMING

During the fiscal years ended June 30, 2020, 2019 and 2018, we invested approximately $947 million, $911 million and $1 billion, respectively, in systems development and programming.

These investments include expenses for activities such as client migrations to our new strategic cloud-based platforms, purchases of new software and software licenses, additions to software resulting from business combinations, as well as the development of new products and maintenance expenses associated with our existing technologies.

During the fiscal years ended June 30, 2021, 2020 and 2019, we invested approximately $1.016 billion, $947 million and $911 million, respectively, in systems development and programming.

These investments include expenses for activities such as the development of new products, maintenance expenses associated with our existing technologies, purchases of new software and software licenses, additions to software resulting from business combinations, as well as client migrations to our new strategic cloud-based platforms.

We are the licensee under a number of agreements for computer programs and databases.

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Third-party licenses, patents, trademarks, and franchises are not material to our business as a whole.

NUMBER OF EMPLOYEES

We employed approximately 58,000 persons as of June 30, 2020 .

OUR HCM STRATEGY

Our Human Capital Management (HCM) strategy is simple, our people are one of our most valuable assets and we are committed to valuing, growing and engaging them.

Our Chief Human Resources Officer (CHRO), together with our Chief Diversity and Talent Officer, manages our HCM strategy and related programs and initiatives, as well as our talent strategy.

Our CHRO, along with our CEO, as appropriate, regularly updates and supports our Compensation and Management Development Committee of the Board (“CMDC”) as well as the Board of Directors on HCM matters, including culture, engagement, and diversity and inclusion.

The CMDC is responsible for these matters, as well as our executive compensation program, management succession planning and talent development, and company-wide equity-based plans.

Our Employees and Demographics

As of June 30, 2021, our global team of associates consisted of approximately 56,000 persons.

We track the female, minority and generational demographics of our workforce and share them in our annual Global Corporate Social Responsibility (“CSR”) Report, which is available on our website.

Nothing in our CSR Report shall be deemed incorporated by reference into this Annual Report on Form 10-K.

Our Culture and Values

More than 70 years ago, our founders established the values that guide us today.

These values have helped shape our one-of-a-kind culture, which embraces diversity, inclusiveness and belonging.

Our long-term business success is closely linked to our commitment to creating an environment in which our associates thrive, and that means we have to listen to and engage our associates.

We conduct an annual culture survey, myVoice, where our associates can share their opinions on important topics, including client service, diversity, social responsibility, ethics, innovation and leadership.

Along with many of our world-class clients, we leverage our innovative StandOut® powered by ADP platform, to drive talent engagement and activation.

We issue quarterly global StandOut® Engagement Pulse® surveys to ensure that all associates can share how they feel about their work and their team, and for us to get a snapshot of engagement across the globe.

The strength of our ADP team comes from what each one of us offers each other, our clients and our community.

Through our myMoment Recognition Program, we give our associates the opportunity to recognize and celebrate each other when they demonstrate our values, drive our goals and go above and beyond in contributing to our collective success.

Our global ADP Cares program, which is funded by the Company, the ADP Foundation and our generous associates, helps members of our team get through difficult, unforeseen events such as natural disasters and major illnesses.

We also proudly support our associates that give back to our communities through paid volunteer time off and our donation matching program.

Diversity and inclusion are a cornerstone of our one-of-a-kind culture.

We value diverse perspectives and believe that our associates and their best ideas thrive in a diverse

and inclusive environment.

We strive to reflect the diversity of the communities and clients we serve and are firmly focused on ensuring that all our associates are welcomed and enjoy a deep sense of belonging.

We have launched a number of initiatives to strengthen and further cultivate our diverse and inclusive culture, starting with our Talent Task Force for all of our people leaders, which includes diversity goals for our senior leaders that are tied to their compensation as an incentive to diversify our leadership ranks.

Our Workforce Diversity Initiative uses data analysis to identify and focus on opportunities to increase the number of underrepresented associates in our workforce to better reflect the communities we serve.

Our voluntary business resource groups (BRGs), which cover a broad array of diverse associates that share common interests and experiences, make us stronger by promoting diversity and cultural awareness, accelerating associate engagement, retention and career development, and helping build relationships with diverse markets in our communities.

In addition, we are deeply committed to fair and equitable pay, which is critical to creating a diverse, inclusive and engaging culture.

We make pay decisions based on skills, job-related experience, the market value of the job, and performance and in the U.S.

and Canada have proactively determined to no longer ask candidates for prior pay history, whether or not we are required to do so.

Our Talent Strategy

Our talent strategy is simple – we aim to attract and retain ambitious, passionate and overall top talent by offering a place where our people can grow their careers, challenge themselves, share generously, take risks, and create positive change.

This has allowed us to be consistently recognized by esteemed organizations as an employer of choice year after year.

We invest in our team members to ensure they have the skills necessary to succeed and grow their careers.

The ADP talent journey begins with onboarding supported by extensive training and mentorship.

Thereafter, our associates can access a wide range of professional and functional skills training to further continue and enhance performance and career development.

Our professional skills program provides on-demand and self-paced learning paths on key topics such as business acumen, client service, time management, teamwork and collaboration, communication and career management.

Our Benefits and Health and Wellness Programs

The wide range of benefits and health and wellness programs we offer contribute to an environment where all our associates add to our success.

Our associates receive a competitive benefits package, intended to help them enjoy physical, emotional and financial well-being and be productive members of their teams.

While exact benefits vary by associate and region, they typically include health

care coverage, a 401(k) plan with company matching contributions, life insurance, paid time off and tuition reimbursement.

We particularly emphasize benefits that support individual and family needs (parental leave, adoption/fertility benefits and caregiver support), and constantly update our programs according to our associates’ needs.

We offer physical and mental wellness programs that help our team pursue a healthy lifestyle and reduce absenteeism and lost time due to injuries.

Our efforts include a company-wide health and safety manual and website, safety education and training, and a wellness program that rewards associates for completing wellness activities.

Physical and mental health initiatives vary across regions, but can include personal health checks, regular exercise classes, nutrition and fitness expert visits offering free consultation and programs, employee mental wellness assistance programs, free counselling and mental health therapy sessions for associates, and mindfulness, massages and yoga classes.

Our Response to Covid-19

With respect to the Covid-19 pandemic, we moved quickly to protect our associates and their families by relocating nearly all of our associates to work-from-home or remote working arrangements.

We provided all of our associates, excluding corporate officers, with two one-time payments totaling $1,250 (or equivalent based on the average wage parity in each country) to assist with the unexpected hardships of the pandemic.

We conducted Covid-19 vaccination drives in our offices in India for associates and their families during a vaccine shortage in India.

We also provided important additional support by expanding our Voluntary Wellness Program and Employee Assistance Program and creating a Mental Health Resources Guide highlighting important mental health topics and resources available to our associates and their families.

Available Information

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Item 1. Business