In the lawsuit, filed last month in a US District Court, TeamStaff alleged that certain human resources software purchased from Lawson last year did not work as expected.
When it purchased Lawson's human resources product, TeamStaff said it expected that the software would allow it to consolidate its multiple operating systems into a single platform.
However, TeamStaff claimed the software did not conform to hundreds of detailed specifications, and the company alleged that Lawson knew it could not meet TeamStaff's expectations when it entered into the deal.
Under the settlement, TeamStaff will keep the financial services licences it purchased but will return the human resources products, according to TeamStaff.
TeamStaff's chief financial officer, Donald Kelly, said the companies were not releasing the financial terms of the settlement, but he added that TeamStaff is happy the issues were resolved. He said his company is currently evaluating different human resources applications from other companies.