Learning Lessons from Zenefits
In 2013, a small company called Zenefits opened offices in New York and California. Over the past three years, it spread throughout the country. Zenefits, according to its own website, “integrates all of [a company’s] HR functions into an easy-to-use online dashboard;” in layman’s terms, the company sells cloud-based software that helps small to medium sized businesses manage their human resources departments. As part of the package, it also helps employers “manage all aspects of employee insurance online.”
This last part, about the insurance management, is what concerns us – specifically because in July, the state of Tennessee fined Zenefits $62,500 for violating insurance requirements. In a statement picked up by Reuters, Julie Mix McPeak, commissioner of the Tennessee Department of Commerce and Insurance, claimed “Under the company’s past leadership, compliance with insurance laws and regulations was almost an afterthought.”
Zenefits violated licensing rules here in Tennessee, and looks to have done the same in seven other states. The CEO, Parker Conrad, allowed his sales teams to act as insurance brokers, which means they were, essentially, selling insurance without a license. Buzzfeed reports that Tennessee regulators found “65 examples of employees selling insurance or otherwise acting as a broker in that state without a local license,” and 10 where the employees had no license at all.
Parker has since been let go, and the company has reported all potential licensing issues. They have also started requiring their brokers to finish 52 hours’ worth of coursework and instituted a new system to track compliance.
This story was an interesting one to watch develop, because the policies themselves were never called into question. But purchasing a policy from an unlicensed broker – one who is likely unable to explain any gaps in your coverage, or potential pitfalls you might face when making a claim – is a serious problem. If something goes wrong, or if the policy does not deliver what it promises, you may have a claim for broker negligence.
At McWherter Scott & Bobbitt, we provide comprehensive counsel to policyholders and employers who have been harmed by such practices. To schedule an appointment with Tennessee insurance disputes attorney Clint Scott or Brandon McWherter, please call 731-664-1340 or fill out our contact form. We maintain offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville for your convenience.
Whether in a courtroom or a duck blind, Clint Scott pursues excellence in all of his endeavors. With a demeanor that’s part Grizzly Bear and part Teddy Bear, he is not the typical lawyer, but then again the Firm isn’t a typical law firm. Learn More