Zenefits Software Helped Brokers Cheat On Licensing Process

http://www.buzzfeed.com/williamalden/zenefits-program-let-insurance-brokers-fake-training

by LukeB_UK • 10 years ago

296 156 10 years ago

The mandatory 52 hours spent logged into the course requirement hearkens back to this recent discussion on occupational licensing: https://news.ycombinator.com/item?id=11054527

taurath• 10 years ago

Its the same kind of restriction that would tie programmer pay to lines of code written.

I understand it though to some extent - its more of a "cheating prevention" program, but I'll bet a very very very high percentage of test takers would find it a very large waste of time.

maxerickson3• 10 years ago

However arbitrary or dumb it might be, it's still a rather low bar.

edit: which I think might not sound how I intend it. I meant to get at it not requiring a great deal of investment of time or other resources to become an insurance broker.

lmm3• 10 years ago

It shows a real lack of faith in the exam, I think. If the exam is testing the requirements of being an insurance broker correctly, why have an "x hours of training" requirement as well?

jasode• 10 years ago

Another source[1] had more info about "The Macro":

Many of our California sales representatives received access to a software tool called a “Macro” that may have allowed them to complete mandatory online pre-licensing education courses offered by a third-party test preparation provider in less than the legally required 52 total hours. The Macro functioned to keep a person logged into the course and prevented the person from being logged out for inactivity. The Macro did not advance through the required material or quizzes in the education course -- the Macro only kept the person logged in. The Macro only pertained to the prelicensing education course and did not affect the broker exam taken later. Use of the Macro enabled -- but did not cause -- a person to spend less than the 52 hours of required time in the prelicensing course.

Ok, I have no judgement about the morals of this but I think the "hacker" mentality is hilarious.

I was at a Fortune 100 company that had an obligatory "security training" webcast that you had to watch and then at the end, answer some test questions. This was required to get a door badge and network id. Well, one programmer simply wrote a script to "watch" the video and automatically answer the questions. The manager knew we all used it and condoned it because the security video was out-of-date and irrelevant.

I can see someone at Zenefits using that mentality and justifying it because skipping the training material gave them no benefit to passing the actual exam.

[1]http://www.businessinsider.com/zenefits-using-secret-fake-tr...

zekevermillion• 10 years ago

Love the passive voice "may have received access to" -- OK, who gave them access I wonder?

I would normally applaud the hacker mentality of using a computer to automate stupid or repetitive tasks, as long as any dishonesty is limited to a white lie. Like the obligatory security training video watching. But running a compliance company that doesn't comply seems more fundamentally problematic.

semi-extrinsic• 10 years ago

There is a bit of fun to be poked at startups/the hacker mentality in this case, sure.

But what's appears to be a refreshing break from what happens when big corporations are caught red-handed, is that the leaders responsible have been fired/disciplined, while the employees on the floor have been told they will not be punished (though they will be if such things happen again).

At least that's what I understand from the email reproduced in the BuzzFeed article linked in another comment.

calbear812• 10 years ago

The "hacker" and "hustler" mentality is also largely driven by expectations of growth when you take $500M in a Series C. When you have that much riding on a company you've built and you have been told to hustle, then you're going to do whatever it takes even if that means breaking the law.

alexqgb• 10 years ago

Well, you might. And perhaps that's the difference between you and people who realize that going to jail is considerably worse than going out of business.

w1ntermute• 10 years ago

Amusingly, YC's new publication is also called The Macro[0]. Perhaps there'll be an article in The Macro about "The Macro."

0: http://www.themacro.com/

BallinBige• 10 years ago

i read somewhere that it may have been iMacro - the chrome plugin

http://imacros.net/browser/cr/welcome

dragonwriter2• 10 years ago

The article directly references one of the steps taken by management once this became an issue being a company wide ban on all use of "iMacros" -- not just "the Macro", so that's probably the case.

rfrank• 10 years ago

Blurring the lines between hacker and hack.

jacquesm• 10 years ago

Sounds to me like the real problem was in the test. If someone can get by without actually absorbing the material then they should be given the pass, if they can't then it's a different story. Of course as soon as the program starts answering test questions or something like that it is a different matter but to spend less time than required and still pass means that either the test is inadequate or the course is needlessly fluffy.

spacehome• 10 years ago

Or there's a wide spectrum in people's ability to learn.

