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Zenefits launches free payroll software for small businesses (zenefits.com)
187 points by henryl on Nov 16, 2015 | hide | past | favorite | 62 comments

PSA: Go with Gusto (formerly Zenpayroll) instead for payroll. We signed up for both Zenefits and Zenpayroll several months ago. Zenefits was a nightmare. Zenpayroll has been an absolute delight.

They obviously don't offer identical functionality, but they're getting more similar now so this is a comparison of where they overlap.

Customer support: Both Zenefits and Zenpayroll are very responsive, but Zenefits provides significantly less helpful responses, the kind you'd expect from first-level big-corporation support. Zenpayroll is much better on this front.

Software: Zenefits is clearly not a startup driven by product or engineering. It's fine given it's free, but still has tons of rough edges and bugs everywhere (e.g. it's easy to click submit twice all over the site and create duplicate entries.) I know it's better than the incumbents, but Zenpayroll has a far better product and it really shows even in basic usage-- it's kind of amazing this level of quality now exists for payroll.

Health insurance: If you have an extremely simple situation and are a startup in CA, Zenefits is probably fine. We have about a dozen employees based in DC, SF, and NYC. Instead of telling us to go elsewhere, Zenefits spent two months and dozens of hours/email threads/phone calls making slow "progress", telling me information that ended up being inaccurate, omitting critical information, replying to one out of every three questions, saying repeatedly it would get done, and finally telling me they just couldn't do it.

The Zenefits rep could not have been worse-- if he'd been actively hostile or more clearly ignorant, that would have been better since we would have short-circuited sooner. (Yes, I did complain about the rep... they routed me right back to him on the same call.) Afterward, I called Zenpayroll and their rep was super knowledgeable and set expectations clearly. It was night and day. We also tried talking to Zenefits' partner Ubiquity for a 401k, and had a negative experience there as well.

We've now heard many, many versions of our story above. I wish Zenefits all the best since they've made a lot of startup founders' lives easier (including ours, for new hire onboarding), but boy do they have scaling issues... all I'm saying is, if you have the option of both Zenefits and Gusto for a particular service, 100% go with Gusto.

We were among the first 10-15 customers at Zenefits (IIRC), and they were really great when they were small. The problem is that they scaled far faster than they could handle, and we are now happy customers of Gusto.

My only rule with Benefits and Payroll is: do not make me look like an ass in front of my employees. If they don't get paid, or if they lapse in coverage, that makes me look like an ass. They give exactly zero shits about which company failed and where and why; they only know that they lapsed in coverage or didn't get paid. Zenefits screwed that up multiple times, and Gusto has yet to let me down.

That's not to say Zenefits is filled with bad people - I happen to like Parker quite a bit, for example. They just aren't set up to help me win quite yet, whereas Gusto seems to have figured it out.

+1 We left Zenefits about 18 months ago after a series of colossal screwups on their part. I'm both amazed and not surprised that so many other companies continue to have similar difficulties with them.

We spent waaaay too much time dealing with their support team, constantly being shuffled around to different people. At one point we discovered they had left my co-founder's wife off of his policy for 3 months (later acknowledging this was their fault). They're an insurance broker, and they couldn't even sell insurance!

FWIW at the time we were also using Zenpayroll, and had a good experience with them.

We switched over to TriNet for everything mid-2014, which for us was a great choice. We have people in NY and CA, and once we hit 5 employees it was a no-brainer even with the monthly fee per employee. The health plans are much, much cheaper for a similar offering, and our support experience has been generally pretty good after a somewhat rough onboarding. Also all of the onboarding fees with TriNet seem to be pretty negotiable. But overall the most important thing is that we're saving money and spending very little time or energy worrying about HR matters.

+1 we had the exact same bad experience with Zenefits.

It looked easy and nice at the beginning, but quickly became a nightmare when they did mistakes for half of our employees. Once mistakes were done, it became harder and harder to contact their customer service. The rep was nice but completely ignorant.

It's sad to see that Gusto/Zenpayroll, who provide a very high quality service, doesn't grow as fast as Zenefits.

Agreed. We're extremely happy with Gusto.

We tried Zenefits first and had a similar experience to yours. It turned out they couldn't help us get health insurance based on the number and locations of our employees. We went over the details in the first call (and subsequent emails), but it was probably 2 weeks and a handful of communications more before they said they couldn't do it.

Their payroll sync (we used Paychex at the time) seemed pretty buggy and confusing too. Support was not helpful.

Gusto's product and support have been amazing. Their phone support team has helped with some hairy issues for us.

(I have no other connection to either company).

