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What changed in TRINET GROUP, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TRINET GROUP, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+379 added−379 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in TRINET GROUP, INC.'s 2024 10-K

379 paragraphs added · 379 removed · 270 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

76 edited+28 added−37 removed54 unchanged
Biggest changeWe take pride in always doing what’s right for our customers and colleagues. • Make an impact - We act with purpose, are deliberate in our planning and quick in execution. We are accountable to each other and empowered to make decisions. • Be incredible - We invest in the development of our colleagues.
Biggest changeWe collaborate across boundaries, communicate openly and respect each other. • Act with integrity - We are honest, transparent, ethical and fair. We take pride in always doing what’s right for our customers and colleagues. • Make an impact - We act with purpose, are deliberate in our planning and quick in execution.
Our PEO technology platform includes online and mobile tools that allow our clients and WSEs to store, view, and manage HR information and administer a variety of HR transactions, such as payroll processing, tax administration, tax credits, employee onboarding and termination, employee performance, time and attendance, compensation reporting, expense management, and benefits enrollment and administration.
Technology Platform Our PEO technology platform includes online and mobile tools that allow our clients and WSEs to store, view, and manage HR information and administer a variety of HR transactions, such as payroll processing, tax administration, tax credits, employee onboarding and termination, employee performance, time and attendance, compensation reporting, expense management, and benefits enrollment and administration.
These programs are popular because they allow SMBs, which often have business income tax losses, to realize benefits via payroll tax reductions, rather than business income tax reductions. As a result, many of our SMB clients require that we support these programs. Examples of these programs include the federal 2015 PATH Act, CARES Act and FFCRA Act.
These programs are popular because they allow SMBs, which often have business income tax losses, to realize benefits via payroll tax reductions, rather than business income tax reductions. As a result, many of our SMB clients require that we support these programs. Examples of these programs include the federal 2015 PATH Act, CARES Act and FFCRA.
The CARES Act and FFCRA Act introduced payroll tax credits and employer Social Security deferral programs that allowed SMBs to receive payroll tax reductions and refunds or to defer the employer portion of Social Security based on qualifications and employment practices. We act as the employer of record for federal payroll tax reporting for our PEO clients.
The CARES Act and FFCRA introduced payroll tax credits and employer Social Security deferral programs that allowed SMBs to receive payroll tax reductions and refunds or to defer the employer portion of Social Security based on qualifications and employment practices. We act as the employer of record for federal payroll tax reporting for our PEO clients.
Client Responsibilities Our clients are responsible for employment-related responsibilities that we do not specifically assume, generally including: • day-to-day management of their worksites and WSEs, • compliance with laws associated with the classification of employees as exempt or non-exempt, such as overtime pay and minimum wage law compliance, • accurate and timely reporting to TriNet of compensation and deduction information, including information relating to hours worked, rates of pay, salaries, wages and other compensation, and work locations, • accurate and timely reporting to TriNet of information relating to workplace injuries, employee hires and termination, and certain other information relevant to TriNet’s services, • provision and administration of any employee benefits not provided by TriNet, such as equity incentive plans, • compliance with all laws and regulations applicable to the clients' workplace and business, including work eligibility laws, laws relating to workplace safety or the environment, laws relating to family and medical leave, laws pertaining to employee organizing efforts and collective bargaining and employee termination notice requirements, • payment of TriNet invoices, which include salary, wages and other relevant compensation to WSEs and applicable employment taxes and service fees, and • all other matters for which TriNet does not assume responsibility under the client service agreement, such as intellectual property ownership and protection and liability for products produced and services provided by the client company to its own clients.
Client Responsibilities Our clients are responsible for employment-related responsibilities that we do not specifically assume, generally including: • day-to-day management of their worksites and WSEs, • compliance with laws associated with the classification of employees as exempt or non-exempt, such as overtime pay and minimum wage law compliance, • accurate and timely reporting to TriNet of compensation and deduction information, including information relating to hours worked, rates of pay, salaries, wages and other compensation, and work locations, • accurate and timely reporting to TriNet of information relating to workplace injuries, employee hires and termination, and certain other information relevant to TriNet’s services, • provision and administration of any employee benefits not provided by TriNet, such as equity incentive plans or nonqualified deferred compensation plans, • compliance with all laws and regulations applicable to the clients' workplace and business, including work eligibility laws, laws relating to workplace safety or the environment, laws relating to family and medical leave, laws pertaining to employee organizing efforts and collective bargaining and employee termination notice requirements, • payment of TriNet invoices, which include reimbursement for salary, wages and other relevant compensation to WSEs and applicable employment taxes and service fees, and • all other matters for which TriNet does not assume responsibility under the client service agreement, such as intellectual property ownership and protection and liability for products produced and services provided by the client company to its own clients.
Our Competitors We face competition from: • PEOs that compete directly with us, • HRIS software providers that compete directly with us, • payroll processing agents and other HCM services providers that do not use a PEO model, • HR and personnel of companies that administer employee benefits, payroll and HR for their companies in-house, • providers of certain endpoint HR services, including payroll, employee benefits, business process outsourcers with high-volume transaction and administrative capabilities, and other third-party administrators, and • insurance brokers who allow third-party HR systems to integrate with their technology platform.
Our Competitors We face competition from: • PEOs that compete directly with us, • payroll processing agents and other HCM services providers that do not use a PEO model, • HR and personnel of companies that administer employee benefits, payroll and HR for their companies in-house, • providers of certain endpoint HR services, including payroll, employee benefits, business process outsourcers with high-volume transaction and administrative capabilities, and other third-party administrators, and • insurance brokers who allow third-party HR systems to integrate with their technology platform.
