Yet on June 5, Bergelson sent the following tweet:

"Hey@ADP it's my account. I can invite who I want to help me manage it.@zenefits."

According to Zenefits CEO Parker Conrad, in late May and early June, "Companies that were trying to set up Zenefits as a payroll administrator within their ADP-run accounts were emailing us and saying that Zenefits' access to the system was unauthorized," he explained. "And we were like, 'What?'"

Conrad said that small businesses commonly outsource payroll administration to accountants, vendors and other third parties. "They go to ADP and ask ADP to create a third-party account on their payroll system," he said. "And then that person or company has access to payroll. That's exactly what Zenefits does: Clients call in and say they want to add Zenefits; ADP does it, and we kind of take it from there. The only difference is that while most people are logging in and doing this payroll stuff manually, we've built software and scripts to do all of this automatically." Conrad said that Zenefits' payroll automation is scalable, which allows Zenefits to offer the service for free and also makes it less error-prone.

Read: 5 flaws to a Zenefits approach

On June 4, Conrad said, ADP cut ties with Zenefits entirely, leaving all existing clients who use both products in a bit of a bind, to say the least.

Conrad also said that contacts at ADP told him that ADP was concerned about security and noticed a suspicious spike in traffic, but he said he pushed back against the company when the dates provided for the alleged spike in traffic occurred after ADP had started disconnecting Zenefits from client ADP accounts.

Then Conrad sent an email to customers of both Zenefits and ADP that stated ADP had deactivated the Zenefits admin user accounts, invited customers to sign a Change.org petition and included the following statement: "The reason for this is that ADP believes it can one day build software to compete with Zenefits, and in the meantime they would like to do anything they can to impede Zenefits." Conrad also stated in the email that Zenefits would pay existing ADP payroll clients $1,000 to switch to Intuit Payroll and would help facilitate the transition for clients.

ADP fired back, demanding an apology. ADP spokesman Dick Wolfe is cited on a new landing page dedicated to showcasing ADP's side of this story, www.adp.com/zenefits, where ADP has been releasing statements to counter those made by Zenefits.

"Zenefits' unauthorized method of accessing ADP's RUN solution pulled sensitive client and employee data, including Social Security Numbers and employee banking information, in a manner that does not comply with ADP's high standards for data security," reads the first entry on the page, dated June 8 at 6 p.m. Eastern Time. "Our security actions do not affect the ability of any ADP client – including those that use Zenefits – to access or make necessary changes to their payroll data in ADP's secure systems.… This action is not specific to Zenefits. ADP would block the access of any organization or individual who attempts to integrate with ADP in a manner that puts our clients at risk."

"Why don't they want to come in through the front door?" asked Wolfe. "The issue is that they have not followed the proper partner process.

"We partner with people all the time—competitors, third parties, whoever—at the behest of our clients, and there's a process to make sure that it works and it's secure, because data security is paramount at ADP," he added.

"This is classic playbook strategy for an incumbent software provider," said Conrad. "Sow fear, uncertainty and doubt. They're saying Zenefits is accessing their system, unauthorized.

"If it's dangerous for us to be doing this, it must be dangerous for others who are doing the exact same thing as us to do it, as well," Conrad said. "Everything about our system is highly secure. If they have any information about Zenefits being insecure, they have not provided it to us."

The situation has only become increasingly heated. ADP filed a federal defamation lawsuit against Zenefits on June 9. Conrad has been blogging about the issue on the Zenefits website, and on June 10, he wrote a post about a new competitive offering that he said ADP is extending to clients.

"Within the same hour they filed suit, an ADP sales rep started selling a brand new Zenefits competitive offering—called 'Opum' —to our shared clients," Conrad wrote. "The ADP sales rep, in an email to convince one of our shared customers not to leave ADP, wrote: 'We are coming out with a product to compete with Zenefits, a full service integrated online payroll and benefits solution.'"

On its ever-growing Zenefits landing page, ADP responded: "Today, ADP offers solutions that enable more than 15 million employees and their dependents to enroll in medical benefits in the U.S. We are constantly improving upon these services, some of which overlap with Zenefits' offerings. With respect to 'Opum,' in responding to a direct client inquiry, the sales associate confused the name with Optum Insight, which is a third party platform from United Health Group that we have integrated into our current offering and improves our ability to support benefits enrollment for our clients. This is a core service ADP has offered clients for many years, and is a service that we charge for."

Meanwhile, customers who use both Zenefits and ADP aren't sure what's going to happen with their accounts.

Everwise is a small company, said Bergelson—about 35 people. "ADP and Zenefits had been playing well together," he said, "and something must have changed." He said that ADP provides payroll and worker's compensation services for Everwise.

"In the course of this interaction between ADP and Zenefits, until they figure it out—and I believe that they will — the consumer, which is me and other small business people, lose," he said. "We count on our providers to innovate on our behalf and we vote with our wallets. And one of the benefits that Zenefits provides is they make it easier for us to onboard employees.

"I have seven new employees starting next week," he continued. "This may sound trivial, but I now need to take all that data from those employees and load it into two systems. Now we have to enter that information twice and make sure everything is synced and working properly.

"When you have a couple dozen folks, every one of whom feels like it's all they can do to keep their head above water, that's a problem," he concluded. "It might just mean I have to find another couple of hours a week to do it. It's sensitive information, so I can't really delegate."

Bergelson said he is a "big fan" of both ADP and Zenefits. "We've been with ADP about a year and half," he said, "and whenever I have a problem, I call them and they're on it. I love their customer service, which came as a surprise, because I would have thought that as few players as there are in the payroll world, I didn't think it was going to be that great. They do a great job.

"Zenefits has also done a great job," he said. "They've been growing quite a bit and expanding their product set. There are growing pains as you grow a business, and they have done a good job of shielding their customers from those.

"I know it will get resolved," he concluded. "I just hope that they figure it out on behalf of the customers and not their own self-interests."

"We are committed, and we want to work with ADP," said Conrad. "We think they are good partners. We want to continue working with them, patch things up and move forward. We want to reactivate all of these customers so they can connect up ADP with these customers.

"What ADP will do—I don't know. That's a different question. Certainly we're looking at this and thinking it doesn't look good."