Equifax Amassed Salary Details for People at 7,100 CompaniesBy
The database is unique in the industry, key to firm’s growth
Employers say they’ll keep working with unit untouched by hack
Here’s some information that Equifax Inc. is managing to hold onto: payroll data from 7,100 companies.
Inside the U.S. credit-reporting firm is a warehouse of corporate secrets like none other -- a database tracking the careers and earnings of bankers, technology workers and other personnel across the country. Even after Equifax failed to prevent hackers from tapping a separate trove of information on 143 million Americans, employers probably won’t stop feeding it updates, because they rely so much on analytics that Equifax provides.
In the wake of the breach announced last month, Bloomberg News contacted the 40 largest U.S. employers -- representing some 12.5 million workers -- and asked if they would continue dealing with the service, which helps them with unemployment claims, employment eligibility and tax credits. None said they will sever existing ties.
Several -- such as Wal-Mart Stores Inc., the nation’s largest private employer -- confirmed they will keep sharing information with Equifax. Others declined to comment on their relationships or didn’t respond to messages. Only about a half-dozen said they didn’t provide that information prior to this year’s hack.
“We’ve been assured by Equifax that the area of their business that we are working with was not exposed to the breach,” Wal-Mart spokesman Dan Toporek said in an email, echoing statements by others. The retailer doesn’t plan to change its relationship, but “will continue to have discussions with Equifax about the security of our information.”
Equifax climbed 1.6 percent to $107.67 at 2:07 p.m. in New York. The stock has dropped 25 percent since Sept. 7, when the company disclosed the cyber intrusion.
U.S. lawmakers also are poised to scrutinize how Equifax collects and protects sensitive data. Richard Smith, who stepped down as chief executive officer last week, is set to testify at a series of congressional hearings starting Tuesday.
Equifax representatives didn’t respond to requests for comment for this article.
Salary history is the “holy grail” in the recruiting world, said John Sullivan, a professor of management at San Francisco State University who specializes in human-resources strategy. If that information were exposed it could be particularly valuable to head hunters who help corporate clients poach talent from rivals, he said.
Not to mention the implications for workplaces if people could see how their compensation stacks up against peers’.
“Your neighbor would know what you get paid, and nobody wants that,” Sullivan said. “The real issue would be retention. People that love their job would instantly hate their job.”
The database was the brainchild of Smith, who sought to diversify Equifax from a regional credit-reporting agency into a full-fledged data and analytics company. So in 2007, less than two years after taking the helm, he oversaw the $1.2 billion acquisition of Talx Corp., expanding into employment and income data. Equifax was valued at $5.2 billion at the time.
“That’s a bet, right?” Smith said at an event at the University of Georgia in August. “We then pivoted to this massive unique data-asset company that allowed us to build products we could never build before.”
The workforce-solutions unit is now among Equifax’s fastest-growing businesses, contributing more than a fifth of the firm’s $3.1 billion of revenue last year. Using payroll data from government agencies and thousands of employers -- including a vast majority of Fortune 500 companies -- Equifax has cultivated a database of 300 million current and historic employment records, according to regulatory filings.
Employers authorize payroll providers like Automatic Data Processing Inc. to transmit their data to Equifax’s database. After Equifax disclosed the breach, the company confirmed ADP clients weren’t affected by the hack as a result of the two companies’ relationship, ADP spokesman Michael Schneider said. ADP data is stored separately from Equifax’s credit bureau data, which helps mitigate security risks, he said.
The database is a “crown jewel” for Equifax, Stephens Inc. analyst Brett Huff said in a note to clients. The company likely highlighted that the workforce data weren’t affected as it tried to assuage worried customers, he said.
“The return on that $1.2 billion investment turned out pretty good,” Smith said at the University of Georgia event. “That acquisition, by the way -- I don’t know if I’m proud of this or not -- but it’s worth about $9 billion today.”
— With assistance by Alexandra Stratton, and Steven Crabill