Complying with existing and new data privacy and security regulations could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Complying with existing and new privacy and security regulations could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
The co-employment model allows WSEs to receive the full benefit of our services, including providing WSEs with access to TriNet-sponsored employee benefit plan offerings.
The co-employment model allows WSEs to receive the full scope of our services, including providing WSEs with access to TriNet-sponsored employee benefit plan offerings.
Based on applicable law in any jurisdiction, we or our client may be held ultimately liable for those obligations if we fail to remit taxes. Our HRIS services do not involve co-employment, and this reduces the responsibility and liability that we assume when providing these services.
Based on applicable law in any jurisdiction, we or our client may be held ultimately liable for those obligations if we fail to remit taxes. Our ASO services do not involve co-employment, and this reduces the responsibility and liability that we assume when providing these services.
State regulations on PEO health plans can limit our options for providing TriNet sponsored benefits to our PEO clients or eliminate those benefits entirely, so we devote substantial time and resources to monitor and respond to these developments. We expect to continue to see similar legislative and regulatory efforts across the country.
State regulations on PEO health plans can limit our options for providing TriNet sponsored benefits to our PEO clients or eliminate those benefits entirely. We devote substantial time and resources to monitor and respond to these developments. We expect to continue to see these legislative and regulatory efforts across the country.
In recent years, many states have proposed or enacted new laws or amended existing laws and we expect them to continue to do so in the future. As the state privacy laws becomes increasingly complex, we expect the cost and effort of complying with all of the requirements to increase and the likelihood of compliance failures to rise.
In recent years, many states have proposed or enacted new laws or amended existing laws and we expect them to continue to do so in the future. As the state privacy laws become increasingly complex, we expect the cost and effort of complying with all of the requirements to increase and the likelihood of compliance failures to rise.
Our PEO clients are typically looking for high-touch HR compliance and services support, TriNet sponsored employee benefits, TriNet responsibility for processing payroll and payroll taxes, and access to EPLI claims support and other substantial HR services. By contrast, many of our HRIS clients are looking for more self-directed, focused and less expensive HRIS services.
Our PEO clients are typically looking for high-touch HR compliance and services support, TriNet sponsored employee benefits, TriNet responsibility for processing payroll and payroll taxes, and access to EPLI claims support and other substantial HR services. By contrast, many of our ASO clients are looking for more self-directed, focused and less expensive ASO services.
HIPAA contains restrictions and health data privacy, security and breach notification requirements with respect to the use and disclosure of PHI. Further, there are penalties and fines for HIPAA violations. Because TriNet sponsored health plans are covered entities under HIPAA, we are required to comply with HIPAA's portability, privacy, and security requirements.
HIPAA contains restrictions and health data privacy, security and breach notification requirements with respect to the use and disclosure of PHI. Further, there are penalties and fines for HIPAA violations. Because TriNet sponsored health plans are covered entities under HIPAA, our sponsored health plans are required to comply with HIPAA's portability, privacy, and security requirements.
Our Service Models We deliver a comprehensive suite of HCM services that help our clients administer and manage various HR-related needs and functions, such as compensation, benefits, payroll processing, tax credit support, employee data, health insurance, workers' compensation, EPLI and other employment risk mitigation programs, employee performance management and training, on-boarding and off-boarding, and other transactional HR needs using our PEO and HRIS technology platforms and our HCM, benefits and compliance expertise.
Our Service Models We deliver a comprehensive suite of HCM services that help our clients administer and manage various HR-related needs and functions, such as compensation, benefits, payroll processing, tax credit support, employee data, health insurance, workers' compensation, EPLI and other employment risk mitigation programs, employee performance management and training, on-boarding and off-boarding, and other transactional HR needs using our PEO technology platform and benefits and compliance expertise.
For additional information on the privacy and security of the confidential, sensitive and personal information and PHI we possess and the potential impact to our business if we fail to protect such information, refer to Part I, Item 1C. Cybersecurity and each of the risk factors included in Part I, Item 1A.
For additional information regarding the privacy and security of the confidential, sensitive and personal information and PHI we possess and the potential impact to our business if we fail to protect such information, refer to Part I, Item 1C. Cybersecurity and each of the risk factors included in Part I, Item 1A.
We believe that a key reason why our PEO services are attractive to SMBs is because of our ability to provide access to a broad range of workers compensation, health insurance and other benefits programs on a cost-effective basis.
We believe that a key reason why our PEO services are attractive to SMBs is because of our ability to provide access to a broad range of workers' compensation, health insurance and other benefits programs on a cost-effective basis.
States continue to consider, or have adopted, changing regulations or guidance around the definition of employers, employees and independent contractors and any change in these definitions may impact our ability to provide certain PEO and HRIS services to certain employers or employees.
States continue to consider, or have adopted, changing regulations or guidance around the definition of employers, employees and independent contractors and any change in these definitions may impact our ability to provide certain PEO and ASO services to certain employers or employees.
For more information about how we help our PEO and HRIS clients manage their own human capital resources and satisfy their own HR-related needs, see the section above titled “ Our Services ”.
For more information about how we help our PEO and ASO clients manage their own human capital resources and satisfy their own HR-related needs, see the section above titled “ Our Services ”.
We intend to continue to pursue acquisitions, where appropriate, that will enable us to add new clients, WSEs or HRIS Users, expand our presence in certain geographies or industry verticals, or expand our technology capabilities or services.
