California fines Zenefits $7M for licensing and training violations
- HR software startup, Zenefits, will pay $7 million for licensing and training violations, reports Bloomberg. Employees at the firm sold insurance without licenses and used software to skip required training. Violations involved 17 states.
- Zenefits agreed to pay $3.5 million of the fine upfront and pay the rest if more violations occur and if it doesn’t pass a compliance test in 2018. California insurance regulators said the fine is the largest single amount filed against the firm.
- Zenefits agreed to cut jobs and reduce its valuation to $2 billion in exchange for shareholders agreeing not to sue it, Bloomberg reported.
This fine is one of the latest handed down to the company after the revelations at the beginning of the year. The original issues were partly associated with the company’s culture, much like the charges lodged against Wells Fargo bank. If the firm’s employees were pushed by management to sell insurance with or without a license to make sales quotas, that could easily be seen as a culture problem.
Zenefits recently announced a new product, Z2, one of new CEO David Sacks' first big strategic moves.