The real issue is that there is a designated time at all rather than just a test.

randomdrake• 10 years ago

This source appears to accidentally leak what "The Macro" really is. If you notice, in the email that was sent, it's once referred to as "iMacros":

We have disabled the use of iMacros on the Zenefits network or on Zenefits-issued devices.

A Google for iMacros reveals software that does pretty much precisely what is described:

http://imacros.net/overview

minimaxir2• 10 years ago

The BuzzFeed Article on Sacks' memo was written/submitted first and is more comprehensive: https://news.ycombinator.com/item?id=11083597

brown9-22• 10 years ago

HN seems to have what amounts to a systematic ban on buzzfeed, even though their news org helped break this story (and many others).

maxerickson3• 10 years ago

There are several highly voted and discussed Buzzfeed articles in just the last couple days:

https://hn.algolia.com/?query=buzzfeed&sort=byDate&prefix&pa...

The previous increment of the Zenefits saga was one of them.

I guess given that many of their articles aren't real topical here there is probably a penalty for the site, but it doesn't stop everything.

mortenjorck• 10 years ago

Buzzfeed's curious chimaera of its trademark virally-targeted fluff content and a burgeoning hard news organization probably merits at least some kind of reconsideration of the penalty applied to submissions on HN.

It would be nice if Buzzfeed had something like a separate subdomain for its non-trivial content, but I'm not aware of any such thing that would enable automated differentiation.

dang4• 10 years ago

Of course we don't: https://news.ycombinator.com/from?site=buzzfeed.com. Two of the biggest HN stories from the past two days alone were from Buzzfeed: https://news.ycombinator.com/item?id=11075336, https://news.ycombinator.com/item?id=11061992. Usually the complaint I hear is "why is Buzzfeed on HN".

Buzzfeed is one of a class of sites that produce a lot of dreck as well as the occasional high-quality article. There are many such sites, mostly media outlets. HN's solution is to penalize them (a little) by default, but take the penalty off under different circumstances, such as if a moderator sees than an article is good or the submitter has a solid track record.

This has proven to be a reasonable compromise. The alternatives—not penalizing these sites at all or banning them altogether—are a lot more problematic, which is how we arrived at this strategy in the first place.

jefftchan• 10 years ago

https://www.ycombinator.com/ethics/

Some examples of ethical behavior we expect from founders are:
...
- Not using misleading, illegal or dishonest sales tactics.
...

Does this mean Parker is no longer a YC Founder, if the allegations turn out to be true?

Implicated• 10 years ago

I have a feeling it doesn't exactly work that way... How would someone be un-YC'd?

calbear812• 10 years ago

Meaning, ex-communicated from the YC network. Not be invited back to YC as a mentor, no demo day invites, etc.

iaw• 10 years ago

I don't think any of their sales tactics fell under "misleading, illegal, or dishonest." It was their California pre-certification practices that was blatantly illegal.

jsprogrammer• 10 years ago

Wouldn't they have represented that their employees were properly certified for the business they were engaging in?

ceejayoz• 10 years ago

Well, that still falls under the "Not behaving in a way that damages the reputation of his/her company or of YC" and "Generally behaving in a professional and upstanding way" rules listed on that page.

FireBeyond2• 10 years ago

"Our brokers were not properly trained and licensed by the state for the products we were selling" certainly sounds sales related to me.

jorgecurio• 10 years ago

Alls well in the Good Ol' Country Club

j_s• 10 years ago

Ask the founder of Airbnb... guessing the answer is still no.

Analemma_• 10 years ago

I guess this is a useful lesson to any would-be founders who want to make a business out of breaking the law: make sure you don't break laws higher than those on the municipal level. The difference between Uber and Zenefits/Theranos is that cities have limited resources and angry citizens can convince them to back down (and if you lose, hey, just ignore that city and try somewhere else), whereas state and Federal agencies can nuke you at any time and don't really have to worry about the vox populi.

nostrademons2• 10 years ago

It reminds me a bit of the Ben Horowitz essay "Why I did not go to jail"

http://www.bhorowitz.com/why_i_did_not_go_to_jail

In general, laws are not something you want to fuck around with as a startup. You can break proprieties, you can do things that will piss certain people off (you're almost guaranteed to piss off your competitors if you're doing anything interesting, for example), and typical business ethics assumes that everybody is looking out for their own interests and can advocate for themselves. But when someone has explicitly said where the boundaries are - and particularly if that "someone" is a government - it's good to respect those.

x0x02• 10 years ago

because I remembered reading it, there's a wee bit more to the story than Ben shares. It took a while to find it since Bloomberg reorganized their site [1] but here you go [2].

tl;dr: what Sharlene really went to jail for was more than shifting grant dates around (some by more than 60 days, which is more than a month last time I checked.) She appears to have changed grant and exercise dates both to increase income and to shift exercise income to long term capital gains, and then mislead auditors about these practices. Specifically, she want to jail for listing a false exercise date on her income tax return.

