Gusto Acts as Data Processor Under Privacy Laws

The updated terms make explicit that requesting a background check through Gusto creates a legally binding agreement not just with Gusto but also incorporating terms from Gusto's payroll service and Checkr's service agreement. This means customers are committing to multiple overlapping sets of terms when they initiate a background check request. The change does not appear to alter the substantive rights or obligations, but rather clarifies their scope and binding nature in writing.

Developers integrating with Gusto's platform are now bound by mandatory arbitration and class action waiver provisions, meaning they cannot join or file class actions against Gusto and must resolve disputes through individual, binding arbitration. The updated terms also grant Gusto the right to modify, update, or discontinue developer tools at its sole discretion without notice or liability, which could disrupt integrations and require developers to absorb costs of upgrading to new versions. Developers should review Section 19 of the updated terms carefully before creating or maintaining integrations with Gusto's platform, and consider whether the arbitration and modification provisions align with their business and legal risk tolerance.

Gusto introduced a new paid service that handles state and local business compliance filings and registrations. If employers use this service, they are subject to a separate set of terms (GBC Terms) that override Gusto's standard employer terms in case of conflict. Critically, these new terms explicitly incorporate Gusto's mandatory arbitration provision and class action waiver, meaning disputes about the Business Compliance Service cannot be resolved through small claims court or joined in a class action lawsuit. Employers considering this service should review the full GBC Terms to understand the scope of services covered, pricing, and the implications of the mandatory arbitration clause before enrolling.