We intend to continue to pursue acquisitions, where appropriate, that will enable us to add new clients or WSEs, expand our presence in certain geographies or industry verticals, or expand our technology capabilities or services.
We believe we comply in all material respects with the applicable PEO laws and regulations in each state and jurisdiction in which we provide PEO services. Every state regulates insurance practices conducted within their jurisdiction. While we do not broker insurance, certain of our PEO and HRIS services involve assisting our clients in obtaining and managing employee benefits.
We believe we comply in all material respects with the applicable PEO laws and regulations in each state and jurisdiction in which we provide PEO services. Every state regulates insurance practices conducted within their jurisdiction. While we do not broker insurance currently, certain of our PEO and ASO services involve assisting our clients in obtaining and managing employee benefits.
Further significant changes to health care statutes, regulations and policy at the federal, state and local levels could occur in 2024 and beyond, including the potential further modification or amendment of the ACA, and we may need to adapt the manner in which we conduct our business as a result of any such changes.
Further significant changes to health care statutes, regulations and policy at the federal, state and local levels could occur in the future, including the potential further modification or amendment of the ACA, and we may need to adapt the manner in which we conduct our business as a result of any such changes.
Our HRIS clients are generally less affected by these considerations. • WSEs select our TriNet-sponsored benefit plans during their respective open enrollment periods, which occur throughout the year.
Our ASO clients are generally less affected by these considerations. • WSEs select our TriNet-sponsored benefit plans during their respective open enrollment periods, which occur throughout the year.
In most cases, our PEO clients may cancel these contracts with 30 days' notice to us and we may cancel these contracts with 30 days' notice to our clients. Our HRIS clients execute contracts with monthly or annual terms and clients can typically cancel these contracts with 30 days’ notice to us.
In most cases, our PEO clients may cancel these contracts with 30 days' notice to us and we may cancel these contracts with 30 days' notice to our clients. Our ASO clients execute contracts with monthly or annual terms and clients can typically cancel these contracts with 30 days’ notice to us.
We believe that our benefit plans are exempt from many state regulations under ERISA, but our position could be challenged by state regulators or as a result of new laws, regulations, agency guidance, audits or caselaw at the federal and state levels.
We believe that our benefit plans are exempt from many state regulations under ERISA, but our position could be challenged by state regulators or as a result of new laws, regulations, agency guidance, audits or case law at the federal and state levels.
We observed the following industry trends in 2023: • SMB Economic Performance . Over any year, SMBs generally experience staffing changes, either resulting in a net increase or decrease in staffing. In 2023 the extent of net staffing increases differed significantly based on industry and geographic region.
We observed the following industry trends in 2024: • SMB Economic Performance . Over any year, SMBs generally experience staffing changes, either resulting in a net increase or decrease in staffing. In 2024 the extent of net staffing increases differed based on industry and geographic region.
We have seen increased focus at every level of government inside and outside of the United States on regulating the collection, storage, use, retention, security, disclosure, transfer and other processing of confidential, sensitive and personal information, as well as the growing use of artificial intelligence.
We have seen increased focus at every level of government inside and outside of the United States on regulating the collection, storage, use, retention, security, disclosure, transfer and other processing of confidential, sensitive and personal information, as well as the growing use of AI.
We also provide for other benefit programs to be made available to WSEs, including flexible spending accounts, health savings accounts, retirement benefits, COBRA benefits , supplemental insurance, commuter benefits, home insurance, critical illness insurance, accident insurance, hospital indemnity, pet insurance, and auto insurance.
We also provide for other benefit programs to be made available to WSEs, including flexible spending accounts, health savings accounts, retirement benefits, COBRA benefits , supplemental insurance, and commuter benefits, as well as other programs such as home insurance, critical illness insurance, accident insurance, hospital indemnity, pet insurance, and auto insurance.
Data Privacy and Security Regulations We collect, store, use, retain, disclose, transfer and otherwise process a significant amount of confidential, sensitive and personal information from and about our actual and potential clients, WSEs, HRIS Users and colleagues, and we are subject to a variety of federal, state and international laws, rules, and regulations in connection with such activities.
Data Privacy and Security Regulations We collect, store, use, retain, disclose, transfer and otherwise process a significant amount of confidential, sensitive and personal information from and about our actual and potential clients, WSEs, employees of ASO clients, and colleagues, and we are subject to a variety of federal, state and international laws, rules, and regulations in connection with such activities.
The division of responsibilities under our client service agreements is typically as follows: TriNet Responsibilities We generally assume responsibility for, and manage certain risks associated with: • payments of salaries, wages and certain other compensation to WSEs from our own bank accounts (based on client reports and payments), including the processing of garnishment and wage deduction orders, • reporting of wages, withholding and deposit of associated payroll taxes as the employer of record, • provision and maintenance of workers' compensation insurance and workers' compensation claims processing, • access to, and administration of, group health, welfare, and retirement benefits to WSEs under TriNet-sponsored benefit plans, • compliance with applicable law for certain TriNet-sponsored employee benefits offered to WSEs, • administration of unemployment claims and post-employment COBRA benefits, and • provision of various HR policies and agreements, including employee handbooks and worksite employee agreements describing the co-employment relationship.
