5 Reasons Why the Zenefits Model Doesn’t Work

By the EBS team

As you may know, last year, Zenefits got knocked with a substantial amount of bad press, causing many business owners and benefits decision makers to second-guess whether or not leaving the traditional broker model was the right solution for their business. Zenefits earned its notoriety from their online platform that acts as a self-service model for employees to manage their benefits and behaves as a seamless onboarding tool – great for small businesses who don’t necessarily have the resources to manage benefits plans in-house or budgets to hire externally to manage these programs.

However, this ‘set it and forget it’ model comes with its set of flaws, which came to light as a byproduct of an increasing media microscope on the Zenefits platform. I hope, in explaining these five key shortcomings of this self-service model, you can be more confident in the questions to ask a potential benefits technology solutions vendor.


1. There is no partnership approach

Looking for a personal touch to your benefits services or a local expert to help you with vendor decisions? Unfortunately, you won’t find a personalized experience here. As a Zenefits customer, expect to be conducting most of the outreach to your account representative yourself, and bear in mind that he may not come armed with tailored recommendations off the bat, throwing your deadlines, and potentially your money, out the window. Opportunities for onsite visits to learn about your business or to relay important insurance plan updates are minimal and often substituted for unfulfilling online resources that leave you needing more information.

2. You’re responsible for dealing with claims issues

When your employees have questions about a claim, Zenefits customer service reps are more equipped to solve issues with their software, not employee benefits. Working with a traditional benefits broker, on the other hand, ensures a designated point of contact whom employees can call upon when they have questions…an expert who can help them navigate complicated claims and unexpected roadblocks with ease.

3. Integrity of data is lost manually

One of the advertised advantages of Zenefits is that they handle the transfer of personal employee and plan data to providers internally. When Zenefits sends that data, the assumption is that it’s an automated process when, in actuality, it’s manual. As the brand continued to grow, it had to onboard more clients faster, opening up a larger opportunity for human error and essentially deeming their manual transfer process unsafe…one of the many reasons for Zenefits’ public predicament.

4. Zenefits doesn’t carry all proper data certifications


Zenefits isn’t SSAE 16 or SOC certified as a service provider, so you can’t be confident that they have implemented the required operational controls and safeguards for their data centers to protect client data. Why is this certification important to your business? SSAE 16 and SOC service providers can recognize and pinpoint security failures and weaknesses in internal control. If these issues are identified during the examination, Zenefits could then improve their controls by repairing any identified issues. Without this, you run the risk of inefficiencies that have a negative effect on your business.

5. Like the model, the software also has limitations

I’ve primarily discussed how the model itself has a less-than-ideal framework when it comes to (cost) efficiencies to your business, but what about the actual software? Jenny Clark, SPHR and Director of People at THX Ltd. recently wrote in a Medium article, “There isn’t the ability to provide a contingent/secondary beneficiary for life insurance, which frankly is a life insurance basic. When I specifically asked [Zenefits] about the lack of functionality, I was informed, again, to have the employee handle it by reaching out to the carrier.” This example makes my case come full circle (see reason #1): Jenny’s story is a roadblock countless others have experienced, requiring more of your time and more effort to ensure employees are getting everything they need from their benefits program.

Sure, Zenefits is a viable platform for businesses who embrace an employee self-service model and want to streamline the administrative burdens that come with the onboarding process, but you have to be willing and equipped to handle these not-so-hot qualities outlined above.

My intention to highlight the many shortcomings of a platform like Zenefits is not a plug for traditional benefits brokers like us (besides, we’re anything but traditional!), but to empower and inspire you to arm yourself with the right information and the right questions to ask so that you can continue to adopt the best resources, tools and technologies for your organization. I hope you found this article useful!

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