The point is, according to the reporter, what she went to jail for was more clear-cut than Ben is claiming.

[1] http://go.bloomberg.com/market-now/2014/02/12/dont-worry-ben...

[2] https://web.archive.org/web/20140309175428/http://go.bloombe...

dragonwriter2• 10 years ago

The difference between Uber and Zenefits/Theranos is that cities have limited resources and angry citizens can convince them to back down (and if you lose, hey, just ignore that city and try somewhere else), whereas state and Federal agencies can nuke you at any time and don't really have to worry about the vox populi.

Aren't a substantial share of Uber's legal issues state-level employer vs. contractor issues (which also potentially have federal counterparts)? So I'm not sure they are a good example of a company restricting its testing of legal boundaries to the municipal level.

I think the difference between potential (and likely) costs and consequences is far more complicated that simply the level of government involved.

SilasX• 10 years ago

The employee/contractor thing probably gets a lot less attention than the legal status of call-a-ride services and whether they need a medallion and the additional hurdles taxis meet, given that they don't pick up randos off the street.

pinewurst3• 10 years ago

Not to defend Zenefits conduct here, but I'd hardly compare them to Theranos. Not passing broker certifications doesn't mean the insurance policies were invalid. It's not giving people bogus test results based on claimed Area 51 black turtleneck technology.

thinkmoore• 10 years ago

How about just not breaking laws anyway?

fixermark3• 10 years ago

Most people aren't even aware of the number of laws they've broken in a year.

tyre11• 10 years ago

I used to work at Gusto (ZenPayroll back in my day) and dealing with Zenefits was always a pain for this reason.

They were the consummate hackers, using screen scraping and automation to do whatever the hell they wanted. One nightmare example was when a bug in their "automated" system rewrote bank account information for tons of employees to just be the last 4 digits of their account number. Such a mess.

Even if this weren't a tightly regulated industry, you're dealing with how people are paid and covered for health conditions.

We didn't hire hackers[1] because that attitude just doesn't fit for certain classes of problems.

Hats off to the investigative journalism by BuzzFeed, uncovering some frightening immaturity pervasive in Valley companies.

[1] I authored this post about our hiring at the time: https://gusto.com/blog/zenpayroll-is-not-hiring-hackers/

mixmastamyk2• 10 years ago

uncovering some frightening immaturity pervasive in Valley companies.

This is one of the dark sides to having an entire engineering team in the 25-30 age range. They can sling http just fine, but sometimes don't fully grasp the consequences of their work.

tyre11• 10 years ago

I was 22 when I started and cared very deeply about the consequences of what I was doing.

It's more about heavily interviewing for alignment with your mission. If people care deeply about the problem you're solving — not just the technical problem, the people problem — then you're far less likely to have these issues.

I interviewed dozens if not hundreds of people at ZP and there were two red flags for engineers:

1) They only care about the technical problems. In this case, they're likely to make decisions more aligned with "that's interesting" than "that helps our customers"

2) Once we raised our Series A, we had a lot of applicants wanting to join a rocket ship. I literally heard that in an interview with a Facebook engineer who found us by "googling startups with 9 figure valuations." If you care about growth at all costs, you're going to cut corners and fuck over your customer.

Mission matters. Values matter. Interview for them.

exw2• 10 years ago

While there may or may not be a darker side to having an entire engineering team in the 25-30 age range, according to the reporter that wrote the article, this hacking came straight from the CEO, who also set the tone for this type of behavior:

https://twitter.com/williamalden/status/697898496314077185

<<I’m told that Conrad created this program based on a belief that 52 hours was too long to spend in training>>

slavik81• 10 years ago

I started my career working on software where serious bugs could get people killed. You do need experienced mentors, but they certainly could be under thirty.

You don't have to be old to build things safely. You just have to care.

