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Zenefits Settles Compliance Issues With 3 More States

Human resources software Zenefits said Tuesday it has resolved investigations into its licensing practices with Arizona, Minnesota, and New Jersey.

All three settlements carried penalties, the company acknowledged, although it didn’t disclose the amounts. According to orders published on government web sites for New Jersey and Arizona, Zenefits was ordered to pay insurance regulators $100,000 and $15,000 for those states, respectively. The amount for Minnesota wasn’t published of this writing.

The startup reached settlements over the summer with South Carolina and Tennessee; the latter fined it $62,500 for “admitted unlicensed activity” in the state, according to an official statement. “Under the company’s past leadership, compliance with insurance laws and regulations was almost an afterthought,” said Tennessee insurance commissioner Julie Mix McPeak.

Delaware opted to close its investigation into the company’s licensing practices with no fine, according to Zenefits.

A Zenefits spokesman described the other state penalties as “fair and generally all in line with each other.”

The new settlements bring the total number of states where Zenefits has resolved its licensing issues to six. The company may still face fines from California, Massachusetts, New York, and Washington—all of which were believed to be investigating Zenefits’ business practices, according to a Buzzfeed story from late last year.

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In February, Zenefits parted ways with founder and CEO Parker Conrad and acknowledged that the software company’s internal processes for ensuring compliance with insurance regulations had been “inadequate.” As a result, some brokers were representing insurance policies in certain states without the proper licenses, it disclosed.

Conrad’s replacement David Sacks has moved quickly to mandate tighter licensing requirements. In June, he declared victory in that quest.

As of Tuesday, Zenefits employed 250 licensed brokers who hold an estimated 10,000 state licenses. It is also taking steps to publish the application it uses internally to manage its licensing processes, called Licensing+, so that other organizations can use it.

The controversy has cost the startup dearly this year. In late June, Zenefits slashed its valuation to $2 billion from $4.5 billion.