Zenefits Settles Compliance Issues With More States

August 12, 2016, 7:48 PM UTC
Photograph by Bloomberg via Getty Images

Zenefits, the San Francisco-based human resources software startup, continues to make headway in clearing up its compliance issues.

On Friday, new CEO David Sacks said on Twitter (TWTR) that the company, which makes its money by selling insurance benefits to employers using its free human resources software, has “resolved” its licensing issues in two more states: South Caroline and Delaware.

Zenefits has agreed to pay $29,500 in fines to South Carolina, but none to the state of Delaware, according to Sacks’ tweets. “Delaware could have fined us, but chose not to, because we self-reported the issue and took corrective measures,” tweeted Sacks.

Last month, Zenefits also settled its compliance issues in Tennessee, where it was selling insurance without the proper licensing, according to a press release from the state’s department of commerce and insurance. The company agreed to pay $62,500 in fines, along with other changes like implementing new controls over licensing, requiring that all of its brokers complete 52 hours of continuing training from the National Association of Health Underwriters (including 12 hours of ethics training), and adding a chief compliance officer and a compliance team.

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As Sacks mentioned in his tweets, these latest settlements with state regulators are part of the company’s attempt to clear up its name and policies following its admission in February that it had been cutting regulatory corners. The company discovered that co-founder and then-CEO Parker Conrad had built software that let employees skirt California insurance licensing requirements. Conrad stepped down in February, and Sacks, who had joined as chief operating officer a year earlier, took over.

Since then, the San Francisco-based startup has tried hard to show that it’s moving away from its past. In May, it released the results of an investigation by law firm Cooley into the software for skirting licensing requirements and the aftermath. Though the report cleared Sacks of any wrongdoing and detailed the chain of events following its discovery, it didn’t offer much explanation as to how the problems went undetected for so long.

In June, Zenefits cut its valuation from $4.5 billion down to $2 billion in an effort to “reset” its relationship with its investors. The company adjusted its investor and employee stakes in the company accordingly. Shortly before that, the company had offered a two-month separation package to all employees who no longer wanted to continue with the company with its new policies and goals. About 10% of the company took the deal, according to Sacks.

Meanwhile, Conrad is apparently working on similar startup, which aims to make it easy to set up new employees with their tools and services when they join a company, as Fortune recently reported.

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