Zenefits, the embattled HR softwarestartup, announced its first legal settlement in relation toviolations it was accused of committing during the tenure of itsprevious CEO.

Related: Zenefits was the perfect startup: Then itself-disrupted

The San Francisco-based company has agreed to pay a $62,500 fineto the state of Tennessee after admitting to skirting statelicensing laws. In a press release, the state Department ofCommerce and Insurance, which negotiated the settlement, said thatthe company had reported allowing employees to sell insurance inthe state without being licensed as insurance brokers.

Related: Zenefits: A story of confidence, culture, andresignation

In a statement, Tennessee Commerce and Insurance CommissionerJulie Mix McPeak said that licensing had been an “afterthought” forZenefits salespeople in the state. She lauded new companymanagement, however, for changing course, highlighting a newcompany policy that will require brokers to undergo 52 hours ofcontinuing education courses, including 12 hours focused onethics.

Zenefits CEO David Sacks also applauded the state's ruling,calling it “tough but fair” in a statement.

“It is a testament to Tennessee’s welcoming environment forsmall business and tech companies that it struck this balance,” headded.

Until late last year, Zenefits was one of the hottest startupsin the Silicon Valley. Its disruptive technology attracted hordesof investors; at its high point the company was valued at $4.5billion.

But while the free software was gaining popularity, the way thatthe company made money — by trying to sell healthinsurance to those using its software — got it in legaltrouble. In November news outlets revealed that the company wasunder investigation for skirting state insurance laws by allowingunlicensed brokers to sell policies.

Amid controversy, its cofounder and CEO Parker Conrad resigned in Februaryand the company, which had become notorious for a frat-likeculture, vowed to clean up its act. It laid off 250 employees thatmonth and another 100 were given pink slips in June. In order toavoid a lawsuit from investors, Sacks agreed last month to cut thevaluation of the company by more than half — to $2billion.

Sacks’ statement indicated the company is working on settlingsimilar legal issues in other states. The settlement in Tennessee,he said, was a reflection of the company’s changed “culture andvalues,” which he attributed to “hard work” of employees.

“We look forward to more exciting announcements in the comingmonths when we launch Z2, the game-changing set of new products andenhancements to Zenefits’ platform that will help small businessessucceed,” he concluded.