GauntletWizard• 10 years ago

The guy on my team who's a 'hacker' is in his mid 30s. Some people just never grow up. I'm 27, and I'm the guy always arguing with my near-40 boss about trying to do things the right way, not the way that's easiest today. Age is probably the generalization to make, but cargo-cult mentality isn't in any way limited to then young.

fancy_pantser2• 10 years ago

I bailed mentally at an interview with a YC startup in SF because, as part of the technical portion, they had me write a scraper to pull information from searches on other sites. This was against each site's legal/usage terms (and so was defeating the basic obstacles the companies put in the way of being scraped in bulk). When I asked about their business model they revealed that they were making money by doing exactly this and had zero intention of changing that or partnering with the other sites to legally obtain the data.

Their recent series A made them so cavalier; they landed money to do this, so of course it was right. It would eat into profits if they negotiated contracts to do it aboveboard.

bishnu• 10 years ago

I'm not sure how age-related this is.

The Valley has started to equate "disruption" with breaking the law. This is its natural consequence.

SteveGerencser• 10 years ago

I wish it was just the 20 something programmer that did this. I know more than a few 40 somethings that never evolved out of the good enough phase of development. They can't even be bothered to test their own code before hitting submit. Everything is just a small bug that can be easily fixed later.

vasilipupkin• 10 years ago

I am not sure 25-30 year old engineers are the problem. The problem is management and leadership

ShaneWilton• 10 years ago

That blog post is one of the best advertisements I've ever seen for a tech company. If I weren't happy where I am, I'd apply for a position immediately.

I get that moving fast and breaking things works for some products, but I wish more companies had the same attitude as you.

tyre11• 10 years ago

Glad you liked it! I'm now building software for local government and we've naturally taken that ethos to our new company.

If you are ever looking for another opportunity, check us out http://seneca.systems

nradov• 10 years ago

Ironically, Facebook which popularized the saying "move fast and break things" is actually more reliable now than many slower-moving systems.

http://mashable.com/2014/04/30/facebooks-new-mantra-move-fas...

gkoberger• 10 years ago

Without knowing much about the situation... how much was this necessary? The industries Zenefits are working with aren't exactly tech-friendly, and I just always assumed Zenefits was doing some gross things on the backend in order to make things easier for the user.

(This doesn't excuse bad testing or bad code, but it's not like the insurance industry has well-documented public APIs for Zenefits to use)

tyre11• 10 years ago

ZenPayroll has an extensive API (I built it.) They did it because they wanted to.

http://docs.zenpayroll.com/

selvan• 10 years ago

Issue you are talking here seems to be about pushing software with a critical bug (a logical mistake by the developer). This issue looks to me as a test scenario that wasn't covered before. I guess these kind of issue could happen at anywhere else too, irrespective of their working (hacking) culture.

tyre11• 10 years ago

My problem isn't the bug. Bugs happen. It's that a developer thought that screen scraping a payroll system and setting up a recurring job to overwrite all bank account information in the middle of the night was a good idea.

If you care about security and stability, that should have set off major alarms.

Scraping data and pushing to internal APIs in another product have no spec, so any tests you write are either wrong or not wrong yet.

maxcan• 10 years ago

In this one particular instance, good for them and its a shame that they got caught. I've had to watch quite a few of these "unskippable" videos for various government mandated trainings and there are a complete waste of time so that some bureaucrat can check a box and some company's lawyers can mitigate some liability. They don't educate the captive viewers and they don't protect consumers.

Lets see how any customers were actually harmed by this.

uptown4• 10 years ago

Yes, it should absolutely be up to the individual to decide whether they've met the legal requirements for their job. I hope my surgeons self-certify that they're ready to operate, and the technician that repairs the airline I'm flying on should have the last word on whether he's qualified to start tinkering with the ailerons!

scarmig• 10 years ago

The spirit behind the hatred of the "you must stare at this screen for 52 hours" type requirements isn't that anyone should be able to do anything they want, but that it's a stupid requirement. Acknowledging the existence of a stupid requirement doesn't at all require thinking that all requirements are stupid.

That said, I'd never want to do business with a company that thought it could choose to ignore certain requirements, and deceive regulators about their fulfillment of them, even if they're stupid requirements.

unethical_ban• 10 years ago

If, after 8 years of med school, your surgeon had to sit through a 2 hour video made 15 years ago about "The importance of surgery" and "where to keep the scalpels", he's probably be a bit frustrated.

uiri• 10 years ago

There is a requirement that someone spend 52 hours in a pre-licensing course. There is a separate requirement that someone pass a broker exam.