The division of responsibilities under our client service agreements is typically as follows: TriNet Responsibilities We generally assume responsibility for, and manage certain risks associated with: • payments of salaries, wages and certain other compensation to WSEs from our own bank accounts (based on client reports and payments), including the processing of garnishment and wage deduction orders, • reporting of wages, withholding and deposit of associated payroll taxes as the employer of record, • provision and maintenance of workers' compensation insurance and workers' compensation claims processing, TRINET 8 2024 FORM 10-K BUSINESS Table of Contents • access to, and administration of, group health, welfare, and retirement benefits to WSEs under TriNet-sponsored benefit plans, • compliance with applicable law for certain TriNet-sponsored employee benefits offered to WSEs, • administration of unemployment claims and post-employment COBRA benefits, and • provision of various HR policies and agreements, including employee handbooks and worksite employee agreements describing the co-employment relationship.
Depending on their needs, our clients, WSEs and HRIS Users have access to varying levels of service and support from our professionals, ranging from call center support to pooled HR resources. Our professionals also provide additional specialized HR consulting services upon request.
Depending on their needs, our clients have access to varying levels of service and support from our professionals, ranging from call center support to pooled HR resources. Our professionals also provide additional specialized HR consulting services upon request.
We do this by: • offering competitive compensation and benefits packages, including comprehensive health benefits and our 401(k) retirement savings plan, with an immediately vested employer match of up to 4% of cash compensation, • supporting a pay for performance culture through the use of cash and equity incentives tied to the performance of our company and individual performance, • offering an ESPP that allows our colleagues to purchase our shares at a discount to market value, which fosters a stronger sense of ownership and aligns the interests of our colleagues with our stockholders, • investing in the professional growth of our colleagues with tuition and continuing education reimbursement, wellbeing programs, and comprehensive training and development activities and opportunities both inside and outside of our company, • creating and maintaining a diverse and inclusive colleague base by, for example, the use of colleague-led resource groups and a diversity and inclusion training curriculum for our colleagues, and • supporting workplace flexibility for our colleagues by adopting remote work policies, and providing access to telemedicine services.
We do this by: • offering competitive compensation and benefits packages, including comprehensive health benefits and our 401(k) retirement savings plan, with an immediately vested employer match of up to 4% of cash compensation, • supporting a pay for performance culture through the use of cash and equity incentives tied to the performance of our company and individual performance, • offering an ESPP that allows our colleagues to purchase our shares at a discount to market value, which fosters a stronger sense of ownership and aligns the interests of our colleagues with our stockholders, • investing in the professional growth of our colleagues with tuition and continuing education reimbursement, well-being programs, and comprehensive training and development activities and opportunities both inside and outside of our company, • creating and maintaining an environment that promotes inclusion and belonging by, for example, the use of colleague-led resource groups and a training curriculum for our colleagues, and • supporting workplace flexibility for our colleagues by adopting remote work policies, and providing access to telemedicine services.
Standards for determining independent contractor and joint employer status vary from law to law and state to state, and changes to and new interpretations of these standards can limit the client workers to which we can provide services and increase the likelihood of claims that we are a joint employer of client WSEs or an employer of HRIS Users.
Standards for determining independent contractor and joint employer status vary from law to law and state to state, and changes to and new interpretations of these standards can limit the client workers to which we can provide services and increase the likelihood of claims that we are a joint employer of client WSEs or an employer of ASO client employees.
Benefit Options In our PEO business, we utilize our scale to provide our WSEs access to a broad range of TriNet-sponsored employee benefit and insurance programs with choice and at costs that we believe most of our clients would be unable to obtain on their own.
Benefit Options In our PEO business, we utilize our scale to provide our WSEs access to a broad range of TriNet-sponsored employee benefit and insurance programs with features and at costs that we believe many of our clients would be unable to obtain on their own.
TRINET 15 2023 FORM 10-K BUSINESS Table of Contents Our Approach to Acquisitions Historically, we have pursued acquisitions to expand our service capabilities, technology offerings, and supplement our growth. Our acquisition targets have included PEOs as well as HCM technology and services companies to supplement or enhance our HCM services.
TRINET 16 2024 FORM 10-K BUSINESS Table of Contents Our Approach to Acquisitions Historically, we have pursued acquisitions to expand our service capabilities, technology offerings, and supplement our growth. Our acquisition targets have included PEOs as well as HCM technology and services companies to supplement or enhance our HCM services.
Alternatively, the public may access these reports at the SEC's website at www.sec.gov. The contents of these websites are not incorporated into this report and are not part of this report. TRINET 16 2023 FORM 10-K RISK FACTORS Table of Contents
Alternatively, the public may access these reports at the SEC's website at www.sec.gov. The contents of these websites are not incorporated into this report and are not part of this report. TRINET 17 2024 FORM 10-K RISK FACTORS Table of Contents
TRINET 13 2023 FORM 10-K BUSINESS Table of Contents Payroll Taxes, Unemployment Taxes and Payroll Tax Credits We must also comply with the federal and state payroll tax and unemployment tax requirements that apply where our clients are located.
TRINET 14 2024 FORM 10-K BUSINESS Table of Contents Payroll Taxes, Unemployment Taxes and Payroll Tax Credits We must also comply with the federal and state payroll tax and unemployment tax requirements that apply where our clients are located.
We provide HR guidance on employment laws and regulations, such as those relating to minimum wage, unemployment insurance, family and medical leave and anti-discrimination. For our PEO clients, we also ensure that our TriNet-sponsored benefit plans comply with applicable laws and regulations, like the ACA, reducing this compliance burden to our clients.
We provide HR guidance on employment laws and regulations, such as those relating to minimum wage, unemployment insurance, family and medical leave and anti-discrimination. For our PEO clients, our TriNet-sponsored benefit plans are designed to comply with applicable laws and regulations, such as the ACA, reducing this compliance burden to our clients.
