Zenefits, the Silicon Valley startup that seeks to disrupt the benefits administration and payroll processing field, announced major layoffs Friday. The announcement comes less than a month after the sudden resignation of its CEO in the midst of a scandal over illegal business practices.
The company is cutting 250 employees, 17 percent of its workforce.
"This reduction enables us to refocus our strategy, rebuild in line with our new company values and grow in a controlled way that will be strategic for our business and beneficial for our customers," CEO David Sacks said in a statement.
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For a company that promises to revolutionize human resource departments, Zenefits has gained a reputation as an HR nightmare. In June, for instance, a company official sent employees an email asking them to stop drinking, smoking, and having sex in the stairwell at company headquarters, lest they be evicted by the building owners.
Former CEO Parker Conrad appears to have resigned after revelations that the company was using unlicensed brokers to sell insurance, in violation of laws in many states.
In his first few weeks on the job, Sacks has sought to tone down the "anything goes" behavior. He has banned alcohol from the office, for instance, and has promised to cooperate with regulators and emphasize the importance of legal compliance.
The company is far from a failure, but it has fallen far short of the ambitious revenue goals that it set last year. While it anticipated generating $100 million in 2015, Sacks announced that it had only hit $60 million by the end of January.
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