ZenPayroll Moves Into Benefits, Changes Name to Gusto

Small-business payroll and health insurance software isn’t necessarily the sexiest tech space, but it sure is heating up. Online human-resources platform ZenPayroll announced today that it is changing its name to Gusto and adding services that put it squarely in competition with larger rival Zenefits.

For small-business owners, managing payroll and benefits for employees has historically been a painful, headache-inducing process. That’s where companies like Gusto and Zenefits come in. They automate and streamline the processes.

The newly named Gusto is adding health benefits and workers’ compensation to its payroll processing services, according to an announcement from the company today. At first, the health benefits service will only be available in California. It will gradually roll out to other states.

The new name, which allowed the company to expand beyond payroll processing services, is a reference to a feeling of enthusiasm.

“Our new name Gusto was inspired by our customers and their teams who show courage and passion in the work they do every day. When you work on something you care about, with people you enjoy spending time with, it’s an amazing feeling,” the three co-founders wrote in a blog post. “That energy. That oomph. That’s Gusto. We believe everyone has the potential to feel this way at work.”

Meanwhile, its rival Zenefits -- which had previously partnered with ZenPayoll to manage its payroll processing -- is also reported to be building its own software for processing payrolls. As of May, the company was valued at $4.5 billion. ZenPayroll's valuation was last pegged at $560 million.

For now, Zenefits is keeping its game face on, saying it’s not worried about Gusto’s new expansion into its turf.

"The size of this market and the speed of the disruption are likely to attract many new entrants. We're happy we started on this journey a little more than two and a half years ago, and as the market leader and pioneer in the category, believe that no one can match our product and how easily and automatically Zenefits eliminates the administrative work behind running a small business," Kenneth Baer, a Zenefits spokesperson, said in an email.