We also rely on our clients to accurately inform us of the work and residence locations for their WSEs and HRIS Users, and inaccurate information, whether due to remote work policies or otherwise, can impact our payroll tax obligations and the obligations of our clients, WSEs and HRIS Users.
We also rely on our clients to accurately inform us of the work and residence locations for their WSEs and ASO client employees, and inaccurate information, whether due to remote work policies or otherwise, can impact our payroll tax obligations and the obligations of our clients, WSEs and ASO client employees.
As an employer of WSEs, we must manage our benefit plans in accordance with ERISA requirements, which can impact how we fulfill plan obligations, how we price services, the features of our benefit plans, and how we administer and operate our plans.
As the employer of WSEs with respect to the employee benefit plans we sponsor, we must manage our benefit plans in accordance with ERISA requirements, which can impact how we fulfill plan obligations, how we price services, the features of our benefit plans, and how we administer and operate our plans.
TRINET 12 2023 FORM 10-K BUSINESS Table of Contents At the state and local level, there is increased focus on regulating the collection, storage, use, retention, security, disclosure, transfer and other processing of confidential, sensitive and personal information.
TRINET 13 2024 FORM 10-K BUSINESS Table of Contents At the state and local level, there is ongoing focus on regulating the collection, storage, use, retention, security, disclosure, transfer and other processing of confidential, sensitive and personal information.
TRINET 8 2023 FORM 10-K BUSINESS Table of Contents For our PEO services, we also assume responsibility for payment and liability for the withholding and remittance of federal and state income and employment taxes with respect to salaries, wages and certain other compensation paid to WSEs, although we reserve the right to seek recourse against our clients for any liabilities arising out of their conduct.
For our PEO services, we also assume responsibility for payment and liability for the withholding and remittance of federal and state income and employment taxes with respect to salaries, wages and certain other compensation paid to WSEs, although we reserve the right to seek recourse against our clients for any liabilities arising out of their conduct.
In some cases, our clients may incur fees associated with early termination. Our top five PEO markets are California, New York, Florida, Texas and Massachusetts, which account for approximately 64% of our total WSEs for the year ended December 31, 2023.
In some cases, our clients may incur fees associated with early termination. Our top five PEO markets are California, New York, Florida, Texas and Massachusetts, which account for approximately 63% of our total WSE paid wages for the year ended December 31, 2024.
We believe we manage our benefit plans in accordance with ERISA requirements and that we are an employer of our WSEs in the U.S. under the Code, the employer of our WSEs in the U.S. for the purposes of ERISA, as well as qualifying as an employer under various state laws, but this status could be subject to challenge by various regulators.
We believe we manage our benefit plans in accordance with ERISA requirements and that we are the employer of our WSEs with respect to the plans for purposes of the Code, ERISA and various state laws, but this status could be subject to challenge by various regulators.
TRINET 5 2023 FORM 10-K BUSINESS Table of Contents Our Services Our comprehensive HR solutions include the following capabilities: HR CONSULTING EXPERTISE BENEFIT OPTIONS PAYROLL SERVICES RISK MITIGATION TECHNOLOGY PLATFORM HR Expertise We use the collective knowledge and experience of our teams of HR, benefits, payroll, risk management and compliance professionals to help our PEO and HRIS clients manage many of the administrative, regulatory and practical requirements associated with being employers.
TRINET 6 2024 FORM 10-K BUSINESS Table of Contents Our Services Our comprehensive HR solutions include the following capabilities: HR CONSULTING EXPERTISE BENEFIT OPTIONS PAYROLL SERVICES RISK MITIGATION TECHNOLOGY PLATFORM CONTRACTOR AND GLOBAL WORKFORCE SUPPORT HR Consulting Expertise We use the collective knowledge and experience of our teams of HR, benefits, payroll, risk management and compliance professionals to help our clients navigate many of the administrative, regulatory and practical requirements associated with being employers.
We push the boundaries of what's possible, lead the way and innovate to accomplish the extraordinary. We regularly conduct surveys to seek feedback from our colleagues on a variety of topics, including confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities and opportunities to improve the attractiveness of our company with existing and potential colleagues.
We regularly conduct surveys to seek feedback from our colleagues on a variety of topics, including confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities and opportunities to improve the attractiveness of our company with existing and potential colleagues.
As the patchwork of laws becomes increasingly complex, we expect the effort and cost of complying with all of the requirements to also increase and the likelihood of compliance failures to rise. • PEO Benefit Plan Legislation. We saw an increase in state efforts to regulate PEO health plans.
As the patchwork of laws becomes increasingly complex, we expect the effort and cost of complying with all of the requirements to also increase and the likelihood of compliance failures to rise. • PEO Benefit Plan Legislation. Various state governments from time to time seek to regulate PEO health plans.
For example, while our software may facilitate payroll processing for HRIS clients, TriNet is not the employer of record and acts only in a software provider role. HRIS clients generally remain responsible for, among other things, payroll funding, workers’ compensation insurance, obtaining and administering group health, welfare and retirement benefits, administering unemployment claims, and in some cases payroll tax reporting.
For example, while we may facilitate payroll processing for ASO clients, TriNet is not the employer of record. ASO clients generally remain responsible for, among other things, workers’ compensation insurance, obtaining and sponsoring group health, welfare and retirement benefits, administering unemployment claims, and in some cases payroll tax reporting.
WSEs and HRIS Users frequently meet these wage base caps in the first two quarters of the year, depending on the compensation level, resulting in lower related billing contributions to PSR in the latter half of the year.
