State probe of Zenefits

Zenefits has been under investigation by the California Department of Insurance since last year, the state agency disclosed, saying the resignation of co- founder and CEO Parker Conrad this week doesn’t resolve compliance issues at the human- resources software startup.

“New technologies and new business models can bring value and convenience to California consumers, but businesses deploying new technologies and new business models must comply with California’s strong consumer protection laws,” Insurance Commissioner Dave Jones said in a statement.

Conrad was replaced on Monday by Zenefits Chief Operating Officer David Sacks, who founded Yammer and was a Microsoft Corp. executive. In a memo online, Sacks cited “inadequate” processes, controls and compliance. The fastgrowing San Francisco startup was valued by investors at $ 4.5 billion last year.

BuzzFeed earlier reported California’s probe of Zenefits. Washington state also has an active investigation into the company. Zenefits declined to comment. Conrad didn’t respond to a request for comment.

In an e- mail to employees obtained by Bloomberg, Sacks said the company had reported “a serious issue” to the California Department of Insurance involving many of its employees in the state. They used software to bypass part of the 52 hours of training required by law. Zenefits fired staff who created or encouraged the use of the tool, Sacks wrote in the e- mail.