If it is possible for someone to do the latter without the former, what purpose does forcing them to do the former serve? Some people will need 100 hours of preparation for the exam and some will need 10. Forcing the latter group to spend an additional 42 hours in prep simply wastes their time.

thwarted• 10 years ago

There are a few tasks/requirements at issue here, 1) the legal requirement that the individuals be sufficiently trained, which then requires 2) the legal requirement that training be provided. If the individual in (1) is "phoning it in" by avoiding watching the provided video, it could also be that the individuals who are providing the training are "phoning it in" by considering a video to be sufficiently fulfilling the requirement for providing training.

As is the case with a lot of these kinds of things, one ends up without any value after taking the training compared to where they were before taking the training. If this is the case, the training is meaningless. The only way to asses the value of the training is through some kind of testing as part of or after the training occurs. This is like requiring attendance of driving school for traffic violations. It is very rarely the case that anyone in driving school actually didn't know the law, but rather they were skirting it and ended up getting caught. They are only in driving school to satisfy the requirements of getting the limits on their driving lifted (being licensed or being able to get cheaper insurance). The driving school ends up being a burden because it takes time, and doesn't necessarily end up making anyone a better driver (although, you could use the lack of further infractions as the metric that the training was successful, but there's a lot of other influences here).

If both the trainer and the trainee are phoning it in, does it matter? If the trainer is phoning it in, is the trainee really doing anything worse by also phoning it in? If the trainer fails at their job because they are providing pomp and circumstance, we end up at the same place we were without doing any training at all, even if the trainees do make a concerted effort to be trained. That is, the trainee could bust their butt watching this video, but in the end, no one has actually been trained.

This isn't meant to get the trainees off the hook for phoning it in, but let's call a rose an rose and acknowledge that there might not actually be much value in 52 hours of video watching.

rayiner3• 10 years ago

The value of training videos is on the back end. Whenever shit goes wrong, peoples' first reaction is to plead ignorance. "Oh I didn't know that, I wasn't told that." These sorts of things eliminate that excuse in a way that leaves a paper trail, making it easier to hold someone accountable if they do fuck up. It's not about making sure they know all of these things that are mostly obvious, it's about ensuring you can fire them, sue them, or defend yourself in a lawsuit if someone sues you, by eliminating their plausible deniability.

harryh3• 10 years ago

That makes sense. But then what exactly happens when this hypothetical conversation happens:

- Hi insurance broker man. You did't follow regulation X when you did Y.

- Oh, I didn't know that, I wasn't told that.

- Oh really? It was right in that mandatory training program you took. See here on screen #7?

- Oh that dumb thing? Most people at my company just ran this script to get through the damn thing. I wasn't paying attention.

What happens then?

NDizzle2• 10 years ago

Can someone give me a good explanation of how the COO wasn't responsible for this kind of stuff? It's mind boggling to me how hard Sacks is throwing Conrad under the bus, despite possibly being just as guilty.

I mean, I get it - power plays and all. But aren't they both responsible?

exw2• 10 years ago

According to the article, Sacks discovered the issue in January, and then forced the company to report it to the California regulator - if you believe that sequence of events, he can't really be held accountable for the action of Conrad.

Let's say you are an engineer, take a new role at a company to work on their database, and then discover that one or your managers has stolen money, do you think you should be held accountable, assuming that you report the issue immediately when you discover it?

timv• 10 years ago

You're questioning the reality, when all of this is about perception.

The board needed to hold someone responsible for this mess in order to satisfy the regulators that they're taking the problem seriously, and things are different now.

Effectively, the message they want to send is that the adults are in charge now.

There was no way Conrad could stay. Even if they could somehow hide any evidence that he knew about the violations (and they probably couldn't), it's very clear from his public statements that he had built the fast and loose culture the had allowed and sustained the problems. He had to go and the message needed to be that the company has no place for him anymore. He's not stepping into a reduced role, he doesn't have a board seat, it's over, he's dead to us.

Sacks has a different record. He wasn't there from the beginning, he hasn't been the public face of the "ready, fire, aim" culture, there's plausible deniability. And he has credentials to justify his position - Yammer, Microsoft, PayPal - he can be painted as a safe pair of hands.