Our clients frequently meet these wage base caps in the first two quarters of the year, depending on the compensation level of the relevant employees, resulting in lower related billing contributions to PSR in the latter half of the year.
TRINET 9 2023 FORM 10-K BUSINESS Table of Contents For more information regarding the developments above, refer to Part II, Item 7. MD&A in this Form 10-K Part I, Item 1A. Risk Factors , and Part I, Item 1C. Cybersecurity . Our Technology and Service Development Efforts We continued to make significant investments in our PEO and HRIS technology platforms.
For more information regarding the developments above, refer to Part II, Item 7. MD&A and Part I, Item 1A. Risk Factors in this Form 10-K. Our Technology and Service Development Efforts We continued to make significant investments in our PEO technology platform.
Risk Mitigation We monitor employment-related legal and regulatory developments at the federal, state, and local levels to help our PEO and HRIS clients comply with employment laws and mitigate many of the risks associated with being an employer.
TRINET 7 2024 FORM 10-K BUSINESS Table of Contents Risk Mitigation We monitor employment-related legal and regulatory developments at the federal, state, and local levels to help our PEO and ASO clients comply with employment laws and mitigate many of the risks associated with being an employer.
Risk Factors , of this Form 10-K, under the heading – " We must continue to work to improve our services to meet the expectations of our clients and regulators, or we may lose our clients and materially harm our business". Our Sales and Marketing Organizations We sell our solutions primarily online and through our direct sales organization.
Risk Factors , of this Form 10-K, under the heading – " We must continue to work to improve our services to meet the expectations of our clients and regulators, or we may lose our clients and materially harm our business".
We do not co-employ our HRIS Users and do not provide TriNet sponsored health benefits, workers’ compensation, or EPLI coverage. As a result, our HRIS services competes with services provided by a wider array of HCM companies and HRIS providers outside of the PEO industry. For additional information about our competition, please refer to Part I, Item 1A.
We do not co-employ the employees of our ASO clients and do not provide them with TriNet sponsored health benefits. As a result, our ASO services compete with services provided by a wider array of HCM companies outside of the PEO industry. For additional information about our competition, please refer to Part I, Item 1A.
Our professionals assist our clients in implementing HR best practices to help avoid and reduce the cost of employment-related liabilities. Our preferred outside employment law firms defend covered EPLI claims. Technology Platform We currently use separate technology platforms for our PEO and HRIS clients.
Our professionals assist our clients in implementing HR best practices to help avoid and reduce the cost of employment-related liabilities. Our preferred outside employment law firms defend covered EPLI claims.
We compete with insurance brokers and other providers of insurance and benefits coverage, and our PEO offerings must be priced competitively with those provided by these competitors in order for us to attract and retain our clients.
Our customers may obtain their own insurance through brokers and other providers of insurance and benefits coverage, and our PEO offerings must be priced competitively with those provided by these competitors for us to attract and retain our clients.
Risk Factors , of this Form 10-K, under the heading - " Legal and Compliance Risks". Employer Status under ERISA and State Laws As part of our PEO services, we sponsor employee benefit plan offerings as the employer of our WSEs under the Internal Revenue Code of 1986, as amended (the "Code"), ERISA and applicable state law.
TRINET 12 2024 FORM 10-K BUSINESS Table of Contents Employer Status under ERISA and State Laws As part of our PEO services, we sponsor employee benefit plan offerings as the employer of our WSEs under the Internal Revenue Code of 1986, as amended (the "Code"), ERISA and applicable state law.
Our clients, WSEs, and HRIS Users can access payroll and tax information using our various online and mobile tools. Our payroll tax administration and tax credit services include calculating, withholding, remitting and reporting certain federal, state and local payroll and unemployment taxes on behalf of clients, WSEs, and HRIS Users.
Our payroll tax administration and tax credit services include calculating, withholding, remitting and reporting certain federal, state and local payroll and unemployment taxes on behalf of clients and WSEs.
Our OMS clients receive PEO services like HR, payroll, payroll tax, and risk management from TriNet while sponsoring their own health benefits obtained through a broker. Our HRIS clients use our HRIS software solution to manage their own selected group health plans.
Our OMS clients receive PEO services such as HR, payroll, payroll tax, and risk management from TriNet while sponsoring their own health benefits obtained through a broker.
We are also subject, among other applicable federal laws, rules and regulations, to the rules and regulations promulgated under the authority of the Federal Trade Commission. We expect that the federal government’s approach to data privacy and security rules and regulations will continue to evolve in the coming years.
We are also subject, among other applicable federal laws, rules and regulations, to the rules and regulations promulgated under the authority of the Federal Trade Commission. In recent years, the federal government has increased its focus on and regulation of data privacy and security, and we expect this to evolve in the coming years.
In 2023, we experienced increased health benefits utilization and inflation in health costs. We believe this occurred in part due to market-wide pharmaceutical price increases, as well as the impact of rising wages and other costs which led to increased costs associated with contract renewals between health insurers and health care providers.
In 2024, we experienced higher than anticipated health benefits utilization and inflation in healthcare costs, which are affected by factors such as market-wide pharmaceutical price increases, as well as the impact of rising wages and other costs which led to increased costs associated with contract renewals between health insurers and health care providers. • Tax Credit Backlogs .
These investments are intended to provide our clients, WSEs, and HRIS Users with enhanced functionality, ease of use, HR management options, security and an optimized user experience. We intend to continue making these and other similar investments in 2024 and beyond.
