(Bloomberg) — Zenefits announced it will cut 45 percent of its workforce as new Chief Executive Officer Jay Fulcher reduces costs in the wake of regulatory scrutiny and management shakeups that collapsed the company’s expansion plans.
The 430 job cuts announced Thursday are the third round of staff reductions for the human resources software maker in the past year amid investigations that found some employees used software to skirt training requirements and sold health insurance without the necessary licenses. Zenefits agreed in November to pay as much as $7 million to the state of California over licensing violations. Thursday’s staff cuts are companywide and affect all departments, Zenefits said. The job reductions were reported earlier by BuzzFeed.
The closely held San Francisco-based company hired too many employees in 2015 to sustain its revenue projections, Fulcher said in a memo to the staff. “Today’s action aligns our costs more closely to our business realities and gives us the runway we need to build the business properly for the long term.”
Fulcher was named Friday as CEO and chairman of the board, taking over for David Sacks, who said in November that he would leave.
Sacks replaced CEO Parker Conrad in February 2016 as the company struggled with pressure from regulators and investors who forced Zenefits to cut its valuation after failing to meet revenue goals.