Zenefits Paying Minnesota $100K Civil Penalty

Company employees sold insurance without a license.

Zenefits Paying Minnesota $100K Civil Penalty
The San Francisco-based Zenefits agreed to pay a $100,000 civil penalty for selling insurance without a license in Minnesota. Ross Corson, spokesman for the Minnesota Department of Commerce, confirmed the agreement on Wednesday morning.
Zenefits’ software streamlines handling benefits, payroll and other human resources-related processes for small business owners. Corson said that the company did have a license to sell insurance in Minnesota. The problem was with the company’s individual brokers.
“Any employee who sold insurance also has to have a license and they did not, and it was the company's supervisory responsibility to ensure that any employees selling insurance to Minnesotans had an appropriate license,” noted Corson.
Twin Cities Business reported in May that Minnesota was looking into the past insurance sales practices of Zenefits. In May, Corson said that Minnesota was part of a “multistate inquiry” into the company’s insurance practices. But on Wednesday Corson said that the Commerce Department, which regulates insurance in the state, ultimately chose not to join the multistate effort.
The $100,000 civil penalty in Minnesota appears to be in line with agreements that the company has reached with other states. According a report in Fortune, Zenefits also reached a $100,000 settlement with New Jersey. The company has now reached settlements with six states including Tennessee, South Carolina, Delaware and Arizona. There was no fine in Delaware.
But Zenefits still has not resolved issues with other states. The California Department of Insurance launched an investigation of the company in February and inquiries are underway in other states. 
Founded in 2013, Zenefits drew attention as a fast-growing tech startup that was “disrupting” the routine but time-consuming business of administrative human resources work. The company was a Silicon Valley darling; last year, the company was valued at $4.5 billion. The company’s founder and CEO, Parker Conrad, resigned in February as the company’s problems began to surface. New CEO David Sacks is working to get the company back on course as it resolves regulatory issues.

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