HB141: Legalizing Zenefits in Utah

This bill passed the House 61-4 and passed the Senate unanimously. It was subsequently signed into law by Governor Herbert.

Libertas Institute supports this bill.

In late 2014, the Utah Insurance Department attempted to shut down operations of Zenefits, an online human resources startup company. This service offers free access to human resources and benefits management software to small businesses; Zenefits earns money when their client businesses choose insurance benefits for their employees through Zenefits as a broker. However, not all clients use them as an insurance broker—and their software is still free to use for all.

The Utah Insurance Department’s “Market Conduct Division” recently ruled that the free software is a “rebate” and violates state statute governing the sale of insurance. The company argued that the division was misapplying the statute, and that their operations are legal under Utah law. In response to the controversy created by the public outcry over this government threat, Governor Gary Herbert issued a statement saying that he was “willing to work with all stakeholders to ensure Utah has the right policy to embrace innovative ideas while protecting consumers.”

To that end, Representative John Knotwell has authored House Bill 141, which makes explicitly clear that free goods or services (such as those offered by Zenefits) may be provided “for free or for less than fair market value” if they “are offered on the same terms to the general public” and that their receipt is not contingent upon receiving an insurance quote or purchasing an insurance product.