Startup Zenefits closes Arizona sales office; lays off 106 employees

PHOENIX — A much-hyped national tech company told employees Tuesday that it will be closing its Arizona sales office, laying off 106 employees in a second round of layoffs in the past 6 months.

According to The Phoenix Business Journal, the company, which provides free human resources software and sells insurance, will be moving any non-sales employees who remain in Arizona from its Scottsdale office to Tempe.

The two rounds of downsizing come after a tumultuous year for the San Francisco-based company.

Co-founder and CEO Parker Conrad left in February after allegations that Zenefits ignored insurance laws and employees were drinking and having sex at the office during work hours.

David Sacks, who took over the CEO position, told employees in a memo obtained by Buzzfeed that he wanted to remake and create a new version of Zenefits, calling it Z2.

Sacks also gave employees the option to voluntarily leave with what he called “The Offer” which was two months of severance pay and four months health coverage.

Employees had until noon Thursday to decide if they want to take the offer.

Any employees who were part of the layoff will receive three months severance pay and six months of health care coverage.

According to a source at the company that spoke with the Business Journal, in the wake of the layoffs some employees also got “a $50 Uber credit to ‘go get drunk at The Lodge,’ a bar near the Tempe offices.”