It’s been a difficult week for insurance start-up Zenefits, which has an office in Vancouver. On Tuesday we told you how the company had been
hit with a $7 million fine from a regulator in California relating to licensing violations; and now the company has found troubled times in another US state.
Washington State Insurance Commissioner Mike Kreidler has ordered that Zenefits stops providing free use of its software in the state – issuing a release explaining that the block has been caused by Zenefits violating inducement laws that stop a provider from acts that undermine the competitiveness of other providers with extreme incentives.
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As part of a statement that accompanied the order Commissioner Kreidler wrote that “everyone has to play by the same rules”.
Now, according to a report at
Techcrunch.com, Zenefits has come to a compromise with the state that will allow it to offer its software on a paid basis – with rates set at $5 per employee, per month.
Zenefits was ordered to implement an acceptable fee by January 01, 2017. However, in a letter to its customers picked up by
Business Insider, its lawyer Josh Stein described the inducement laws compelling the company to charge a fee as “counterintuitive and wrong”.
It’s not the first time that Zenefits has clashed with Kreidler, either. Turn the clock back to October and the company faced a penalty of $100,000 because it allegedly skirted licensing requirements prior to the exit for former CEO Parker Conrad. Since then, the company has been eager to rebuild its reputation under new CEO David Sacks.
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California regulator hits Zenefits with $7 million fine
Failed competitor bodes well for brokers
