It appears beleaguered human resources startup Zenefits isn’t out of the woods yet.
Four months after the company lost its CEO and cut 250 jobs in the wake of a scandal over its insurance sales, Zenefits is laying off another 106 employees.
The latest round of cuts is part of the company’s transformation into version two of itself, dubbed “Z2,” according to an internal email. As part of the reorganization, Zenefits will simplify its operations department and close its sales office in Arizona. The cuts will amount to about 9 percent of Zenefits’ staff.
“This is a painful decision because we have a lot of great salespeople in Arizona and talented people in the Ops organization who will no longer be with us,” Zenefits’ new CEO, David Sacks, wrote in an email to employees that was obtained by SiliconBeat. “But it is the right thing to do.”
Zenefits also is offering voluntary buyouts consisting of two months severance pay and four months of COBRA. That package, which Sacks calls “The Offer,” is available for all employees who joined before “Day One” (Feb. 8 — or the day Zenefits co-founder Parker Conrad resigned as CEO and Sacks stepped in).
“We want you busting ass on Z2. The next few months are going to be an exciting time at Zenefits and we want everyone participating in that,” Sacks wrote. “But if you can’t get excited about that, then frankly we need you to make space for someone who will.”
Zenefits, which sells cloud-based HR software, came under fire earlier this year over accusations that the company’s sales representatives were selling health insurance coverage without being properly licensed. In February, Zenefits laid off 250 people in an effort to “rest” the company’s culture. Reports also surfaced of inappropriate workplace behavior at the company, including sex in the stairwells.
In his email, Sacks acknowledged past mistakes and said the company is turning around.
“We’ve made huge progress over the past four months,” he wrote. “In that time, we’ve admitted and self-reported our mistakes, fixed our licensing issues, changed our leadership and governance, transformed our culture and values and articulated our mission.”
Photo: David Sacks, the new CEO of Zenefits. (Courtesy Zenefits)
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