Seconded. Zenefits has been great for on-boarding new hires, but they made mistakes in our health insurance coverage that ended up costing us ~$20k/year. I'm sure Parker and Co. are aware of these issues and working hard to improve, but the reality is that hyper-growth and quality are often somewhat orthogonal.

On the other hand ZenPayroll has been amazing. I take an unreasonable amount of pleasure deflecting inbound sales forays from the likes of Paychex and ADP (may they die in a fire).

Since so many people here mirrored that sentiment I'll just say my experience with Zenefits has been mostly pretty good. I have run into a few minor bugs, but nothing disastrous, and the salespeople have been friendly and knowledgable. I'm probably about the easiest business to run but can't really complain about them (other than the ADP snafu, which is at least not entirely their fault).

Our experience mirrors yours...we couldn't be happier with ZenPayroll/Gusto. We signed up with Zenefits recently to try to get the benefits piece in place, and it was a nightmare, both with the software, and the reps/support.

our zenefits sales guy was totally rude, and insinuated that i was wasting his time by rescheduling a meeting, so i just told him i wasn't interested right after that. i'm sure he's doing fine if he feels like he can talk like that to prospective customers.

what is your startup?

i don't talk about it here.

at least you admit it

We had an identical experience.

I just counted and I have two threads with Zenefits - one with sales and one with acct mgmt. The first thread with sales has 38 emails, and the account management thread has 16 emails. All of this to get set up as a new, tiny little company (4 employees at the time).

The craziest thing was that I didn't need to be "sold." I had used Zenefits previously, and filled out the form on their site to create an account, and got kicked into an incredibly long and painful manual onboarding process that took over five weeks, multiple calls, and 50+ emails.

Gusto got us set up in 20 min. with one automated workflow.

I understand that enrolling in healthcare is a more complex process than payroll, but it felt like I was working with a very traditional insurance broker.

Running a startup myself, I'm usually really empathetic toward startups with growth pains, but there were many things about the process where Gusto far exceeded expectations and Zenefits really underwhelmed me.

+1 went for months without insurance because Zenefits continually promised things they could not deliver. Could not imagine a worst experience for such a critical thing.

Gusto (Zenpayroll) has been peach perfect. Going to transfer our healthcare benefits to them as soon as we can.

I am also a happy ZenPayroll/Gusto customer, with one major issue: see how many trackers they have running after you are logged in. It's appalling, and I have filed a complaint.

If you don't mind sharing, which providers did you end up using for health insurance and 401(k)?

We went with a broker based in DC, Joshua Lavine, for health insurance, since that's where we [eventually learned that] we needed to base our plans from. Great experience (well, the DC small business health exchange is a separate sad story.) Health insurance is so complicated and state-specific you really want someone knowledgable.

We went with Captain401 (a YC startup) because we needed a fast turnaround and they had amazing service. Too early to render judgement otherwise. OctaveWealth is another seemingly competent YC 401k startup. If you're not in a rush and don't want to trust a startup with your company's 401k plan (though assets are safe regardless), Vanguard is great, and would have been our backup option.

I know this is now "industry standard" but I hate the practice of quoting a yearly price as if it were a monthly price. There is a meaningful difference between $120/year (where you pay once, upfront, for the full year) and $10/month (where you pay each month).

Note here that they quote $4/month/employee in the "Pro" plan, but the prices are actually $48/year/employee or $6/month/employee. There is no $4/month plan.

I see what you mean but don't think it's that bad. The actual cost is $4/employee/month. It's not like using it for less than a year is a common scenario.

But using it for non-whole multiples of a year probably is.

Also, it both obfuscates the price and creates the impression that you can trial the product without being locked in.

If it didn't confuse people (even if only unconsciously), it wouldn't be such a widespread practice.

> If it didn't confuse people (even if only unconsciously), it wouldn't be such a widespread practice.

And this is the key observation about those sales practices. Most of them work, because you're being dishonest. You only call it "growth hacking".

It absolutely is in the service & manufacturing industries.

I don't know much about this industry, but this seems like a hilarious response to the ADP lawsuit. When your partner/competitor screws you really hard, launching a free product that performs the most important function of their very expensive product line is just about the most satisfying form of vengeance I can think of.

Also, I hate Intuit Payroll (and it's cost me a small fortune due to deadlines being missed and other random crap based on Intuit requiring constant babysitting to do anything on time), so I'm signing up. If it supports multiple states, I am totally on board.

I doubt this is a response to ADP; ADP is a horrible product, and Zenefits knew they could make a better solution (like ZenPayroll/Gusto). They've probably been working on this for a year, to be honest, given the requirements for payroll providers and syncing with the IRS/etc.

What's more interesting is that the payroll is free only if the company manages everything else HR related in Zenefits. Talk about lock-in.