And, since he's been the COO for a year, he can step straight in an take over without needing a handover period from Conrad.

The board need Sacks to stay on and be the new face of Zenefits. And they've decided that the regulator investigations are not going to find damning evidence against him. Maybe because he had no idea. Maybe because he was smart enough not to leave any evidence. Maybe because there's a paper trail of him reporting the issues up the chain in way that makes him look like the good guy.

You're asking the question "How can a COO not know about all this stuff, and not have had some responsibility over it?" and that's a good and fair question - the regulators will ask it too. I take it the board will be able to provide a plausible answer to that question when the regulators come knocking.

But that's not really the #1 question that the board's worried about. They want to know "who has the best chance of saving this company?" And what Sacks provides is:

- Plausible deniability

- Credibility in the market

- Credibility with the regulators

- Knows the business

- Can do the job

- Ready to start now

There's no one else with those credentials, so Sacks needs to take the job.

Once that's decided it's a matter of execution - almost literally. If Sacks is going to save Zenefits then he needs to look innocent, and blame Conrad for everything. That might actually be true, but that's actually not the key question for the board. They just need something that they can sell to the market and regulators.

NDizzle2• 10 years ago

Thanks for taking the time to write that up. It makes sense from that perspective.

xkeemy• 10 years ago

Not to say Sacks shouldn't be responsible but, to my understanding, all of these issues being reported on are coming out of the sales org (which is what Parker primarily focused on) where as Sacks primary focus as COO was on post sales customer success (product, ops, support, etc.)

run4yourlives23• 10 years ago

Let's just forget about the entire ethical argument around breaking an existing policy/legal condition of doing business, as important as that is wrt health insurance.

Who in their right mind thinks taking the time to design, then publish, a way to defeat a relatively straightforward education requirement is in any way a worthwhile thing to do? There is a level of ego there that goes beyond rational decision making: you aren't cheating the system for an advantage; you're cheating just because you can, because it makes you feel better than others. That's some borderline psychopathic behaviour really.

Did Zenefits employees really gain anything from not having to complete the required 52 hours? Was it really that big of an ordeal? Or was this a matter of just being smug about 'not needing' to do some very basic requirement they felt was beneath them? There is an element of hubris there that is unbecoming in and of itself.

These are (very minimal, really) licencing requirements. There is a minimal amount of effort that an employee should be expected to put in to do their job legally. The assumption is that exposure through time to the subject matter will increase knowledge. That may not be true in every situation, but it likely is in a majority; the rule exists. The exposure generated from choosing to "fight this battle" and losing is miles greater than any particular payoff achieved in victory. That alone indicates to me that the person in charge has a poor grasp of weighing risks/rewards, regardless of personal ethics.

Some things just aren't worth fighting because the risks in losing are so disproportional to any net gain from winning. This is a perfect example. A good CEO needs to know how to pick and choose the hills to fight on.

Lesson learned here: Not every component of your business needs to be disrupted. Some things aren't worth disrupting at all, really.

stordoff• 10 years ago

Did Zenefits employees really gain anything from not having to complete the required 52 hours? Was it really that big of an ordeal?

That was my first thought as well. I can see the appeal in streamlining (what at first glance seems like) an arbitrary process if the final exam is passed legitimately, but a one-time commitment of 52 hours at the start of employment (a good chunk of which you'd probably need to do anyway for the exam) barely seems worth bothering with. As you say, the risks are disproportionate - it certainly makes me wonder what other corners are being cut.

run4yourlives23• 10 years ago

Well, based on what I read elsewhere it seems like they didn't think licencing was that big of a deal at all really, which is an even larger demonstration of hubris than this.

I do feel bad for their employees who may end up being blacklisted from insurance period for practicing without a licence.

lmm3• 10 years ago

It could easily have been a bottom-up effort - someone got tired of watching the videos, wrote the macro (doesn't require a lot of programming expertise), passed it around to their friends who also used it, passed it up to their manager and eventually it became widespread.

