Beacon Transcript – Zenefits, the software startup, has just been hit by a new fine, its biggest one to date as the state of California issued a $7 million payment for its licensing violations.
Zenefits is a San Francisco, California-based company that offers cloud software to companies so as to help them manage their human resources. One of their main targets and points of focus is the health insurance coverage.
The company was first put under investigation back in 2015 by the Insurance Commissioner Dave Jones. The office investigated and charged the company over claims to have allowed the sale of health insurances by unlicensed employees.
Following the licensing violations claims, the San Fran company has been faced with several other fines. These also include the $160.000 fee that will go to the insurance commissioner department for their investigation expenses.
Over the past year, Zenefits was put under investigation by a number of various states including Arizona, Texas, and Idaho.
As yet, all these claims have resulted in settlements that nonetheless, have been costing the software company a sum valued in the hundreds of thousands.
With another set of charges on the way, the company has also been sued for failing to pay overtime hours for some of its workers.
Also, Zenefits has just received its highest settlement value to date. The California Department of Insurance fined the company with an initial value of $7 million.
Company representatives have stated that Zenefits has reached an agreement with the state department and will only be paying half of the fine value.
The reduction of the fine was based on the fact that the company undertook remediation efforts, which were recognized by the state insurer.
The Department confirmed the statement but pointed out that the measure was not definitive. A full payment of the fine will be reinstated if the company fails to meet business practices demands in its 2018 examination.
A Zenefits spokesman also declared that, following its latest settlement with the state of California, the company has returned to a clean bill of health. This targets both its lead regulator and a number of 16 various states.
The righting of the company’s bill of health is thought to be owned to the change in board members. Following the fines, the former CEO, Parker Conrad resigned in February and was replaced by David Sacks.
However, amidst the trials and settlements, Zenefits has also marked a significant decrease in valuation. At a former $4 billion value, the company was considered one of the area’s fastest growing firms.
Currently, Zenefits is valued at $2 billion as it is still struggling with the effects of the license violations case.
It also does not help that although reduced, the California settlement marks the largest such penalty given to the date.
It is both the highest sum requested by both a commissioner and in any case of licensing violations, according to a Dave Jones Insurance Commissioner statement.
According to a statement released by Jones on Monday, this goes to show that Californian laws are respected and that any consumer or business can be confident in their insurance techniques.
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