Dive Brief:
- Troubled start-up Zenefits continues to face severe growing pains, as the company is now being investigated by California regulators over its business practices, according to the New York Times and other media outlets.
- The Times article reports that California Insurance Commissioner Dave Jones said the Zenefits investigation, which began in 2015, is trying to determine whether the fast-growing company was following state regulations regarding insurance agent and broker licensing and training.
- According to various media reports, Zenefits may have used a software application that allowed employees to complete mandatory online pre-licensing classes in a highly expedited, and non-conforming, manner.
Dive Insight
Those same media reports say that David Sacks, Zenefits' newly appointed CEO, mentioned the California compliance issues in a memo to the Zenefits workforce. The investigation news comes on the heels of the recent resignation of Zenefits founder and Chief Executive Parker Conrad, who was replaced amid allegations from state regulators that the startup failed to properly license its salespeople. This latest news on using software to skirt training regulations seem to be part of that issue.
Where the Zenefits story ends has yet to be determined, but small businesses who are depending on the company for their employee benefits delivery are no doubt concerned about whether or not Zenefits will survive the turmoil.
