129 Zenefits Staff Quit After Offer From CEO

Matt Chase for BuzzFeed News

The embattled startup Zenefits will lose an additional 10% of its staff, after 129 employees decided to take a severance offer and quit, CEO David Sacks said on Monday in an internal memo that was reviewed by BuzzFeed News.

Zenefits, the $4.5 billion human resources startup whose founder was ousted in February, made the offer last week as part of a broader reorganization effort that included 106 layoffs. Any employee who joined before February 8 could elect to leave in exchange for two months of severance pay and four months’ health coverage, Sacks told staff at the time.

The 129 employees who took this deal — which was known internally as “The Offer” — amount to “approximately 10%” of staff, Sacks said in the Monday memo. Based on the company's headcount after the layoffs announced last week, the voluntary departures amount to12.4% of staff, a calculation by BuzzFeed News shows.

The departures are the third wave of employee exits this year, following two rounds of layoffs. In the first round, announced in February, Zenefits cut 250 jobs, mostly from sales. The company will now be left with about 910 employees, compared with a peak of roughly 1,600 last year.

The layoffs are part of an effort to repair a company that, by its own admission, grew too quickly and had lapses in regulatory compliance. Zenefits gives away software to help small business manage their employee benefits, but it makes money as an insurance broker when it sells those businesses health insurance.

Its founding CEO, Parker Conrad, was forced to resign in February after colleagues learned that he had created and shared with his employees a piece of software to cheat on California insurance broker licensing requirements. Zenefits executives discovered this software through an internal investigation that was prompted by a BuzzFeed News investigation last fall.

Last week, in announcing “The Offer,” Sacks said, “I want to work with people who want to be here and who are unified in the purpose of what we’re trying to achieve.”

Sacks initially gave employees a deadline of noon on Thursday last week to decide whether they wanted to leave. They ended up getting another day to mull it over, according to one person with knowledge of the matter.

“I'm extremely proud of the 90% of you that have chosen to stay with the company and drive the new Zenefits forward,” Sacks told staff on Monday. A Zenefits spokesperson confirmed the memo's authenticity.

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