The CEO explicitly says that this is a response to ADP:

> As Conrad tells it, a select group of Zenefits employees holed up in the Courtyard Marriott to start working on a secret project to create a payroll system shortly after paycheck services giant ADP cut the company off earlier this year.

> “We’ve been working on this basically since the day we started getting blocked by ADP,” Conrad told TechCrunch.


I would have probably been working on it before that, if I were them, as I don't ever feel comfortable being a sharecropper on someone else's land. But, they've delivered quickly.

I think ADP and Gusto forced their hand. They realized they needed to be in control of this part of their business, and while before they had planned it as an "eventually" thing, it became a material risk that was no longer tolerable. If I were them in the absence of the ADP shut down and Gusto competing head to head I would have wanted to focus every dollar on the core service and scale and kicked Payroll down the road. Makes sense in context they did it now though.

I'm sure they've been working on it for a while. And, it may even be part of the cause of the falling out between ADP and Zenefits, who knows? But, nonetheless, I bet it feels good to launch.

> a free product that performs the most important function of their very expensive product line

There is zero chance I'd subject employees to a hacked together payroll system. Building one is far from trivial, considering the complexities of tax and employment law in 50 different states.

I've not seen any indication that Zenefits is offering a shoddy product. Their other products seem to be well-regarded, do they not? And, their other products are in the same general area (most benefits programs have some tax and accounting repercussions that they'd need to understand, as well as integration with banks and payroll systems), so they already have some domain expertise in-house.

So, yes, it's hard to build. That doesn't mean that no one can do it. Many companies have done so, including several startups. And, given how poorly one of the market leaders (Intuit) has implemented it, I'm willing to give a startup a try.

>Their other products seem to be well-regarded, do they not?

Not entirely, no. There's a history of Zenefits customers and their employees suffering from serious technical and support failures.


>in late February this year, with coverage supposed to start days later, Zenefits informed Hawkins that it had made a significant mistake, attempting to enroll his employees with an insurance provider that didn’t cover the company’s region. The insurance wouldn’t come through as planned. [...] In several cases employees like Harris, who had put their trust in Zenefits, were left without health insurance for a month or more after they had expected it.

My 15-person company uses zenefits. When our HR person was sold on zenefits she was promised some features that, bluntly, didn't and don't exist. They also, as a user, required some emailing to get stuff set up. It seems to be ok now that it's all set up, but it definitely wasn't 0 friction initially.

> There is zero chance I'd subject employees to a hacked together payroll system.

Not an ADP user I presume.

I actually am an ADP user/administrator. As crappy as their system is (I could go on for days), their domain expertise is unmatched.

I wish a payroll startup would put resources into a nice UI and having some really season support too. Just doesn't seem to be there yet, unfortunately.

We're launching in all 50 states. Happy to have you on board!

Pretty sure the ADP fiasco was likely an understanding by ADP that zenefits was working on this already.

Payroll/Benefits is long overdue for disruption.

How does Zenefits handle if a Employer paid check does not match the Zenefits charged amount? ie: reconciliation portion.

Employee X terminated, check is $22.8k instead of $23k.

Employee Y has three policies for a single benefit, but only two get paid through the employer.

Is this all automagically handled by the UI in a simple 'SSN or Policy' amount does not match for these three records, how do you want to apply the $30? 'No record found for Employee X, reason for non-payment?' Does Zenefits handle managing/forwarding that to all to the carriers?

(disclaimer: I work in insurance)

This must be their answer to Zen Payroll/Gusto now offering worker's compensation and health insurance.

It's great to see competition in this space. ADP and the other dinosaur providers in this area have had it too good for too long.

Has anyone done a breakout comparison of Zenefits vs Gusto (/zenpayroll)?

There has to be quite a few companies who have benefits with Zenefits and payroll in Gusto; wondering what's ideal moving forward.

I would love to see this as well.

A salesperson from Gusto (fka Zenpayroll) who we use for payroll sent me multiple emails about switching to Gusto for benefits, so I emailed, "Hey - We're currently running everything through Zenefits. Are there any advantages to switching over?" and I never heard a response.

Could have been a mistake (i.e. forgot to respond), a bad salesperson, etc. but not having any differentiators makes the decision tough on my end.

I sent the same email to them, but I did get a response:

We're fundamentally different than Zenefits in a few very important ways, so accessing all of Gusto's features still makes sense: 1) Payroll is your system of record in your back office and quite simply, we believe computers follow rules a lot better than humans do. Zenefits functions on a “hub-and-spoke” model… they’re the hub, we’re the spokes. But that's already an outdated functionality-- there should be no spokes when it comes to payroll and benefits—they are really just one single hub functioning in unison. Removing the spokes and human operations that Zenefits uses removes the opportunity for error.

