It would appear that Zenefits, the tech startup disrupting how small businesses manage employee benefits, needs to pay more attention to its own human resources policies.
The San Francisco-based company is scrambling to address claims that it failed to pay some workers for overtime and unused vacation days, as required by California law, reports The Wall Street Journal.
To make good, Zenefits is offering former employees—some of whom have filed official complaints—one-time payments of approximately $5,000. That’s in exchange for waiving their right to take legal action, the Journal reports.
California law requires companies to pay employees for accrued time off if they leave before using it. The state also has strict rules about which members of a company’s workforce should be paid more when required to work long hours. Many of Zenefits’ operations and support staff may have been misclassified, although the company has rectified this, according to the Journal story.
Zenefits acknowledged the errors, which it pinned to mistakes in early versions of its employee handbook, last updated in March.
MORE: Zenefits: Now We Handle Payroll, Too
This is just the latest example of how Zenefits’ management policies are lagging behind its growth. The company is also under investigation over claims that current and former Zenefits employees have sold insurance policies without having the proper licenses to do so. Every state requires individual brokers to carry licenses, but the company didn’t put a systemic approach for managing this into place until last July.
You could chalk both situations up to growing pains. Last fall, Zenefits employed 400 people. Now, that number is close to 1,600.
Zenefits, last valued at $4.5 billion, is on an $80 million revenue run rate for this year. Last year, it generated $20 million.
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