This content is part of the Essential Guide: The essential guide to managing HR technology trends

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Robo-advisor automates hiring with HR software for small businesses

A fast-growing automated investment provider uses Zenefits for hiring, onboarding and managing benefits and recommends the controversial cloud-based HR software vendor.

Michael Kerins, founder of RobustWealth, a fast-growing "robo-advisor," is greatly relieved to have a cloud-based...

software vendor administer health insurance for his small business.

Zenefits, Kerins said, eliminates the pain of dealing with health insurance companies for administration of the benefit such as answering questions from employees or responding to detailed correspondence from the insurer. Kerins used a licensed broker from Zenefits to select and purchase health insurance. His employees sign up for health insurance through Zenefits and Kerins said he was very happy with the service and selection offered by the vendor of HR software for small businesses.

When employees are onboarded, Zenefits takes them through health benefits they can choose, Kerins said. "I have never seen a health benefit form, ever," he said. "The employees fill it out. If an employee asks a question, I say call Zenefits. "

Zenefits, part of a growing trend of cloud-based vendors that also act as health insurance brokers, dealt with a slew of compliance and regulatory problems last year because its employees in many states sold health insurance without a license, but Kerins said those problems had no effect on his use of the software.

"The product works great for me," said Kerins, a chartered financial analyst whose company, RobustWealth, is among 20,000 small businesses that use Zenefits. "My experience with them has been nothing but exceptional."

Layoffs announced in wake of rules violations

Following investigations by states where employees of Zenefits violated rules by selling or soliciting health insurance without licenses, Zenefits, which provides HR software for small businesses, announced it was laying off almost half its workforce.

Michael Kerins, founder of RobustWealthMichael Kerins

Zenefits, headquartered in San Francisco, has reached resolutions with more than 25 states, according to Kevin Young, senior director of communications at Zenefits.  The vendor was assessed a $3.5 million penalty in its home state of Calif., the most substantial settlement in any state.

Zenefits' announced layoff of 430 employees came several days after the human capital management (HCM) vendor named Jay Fulcher as its new CEO, the third CEO since the company started in 2013. After the layoffs, Zenefits will have about 500 employees.

In an emailed statement, Young wrote that the layoffs were a hard but necessary decision to position Zenefits for long-term growth and that Zenefits has enough cash to fund operations for years to come.

"We do not expect any disruptions in service or support," Young wrote.

Kerins, whose company has 28 employees and is based in Lambertville, N.J., said he has used Zenefits since hiring his first employee more than a year ago. He said it is too early to tell if service will be affected by the layoffs but that he did not notice much change during prior layoffs by Zenefits in June 2016.

Robo-advisor applauds automated HR

In addition to administration of health insurance, RobustWealth, which offers an automated platform for financial advisors, uses Zenefits for hiring, onboarding, payroll software, time and attendance and HR support, Kerins said.

In a phone interview, Kerins said onboarding is ridiculously easy. When he hires a developer, for example, he clicks to add the employee and inserts the name, email address, pay, start date, expiration date for the offer, and type of position and asks a few compliance questions.

He hits send and Zenefits compiles an offer letter, a prepopulated nondisclosure agreement and assignment form. For compliance, Zenefits automatically delivers a code of ethics and employee handbook to new hires, he said.

When employees sign documents and onboard, they do it themselves, including uploading a password, license information and other documentation.

Payroll and administration of health benefits are also seamless and paperless, Kerins said. Employees load their bank account and other information into the payroll software and Zenefits guides them through choosing their health benefits and responds to any questions from an employee.

Kerins, COO of his company, said it is "amazing" to have the Zenefits HR software for small businesses administer his health insurance from Aetna Inc.

"One, customer service is awesome. Two, they have always answered all of my insurance-related questions quickly and if the person can't answer it, they escalate it and they get the answer within 12 to 24 hours."

The tool allows comprehensive benefits administration, meaning it calculates all deductions for health insurance and it can integrate with either Zenefits payroll or other payroll software, Young added.

Zenefits launches new products

Zenefits, a provider of HR software for small businesses, is expanding its services.

It released on Jan. 31 "HR One," a package of new products including Zenefits Compliance Assistant App, Zenefits Documents App, new mobile capabilities and Zenefits Payroll in Florida, California, Texas and Washington. The company now has 27 platform integrations, with more than 50 others in development.

In October, Zenefits released Z2, a platform that allows the vendor's core HR to work with 17 other products, including Zugata performance management, Intuit QuickBooks and Slack.

Kevin Young, senior director of communications at Zenefits, said the vendor has put in a lot of hard work to improve products and service.

Holger Mueller, a vice president and principal analyst at Constellation Research, said Zenefits is becoming more of a general software company. He said there is a lot of room for growth in providing HR and benefits for small to medium-sized businesses.

"Few vendors do all of it successfully. ADP is a long-time player. Gusto is a new one. Zenefits is there and Ceridian and Paychex to a certain point. There is plenty of opportunity. "

Vendor earns money from commissions

Zenefits provides free software in some instances and makes money from commissions from insurers after employees sell health insurance, including to companies that also subscribe to the software.

Zenefits has a large number of licensed insurance brokers and serves as the broker of record for many customers, according to Young. However, customers are not required to make Zenefits their broker in order to use the HR software, Young added.

Regulators in several states cited Zenefits' rapid growth as a reason for its failure to establish proper measures to ensure licenses for people selling or soliciting insurance.

The vendor of HR software for small businesses still has an option for a free subscription, but depending on services, pricing can range from $5, $8 or $12 a month per employee.

Holger Mueller, a vice president and principal analyst at Constellation Research, said Zenefits is a one-stop shop for HR and benefits and solves "a huge headache" for small to medium-sized businesses including providing health insurance and automating compliance, a key preoccupation for HR leaders. He said many customers of Zenefits don't even have dedicated HR.

"It's good software with a good UI and is simple to use," he said.

Mueller said Zenefits has turned itself around with the release of its new platform last year. He said Zenefits has made some good moves, topped by the introduction of payroll software.

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