Even though Utah is leading the nation with its pro-business climate and job growth, crony capitalism is alive and well in the Beehive state. Its latest victim: Zenefits, a San Francisco-based startup company and promising job creator.  For a state that is supposed to be an emerging “technology hub,” etc. this revelation is very disappointing.  

Zenefits has experienced success in other states because it has transformed the HR department for small businesses by making hiring, payroll, benefits, termination, and insurance easier through its cloud-based program. Naturally, Utah’s local brokerage insurance companies are displeased with having to compete with an edgier company. However, that’s not a just reason for thwarting competition.

 As Patrick Gleason, director of state affairs at Americans for Tax Reform, points out in his latest Forbes article, Utah’s latest protectionist effort is a shot in the foot for the beehive state:

So in Utah, it’s apparently a bad thing for a new company to make it easier for employers to operate their business. That’s an odd approach and one that won’t help the state market itself to companies looking to move to and create jobs in Utah. It’s also at odds with Utah Gov. Gary Herbert’s stated commitment to foster and support tech innovation in the state. Other states have smartly welcomed Zenefits.

… It’s a shame that Utah officials are targeting a company that is creating jobs and helping local small business. According Fortune Magazine, “Zenefits has 2000 paying clients and 450 employees. The San Francisco-based company has signed a development deal with Arizona to add 1,300 jobs there in the next three years.” After raising $66 million in a June funding round and being referred to as “the hottest deal in Silicon Valley,” the startup, valued at $500 million, and its job-creating capacity are poised for further expansion.

Utah should heed Gleason’s warning and continue welcoming innovative companies into the state.