Have you ever had to watch 52 hours of mandatory training videos? I think that could easily be more unpleasant than 104 hours of hard labour.

run4yourlives23• 10 years ago

Reports are saying the CEO actually wrote the actual macro though.

dang4• 10 years ago

We changed the URL from http://techcrunch.com/2016/02/11/zenefits-under-investigatio.... That article points to an earlier Buzzfeed story (http://www.buzzfeed.com/williamalden/zenefits-under-investig...), but since this one appears to be the current canonical source, we'll use it instead.

uptown4• 10 years ago

Just curious - since you switched the URL, why did you credit this version instead of the one I submitted about an hour earlier? My submission was even referenced in a thread you'd replied to.

dang4• 10 years ago

I'm afraid I don't understand the question. What do you mean by "credit this version"?

1stbubblevet• 10 years ago

I think the focus on "TheMacro" is a bit overblown. "TheMacro" sounds sinister, but AFAICS it just keeps a web session from expiring. Depending on Session timeout length, the 52 hour requirement can still be gamed by having multiple browser windows open.

trevmckendrick• 10 years ago

This is being way overblown IMO.

If you've worked at a big, regulated company, you know there are tons of trainings that you have to do.

Often said training provide little to no value, other than covering the ass (CYA'ing) of the employer.

But what's worse: these programs will sometimes log you out if you're not paying 100% attention.

Everyone I knew working at our Big 4 accounting firm would do our real work while these "training" videos played in the background.

Some engineer likely thought s/he was helping everyone out. And rightly so...their time was likely much better spent in other places given their incredible growth.

i_too_cheat• 10 years ago

There is a bit of a difference between the training videos the big co's force you to watch and the training required to get certified by the state to do business in a highly regulated industry.

I too created "macros" for the insufferable training they put you through, but it was for training videos on the "new" HTML4 standard and about the "new" invention ajax requests -- all while I was working on a team using angularjs every day.

brown9-22• 10 years ago

You are mistaking annual compliance training for things like "don't insider trade" for training on how to do the job legally to gain entrance into the profession.

giarc• 10 years ago

There's a huge difference between this happening and the CEO actively building the work around. When the CEO demonstrates this behaviour is appropriate, the whole company adopts this culture of "what laws?!".

That was how executives discovered the macro, which Conrad had created based on a belief that 52 hours was too long to spend in training, the lawyer for Sacks said.

phonon• 10 years ago

LIC-EN-SING

This isn't some perfunctory blah-blah training.

Unlike professions where you are expected to get a post-college degree and pass a multi-day difficult test given once or twice a year, all you need to become a health insurance broker is take some classes (in person or online) for a few hours, pass a test (which you can retake as often as you like) and pay ~$100. That's it!

Zenefits is large enough they could actually not treat licensing as a nuisance (gotta SELL SELL SELL) but could have had a full time in-person instructor give a week+long onboarding/training/prelicensing class for every new sales-person. You know, so that people who are expected to be explaining the intricacies of health care laws and pro and cons of $100,000+ yearly group policies might actually know a little of what they are talking about.

How many of those accountants didn't study ACCOUNTING for at least 52 hours?

lmm3• 10 years ago

What on earth does spending x hours on something prove? If someone spent their 52 hours zoned out while the video played, just aware enough to click the "I'm still watching" button that shows up every 5 minutes or whatever, how would that make them any more qualified than the macro?

It sounds like the real problem is that the test is grossly inadequate. The regulations should specify a test that's stringent enough. Specifying x hours of training isn't helping anyone.

batmansmk• 10 years ago

I moved in USA recently, so maybe can help me understanding the impact of this beyond not respecting the law. What value this license provides to american workers? Do the healthcare system get better with the help of trained brokers? Thanks!

dininglogistics• 10 years ago

Yeah it does, especially now in the USA because new healthcare laws don't allow insurance companies to refuse coverage to consumers for any reason. If you have medical issues, or your spouse does, or your kids do, a licensed knowledgeable health insurance professional will take the time to help you select a plan that will actually be beneficial for you and your family.

Zenefits was hiring people who worked at the Yellow Pages and Yelp, previously selling advertising, and was turning them into "insurance brokers". Apparently in very short order.

Healthcare is complicated, and assuming that it could be treated in such a careless and reckless manner, or that 52 hours of training is a waste of time, it is beyond irresponsible, it shows an incredible lack of respect for the companies that Zenefits is supposed to serve, people who are relying on them for advice on the most important benefit employers provide, and finally their families. It's shocking and sad that Parker, someone who survived cancer, would be careless with peoples lives.

If Zenefits ended up being the "hub" that millions of consumers within the USA had to rely upon, there would be a lot of people hurt by that.