2) We’re a customer service organization, not a sales organization. With the technology comes the vital human touch—you’ve got your dedicated Care Team trained to support your benefits just like you have a Care Team trained to support specific payroll needs.You also have your dedicated and experienced Benefits Advisor for business and benefits strategy planning. This way, you can go to one partner for all your back-office needs rather than using an intermediary to control several different disjointed resources.

3) Because it’s all in one place, you get one beautifully simple experience for your entire team—administrators/managers and regular employees. That means onboarding your employees' payroll and benefits in one place while we help you navigate the confusing world that is US Health Care Reform. Basically, we love you as a customer and we want the best product experience for you. That happens when you use the full Gusto platform to combine payroll, benefits, and compliance.

It wasn't very convincing to me, and I think it might be an even harder sell now that Zenefits is launching payroll. I love both companies but I definitely would prefer to have everything integrated in one platform.

fwiw, we've had less than a great time with Zenefits, whereas with Zenpayroll, we've been amazed at how good they were. They helped get through some tricky payroll business, and were always quick to make sure everything was in order.

I'm happy to pay the money and get the faster response times, better website, and stronger relationship with ZP (errr Gusto).

We'll probably move off of Zenefits entirely soon.

I would like to see the hold times for Zenefits decrease. The customer service, once getting somebody on the line, is very good. But to be fair, I also have hold times for Gusto, too. I had to put in a call-back number today.

Good feedback; I wonder (operationally) which is trickier to switch (payroll or benefits provider).

with benefits, it's like a one-pager. you sign an authorization form and they take it to the med provider who then recognizes the switch. it's like a one day thing.

Where are you thinking about moving to?


Same - I'm actually starting the process of switching over the Gusto simply because I wanted to consolidate the services I was using, but now I'm having second thoughts since Zenefits is free. So far I much prefer the Gusto/zenpayroll interface, so I'll probably keep going forward with Gusto and only switch back if I run into any frustrations.

Zenpayroll & Gusto customer here. Looks like the biggest difference will be that Zenefits is free for payroll if you use them for everything else (vs Gusto at $29 base + 6/person per month). I wonder if Gusto will extend a similar pricing model for those who use Gusto for benefits.

But Zenefits handles more than just benefits for us. It's a fully-featured HR platform, which makes employee on-boarding super simple. I wonder if Gusto will go that direction, because I'm so tied to Zenefits right now I can't imagine living without it.

Does it support businesses who mainly only work with contractors including helping to create 1099's to send out? Don't see anything about it on the page.

After leaving Quickbooks for a contractor based business, I've been looking for a solution for 1099 work outside of "do it by hand" which I can and am prepared to do, but it takes a long time.

Zenefits definitely supports Contractor Payments, if you sign up, look for the "contractors" card to get started.

edit: to be clear, this is a separate product from payroll.

What exactly does this line mean from their 'Pro' plan?

"Includes everything from Self-Driving Mode plus the ability to directly customize deductions, earnings, and more."

I don't have any clue if the free plan would work for me or not.

if you use Zenefits for HR/Benefits, they will know everything they need to determine your deductions and taxes. This makes it simple or them to run everything for you in 'self-driving' mode. All the changes you make in Zenefits are reflected in your payroll automatically

The custom experience where you can go in and configure things specifically for payroll without making those changes in Zenefits, that's the one they're charging for

What's an example of something that would need to be custom? Does anyone know?

I'm also confused by that line, and the plans in general.

Yeah, I think it's a little confusing as well. But, basically if Zenefits manages all of your benefits, Self Driving Payroll will be your best bet. If you offer a benefit that Zenefits doesn't manage, you'll need to go Pro.

One example would be if your company is offering benefits not managed through Zenefits, such as an outside 401k plan or something. In those cases you'd want to make custom deductions for the 401k plan. (I don't work for Zenefits but I do work in the industry).

I'm confused as well. What if you have a part-time employee who doesn't have benefits? Or what if you're a small business that doesn't offer benefits?

Self Driving Payroll will work perfectly in this case. If you don't offer Benefits, use Zenefits for onboarding and keeping track of your employee info (also free), and have self driving payroll take care of your payroll for free.

Wondering if this would apply for things like hourly workers as well.

If you use Zenefits time tracking, Self Driving Payroll will automatically pay your hourly workers approved hours.

You might want to look at Visage (http://visagepayroll.com), which I think was first in the "free payroll" market; their revenue stream comes from Credit Karma-style financial product targeting, but all the payroll features are free. (No affiliation, but I've run into their CEO in the past and he's a very solid guy.)

"Zenefits launches free payroll software for small businesses IN THE USA", I'm guessing the title should be.

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