I’m pleased to announce that Zenefits has entered into its first regulatory settlement concerning its past licensing practices. As you know, we brought our licensing into compliance shortly after I became CEO in February and self-reported the issue to all the state departments of insurance on March 1. However, the question of the company’s historical violations still needed to be resolved with regulators.
We have now done that with the Tennessee Department of Commerce and Insurance (TDCI). In an agreement announced today, Zenefits will pay a fine of $62,500. However, TDCI will take no action to restrict our ability to do business in the state. The State explained that more severe fines or penalties were not warranted because the new Zenefits self-reported its violations and took extensive remediation measures. As Commissioner Julie Mix McPeak recognized, “new company leadership has demonstrated a dedication to righting the ship.”
Among Zenefits’ remediation efforts cited in the State’s Consent Order were: implementing new administrative and technical licensing controls; mandating that all brokers complete 52 hours of continuing education courses from the National Association of Health Underwriters (NAHU), including 12 hours of ethics training; changing top leadership and reconstituting our Board of Directors; and creating the position of Chief Compliance Officer and establishing a compliance team.
I want to thank the Tennessee Department of Commerce and Insurance for reaching a fair and significant resolution. It is a testament to Tennessee’s welcoming environment for small business and tech companies that it struck this balance. This is a great state for entrepreneurs and small business owners, and we look forward to serving them with a Zenefits product that makes it easier to run and grow their businesses.
I also want to thank our employees for doing the hard work of remediation and, in the words of the Commissioner, “righting the ship”. You have changed our company’s culture and values at a fundamental level. Because of your efforts, Zenefits has reached a watershed moment: not only does this agreement pave the way for us to continue operating in the great state of Tennessee, it also recognizes that Zenefits is a new company that has moved past its historical issues. We look forward to reaching resolution with other states soon.
As a result of the measures we’ve taken over the past 6 months, Zenefits has become a much stronger and more mature company. Today’s news is validation of that. We look forward to more exciting announcements in the coming months when we launch Z2, the game-changing set of new products and enhancements to Zenefits’ platform that will help small businesses succeed.