There are lots of companies who not only struggled to get coverage for their employees via Zenefits, but some didn't end up getting coverage through them at all. I have heard direct from CEO's of some small but successful companies who very much wanted to support Zenefits, that they gave up on working with them after exhaustive efforts to get coverage that in some cases went on for as long as seven months. Not providing coverage for your employees for seven months, that's disgraceful. I can not imagine how the CEO's of these companies felt.

Parker had to go, as should Sam Blonde, his right hand. Parker just cared about scaling the business, at any cost, he didn't care about the collateral damage.

merkle_tree• 10 years ago

All I can say is way to go! Buzzfeed journalist. Literally nothing positive came out of this for anyone. It sounds like all of the brokers were capable of completing the training material in under 52 hours. Now this is getting blown up #bureaucracy

ryporter• 10 years ago

How is Sacks able to assert moral authority when he was the COO working side by side with Conrad? Are there any Zenefits employees here who can tell us what the internal opinion is of the two?

free2rhyme2143• 10 years ago

I think Parker is really, really smart. If you hear him talk he sounds like he's somewhere on the intelligence level of Patrick Collison. It's too bad he tried to shortcut a regulated industry but I'm curious what his next ambitions are.

leroy_masochist2• 10 years ago

I wonder if this incident and others such as the recent Homejoy / Flymaids kerfuffle have caused PG to rethink whether he's still looking for "naughtiness" in founders [0].

That's not meant passive-aggressively. I completely get why naughtiness might be indicative of a propensity toward innovation -- it's a pretty straightforward and intuitive concept. I'm just wondering whether PG still puts as much faith in the heuristic as he used to.

[0] http://www.paulgraham.com/founders.html

username2232• 10 years ago

I doubt it. "Naughtiness" is creativity combined with a lack of conscience, which is a good way to make a quick buck. Regulatory arbitrage or capture, exploiting known cognitive biases, and creating subtle information asymmetry should all feature prominently in "YC 1[6-9]."

leroy_masochist2• 10 years ago

If we're trying to define the better side of naughtiness, I'd substitute "an irreverent and inquisitive attitude" for "a lack of conscience" in your definition above.

wiseleo• 10 years ago

I took pre-license training while developing some software for insurance brokers to better understand their industry.

There is not enough material there to spend 52 hours studying. You spend 12 hours on code and ethics, 20 hours on life, and 20 hours on medical.

The material is very simple. The hourly requirement is based on the offline classroom, but should be compressed for online learning.

hosh• 10 years ago

Huh, I was wondering why the new CEO had emphasized culture and value on his day 1 letter.

BRValentine• 10 years ago

FWIW my company had a terrible, terrible experience with Zenefits and ditched them after less than a year. Incompetent customer service, crappy software (one problem we had was a result of a corrupted database record, according to one of their reps, that had to be manually corrected by a developer), no one seemed to know what they were doing. As a founder I told their reps multiple times that we were a startup too -- ostensibly their target market -- and that we were willing to work through some problems with them, but they didn't seem to care and frankly just kept fucking up. Once we hit 5 people we switched to TriNet and have gotten great service AND we're saving tons on the insurance side, even accounting for TriNet's monthly per-employee fee.

Generally I avoid rooting for others to fail, but I can't help but feel just a teeny bit of schadenfreude with this recent news. For the last couple years I've been rolling my eyes with each new piece of breathless coverage. The Zenefits people are talking about now sounds a lot more like the one I experienced dealing with.

jasonlaramburu• 10 years ago

This sounds like sponsored content for TriNet :)

ralmidani• 10 years ago

One aspect of this whole debacle that needs to be highlighted more is the culture that allowed Zenefits to behave in shady ways.

The culture I'm referring to is the "give me complex software, and host and maintain it for me, but have someone else pay for it" culture.

Whether it's through intrusive ads, creepy data practices, and/or Zenefits-like shadiness, insisting that software should be paid for by anyone but the people using it is a disaster waiting to happen.

I'm founder of a startup building an application that is free (as in freedom) for small businesses. If future customers want us to support and maintain the software for them, they will need to pay for it the old-fashioned way. Any other arrangement would compromise both our customers' interests, and our company's integrity.

gadders• 10 years ago

Move fast and break things. Laws, mostly.

Zenefits Software Helped Brokers Cheat On Licensing Process

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