These investments are intended to provide our clients (including PEO and ASO clients) and WSEs with enhanced functionality, ease of use, HR management options, security and an optimized user experience. We intend to continue making these and other similar investments in 2025 and beyond to drive operating efficiencies and improve client retention and satisfaction over the long term.
Our PEO service competitors include large PEOs such as the TotalSource unit of Automatic Data Processing, Inc., the TRINET 10 2023 FORM 10-K BUSINESS Table of Contents PEO operations of Paychex, Inc. and Insperity, Inc., as well as numerous specialized and smaller PEOs and similar HR service providers with PEO operations.
PEO services remain our core business and other PEOs continue to represent our most significant competition. Our PEO service competitors include large PEOs such as the TotalSource unit of Automatic Data Processing, Inc., the PEO operations of Paychex, Inc. and Insperity, Inc., as well as numerous specialized and smaller PEOs and similar HR service providers with PEO operations.
We have aligned our PEO sales organization by industry vertical with the goal of growing profitable market share in targeted industries. Our PEO vertical approach deepens our network of relationships and gives us an understanding of the unique HR needs facing SMBs in those industries. Our sales representatives are supported by marketing, lead generation efforts, and referral sources and networks.
Our PEO vertical approach deepens our network of relationships and gives us an understanding of the unique HR needs facing SMBs in those industries. Our sales representatives are supported by marketing, brand, lead generation efforts, and referral sources and networks. We increasingly use technology and remote communication tools to engage with customers and prospects virtually.
We also generate sales opportunities, and promote brand awareness, client retention, and build our reputation as HCM thought leaders, within key industry verticals, through marketing alliances and other indirect channels, such as accounting firms, venture capital firms, incubators, insurance brokers, and vertical market industry associations.
We seek to generate sales opportunities, build brand awareness, enhance client retention, and establish our reputation as an HCM thought leader in key industry verticals through marketing alliances and indirect channels. These include partnerships with insurance brokers, accounting firms, venture capital firms, incubators and industry associations.
TRINET 6 2023 FORM 10-K BUSINESS Table of Contents Payroll Services We help our PEO and HRIS clients manage their employee compensation by providing multi-state payroll processing, tax administration and tax credit services and other payroll-related services, such as time and attendance management, time off and overtime tracking, and expense management solutions.
Payroll Services We help our PEO and ASO clients manage their employee compensation by providing multi-state payroll processing, tax administration and tax credit services and other payroll-related services, such as time and attendance management, time off and overtime tracking, and expense management solutions. Our clients and WSEs can access payroll and tax information using our various online and mobile tools.
Our Clients and Geographies Our clients are distributed across a variety of industries. We support these different clients using our suite of HCM offerings. Our PEO clients generally execute annual service contracts with us that automatically renew.
TRINET 10 2024 FORM 10-K BUSINESS Table of Contents Our Clients and Geographies Our clients are distributed across a variety of industries. Our PEO clients generally execute annual service contracts with us that automatically renew.
The higher level of responsibility that our PEOs assume, and risks that our PEOs manage, for our PEO clients is a key differentiator between our PEO and HRIS services. Market Trends and Developments Affecting Our Business in 2023 The U.S. economy grew modestly during 2023 with unemployment remaining low while inflation began to abate over the year.
The additional responsibilities that PEOs assume, and risks that PEOs manage, for our PEO clients is a key difference between our PEO and ASO services. TRINET 9 2024 FORM 10-K BUSINESS Table of Contents Market Trends and Developments Affecting Our Business The U.S. economy grew modestly during 2024 with unemployment remaining steady while inflation stabilized during the year.
TRINET 11 2023 FORM 10-K BUSINESS Table of Contents The Laws and Regulations that Affect Our Business Our business operates in a complex legal and regulatory environment due to a myriad of federal, state and local laws and regulations that impact our business.
The Laws and Regulations that Affect Our Business Our business operates in a complex legal and regulatory environment due to myriad federal, state and local laws and regulations that impact our business. Below is a summary of what we believe are the most important legal and regulatory issues specific to our business.
These higher costs over the year were and continue to be reflected in 2023 health claims. • Tax Credit Backlogs . Many of the key economic assistance programs that SMBs relied on during the COVID-19 pandemic have now expired, including the Employee Retention Tax Credit (ERTC).
Many of the key economic assistance programs that SMBs relied on during the COVID-19 pandemic have now expired, including the ERTC.
Below is a summary of what we believe are the most important legal and regulatory issues specific to our business. For additional information on the impact of these and other laws and regulations on our business and results of operations, refer to Part I, Item 1A.
For additional information on the impact of these and other laws and regulations on our business and results of operations, refer to Part I, Item 1A. Risk Factors , of this Form 10-K, under the heading - " Legal and Compliance Risks".
We recognize the incredible opportunity that can only be realized by working together, with a shared view of how we support our clients, WSEs and HRIS Users. This is illustrated in our core values: • Lead with the customer - We are accessible, responsive and empowered to serve our customers.
Together, we strive to become the most trusted advisor to SMBs by harnessing the power of scale. We recognize the incredible opportunity that can only be realized by working together, with a shared view of how we support our clients, WSEs and ASO clients.
Our clients experienced significant staffing reductions in the technology sector, and reductions in the professional services sector, while staffing levels in other industries remained stable. Overall in 2023, our SMB clients still increased their staffing, however the increase was significantly lower overall than historic trends. • Continued Insurance Cost Variability and Volatility .
Our clients experienced staffing reductions in the technology and professional services sectors, while staffing levels rose in other sectors such as main street and nonprofit. Other industries remained stable. Overall in 2024, net hiring was low relative to our historical experience. • Continued Insurance Cost Variability and Volatility .
