Zenefits may finally be putting its regulatory troubles in California to rest.
The company, which sells corporate health insurance and provides businesses with human resources software, said on Monday that it had agreed to pay $7.2 million to settle accusations by California regulators that it had skirted licensing requirements. However, Zenefits may only end up paying $3.7 million because some of the fines have been suspended after the company took steps to fix its regulatory problems, according to the settlement documents sent to Coins2Day. The suspended fines may be reimposed if regulators find that the company is still violating the law in 24 months.
BuzzFeed first reported that Zenefits has agreed to settle with regulators.
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“We are pleased to reach a settlement with the California Department of Insurance, which recognized our remediation efforts by suspending half the fine,” a Zenefits spokesperson told Coins2Day in a statement. “We now have a clean bill of health from our lead regulator as well as 16 other states. New management has righted the ship at Zenefits. We’ve moved past these historical issues, and now we’re focused on serving our 20,000+ customers and delivering All-in-One HR to small businesses.”
In February, Zenefits said it had discovered that co-founder Parker Conrad had created a software tool that let employees skirt insurance licensing requirements. Conrad stepped down from his role as chief executive and then-COO David Sack took over the job. Since then, Sacks has been vocal about the company’s commitment to address its regulatory issues and operate in full compliance with insurance laws.
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Since then, Zenefits has settled with regulators in several states, including South Carolina, Delaware, Arizona, New Jersey, Minnesota, and Tennessee.
Zenefits was founded in 2013 by Conrad and Laks Srini. The company has raised $583.6 million in funding, though it slashed its valuation from $4.5 billion to $2 billion in June to make up from the regulatory issues and secret software built by Conrad.