Fintech Bench Layoffs: Uncertainty in the Gig Economy

Bench Confirms Layoffs Following Acquisition

Following its acquisition in a distressed sale last December, Bench, the accounting and tax startup, has recently implemented a round of substantial workforce reductions, as verified by reports to TechCrunch.

The precise number of employees affected remains undisclosed. However, sources within the company suggest that the cuts encompass dozens of positions, representing a significant proportion of Bench’s approximately 300-person workforce.

Impacted Departments

Departments directly affected by these changes include client success and tax services. Information obtained by TechCrunch indicates that the majority of Bench’s U.S.-based tax advisory team has been eliminated.

Employer.com, the San Francisco-based HR technology company that acquired Bench last year, communicated to TechCrunch that the decision to reduce staff “was not made lightly.”

Matt Charney, CMO of Employer.com, expressed appreciation for the contributions of the affected employees and their dedication to maintaining client accounts.

Previous Financial Struggles and Acquisition

Prior to the acquisition, Bench had secured over $110 million in venture capital funding and more than $50 million in debt. Despite this investment, the company failed to achieve profitability.

Facing financial difficulties, Bench was forced to cease operations and lay off all employees, leaving thousands of customers without access to their financial records. Employer.com subsequently intervened, purchasing Bench for $9 million and committing to its revitalization, and rehiring a large portion of the original staff.

This acquisition effectively prevented the complete collapse of Bench.

Contractor Status and Workforce Structure

However, according to accounts from two current and one former Bench employee, the majority of the workforce has been retained as independent contractors. These individuals are subject to monthly 30-day contract renewals rather than being offered full-time employment.

Employer.com initially characterized this arrangement as a temporary measure at the time of the sale.

Furthermore, these sources indicate that Bench has communicated an intention to base a majority of its workforce outside of North America. However, Mr. Charney clarified that the recent layoffs are a response to “the realities of turning around the business and addressing legacy issues,” and are not part of a broader outsourcing strategy.

Mr. Charney stated that Bench continues to explore long-term employment solutions for its employees, referred to as “Benchmates,” but that the current contractor structure was the most expedient way to onboard personnel following the acquisition.

Operational Challenges and Customer Churn

Current and former Bench employees have also highlighted other challenges facing the company. A significant number of customers reportedly cancelled their services after the tax season deadline of April 15th.

Additionally, Bench experienced difficulties in completing taxes for numerous customers within the required timeframe, according to one source familiar with the situation.

Some customers have also alleged instances of being charged for services they had already prepaid under the previous ownership. Bench previously responded to these claims by stating that all pre-paid services are honored.

Mr. Charney acknowledged some customer attrition but explained that a portion of this was intentional, aimed at eliminating unprofitable customer relationships.

“While we’ve seen an uptick in customer churn, a significant portion of it has been intentional and necessary,” Charney explained. “Legacy pricing and servicing decisions prior to our acquisition resulted in supporting some customers at a financial loss.”

Bench intends to expand both its feature set and its employee base in the future, according to Charney.

A complete statement from Employer.com regarding the Bench layoffs can be found here.

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