Zenefits’ Free Software Comes with a Price

Zenefits’ Free Software Comes with a Price

Washington State has been busy. Last week, we blogged about its State Supreme Court ruling that attorney-client privilege no longer applied to communication with former employees. We kick off this week with news that the state’s insurance regulator found a human resources platform company could no longer offer its software for free.

Per the The Wall Street Journal, Zenefits offers small businesses the use of its human resources software for free in exchange for then collecting commissions when those same companies use Zenefits to sign up for health benefits. The Washington Insurance Commissioner Mike Kreidler has ruled that this practice qualifies as an inducement, and that Zenefits has to start charging for some of its software features.

Zenefits said the commissioner’s use of a consumer protection statute will raise prices for Washington consumers and is counterintuitive. The company will start charging $5 a month for each employee who signs up to use the software.

Per the report, while other states have anti-rebating laws in place to prevent the inducement practice, Washington is the first state to force a company to start charging for its software. There is a possibility, therefore, that other states could follow Washington’s lead.


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