Startup Zenefits had been using that well. It would give companies free use of software to automate human resources functions such as health insurance and payroll. Where it made its money was on the brokerage commissions it received when the software users would buy a policy, say, for health insurance.
Well, the Washington State Insurance Commissioner, Mike Kreider, put the kibosh on that in his state. He determined that such an extreme incentive violated the state's inducement laws. Those are intended to prevent any one player from undermining the overall competiveness of the game. Here is the coverage by TechCrunch.
Zenefits has created a compromise with Kreider. It will impose the fee for use of the software at $5 per employee. That might reduce the motivation of companies to partner with Zenefits.
As many know, Zenefits has gone from being the love of investors and the media to a tarnished brand which is in the process of winning back trust. One of its problems had been that some of those selling its insurance had not gone through all the licensing steps.
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