Insurance software startup Zenefits has agreed to pay $3.4 million in unpaid overtime to 743 of its account executives and sales representatives in California and Arizona, according to the Department of Labor. Zenefits also agreed to let the DOL monitor its practices to ensure the company does not violate the Fair Labor Standards Act.
This agreement comes after the DOL’s Wage and Hour Division found that Zenefits misclassified the above-mentioned employees as being exempt from minimum wage and overtime. Zenefits, according to the DOL, was wrong to pay those workers a flat salary, regardless of overtime and time spent in training.
“We have put money back in workers’ wallets while also working with Zenefits to ensure future compliance with federal labor law,” Ruben Rosalez, a regional administrator at the DOL Wage and Hour Division, said in a statement. “This case allows us to level the playing field for all of the employers who play by the rules. We are dedicated to protecting both workers and employers.”
Zenefits has had a rough time lately. Earlier this year, Zenefits laid off 45 percent of its workforce, shortly after bringing on board Jay Fulcher as its third CEO. Before all of that happened, Zenefits was fined $7 million for multiple license violations in California and was ordered to stop offering its software for free in the state of Washington.
“We are pleased that after the DOL’s review regarding classification of two jobs at Zenefits, there were no penalties, fines or damages,” Zenefits VP of Communications Jessica Hoffman said in a statement to TechCrunch. “Zenefits fully cooperated with the DOL and we are happy to have this issue behind us.”