Changes to the laws and regulations that govern what it means to be an employer or an employee may require us to make significant changes in our operations and may negatively affect our business". Our Human Capital Resources As of December 31, 2023, we had approximately 347,500 WSEs, 200,800 HRIS Users and 3,600 colleagues.
Risk Factors , of this Form 10-K, under the heading - "The definition of employers, employees and independent contractors is evolving. Changes to the laws and regulations that govern what it means to be an employer or an employee may require us to make significant changes in our operations and may negatively affect our business".
We are successful when our customers are successful. • Stand together - We bring together diverse backgrounds, experiences and ideas to create better outcomes. We collaborate across boundaries, communicate openly and respect each other. • Act with integrity - We are honest, transparent, ethical and fair.
This is illustrated in our core values: • Lead with the customer - We are accessible, responsive and empowered to serve our customers. We are successful when our customers are successful. • Stand together - We bring together diverse backgrounds, experiences and ideas to create better outcomes.
HRIS Services Our HRIS services primarily consists of our self-directed, cloud-based HRIS software solution which allows clients to manage their HR needs and the option to add tools such as payroll processing and benefits management to provide HCM solutions that flex dynamically over time based on the needs of our clients.
We now refer to these offerings as ASO services, and are marketed as "HR Plus". ASO services include payroll processing, benefits management, HR administration and compliance management to provide HCM solutions that our clients can tailor dynamically over time based on their needs.
Our online tools also incorporate workforce analytics, allowing PEO clients to generate HR, payroll, total compensation and other custom reports. Our HRIS software allows our HRIS clients to manage most of the same functions as our PEO technology platform and it is optimized to provide HRIS clients with customizable and flexible reporting tools and analytics to fit specific client needs.
Our online tools also incorporate workforce analytics, allowing PEO clients to generate HR, payroll, total compensation and other custom reports. Contractor and Global Workforce Support TriNet provides clients with a simplified solution for handling independent contractors with our contractor payments application, featuring a software solution that allows clients to onboard, manage and pay independent contractors.
Lack of uniformity of laws and regulations, which we expect will increase as various states and countries enact data privacy laws, creates significant legal complexities for companies like TriNet that operate nationwide and in India and Canada.
Moreover, without the enactment of a comprehensive federal privacy law, we are required to comply with a patchwork of state laws that lacks uniformity which creates significant legal complexities for companies like TriNet that operate nationwide.
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Item 1. Business TriNet is a leading provider of comprehensive and flexible HCM solutions designed to address a wide range of SMB needs as they change over time. Our flexible HCM solutions free SMBs from HR complexities and empower SMBs to focus on what matters most - growing their business and enabling their people.
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Item 1. Business TriNet is a leading provider of HR solutions for SMBs. We offer advanced technology-enabled services that include human capital expertise, employee benefits such as health insurance and retirement plans, payroll and payroll tax administration, risk mitigation, and compliance consulting.
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TriNet offers access to human capital expertise, benefits, payroll, risk mitigation and compliance, all enabled by industry leading technology capabilities. TriNet's suite of products also includes services and software-based solutions to help streamline workflows by connecting HR, benefits, payroll, time and attendance, and employee engagement.
Added
Our long-term objective is to be the premier provider of HR services for a broad range of SMBs through industry-leading benefits, sales distribution excellence, and a world-class services delivery model. Since our founding in 1988, TriNet has served, and continues to serve, thousands of SMBs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinancial Statements and Supplementary Data, of this Form 10-K for additional information about the legal proceedings we are currently involved in and future proceedings that we may face. Current and future legal proceedings may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, results of operations, financial condition and liquidity.
Biggest changeCurrent and future legal proceedings may result in substantial costs and may divert management’s attention and resources, which may seriously harm our business, results of operations, financial condition and liquidity. In addition, the tax authorities in the U.S. regularly examine our tax returns. Refer to Note 12 in Part II, Item 8.
Some of these programs include the 2015 PATH Act, which allows SMBs to use R&D tax credits submitted on the SMB’s income tax return to reduce the SMB’s payroll taxes, and the CARES Act and FFCRA Act payroll tax credit and payroll tax deferral program enacted in 2020 and 2021, which allow SMBs to defer certain payroll tax obligations to a later date or to receive payroll tax credits based on SMB employment practices that are beyond our control.
Some of these programs include the 2015 PATH Act, which allows SMBs to use R&D tax credits submitted on the SMB’s income tax return to reduce the SMB’s payroll taxes, and the CARES Act and FFCRA payroll tax credit and payroll tax deferral program enacted in 2020 and 2021, which allow SMBs to defer certain payroll tax obligations to a later date or to receive payroll tax credits based on SMB employment practices that are beyond our control.
For example, new legislation and proposed rules in New Mexico seek to prevent WSEs of small group employers from participation in PEO sponsored large group market health plans, with exception for plans the PEOs register as MEWAs under state law.
For example, legislation and proposed rules in New Mexico seek to prevent WSEs of small employers from participation in PEO sponsored large group market health plans, with exception for plans the PEOs register as MEWAs under state law.
We must comply with constantly evolving, data privacy and security laws and regulations, which may require substantial costs or changes to our business, and any actual or perceived compliance failure could result in reduced revenue, increased costs, liability claims, regulatory penalties, and damage to our reputation.
We must comply with constantly evolving, data privacy, AI and security laws and regulations, which may require substantial costs or changes to our business, and any actual or perceived compliance failure could result in reduced revenue, increased costs, liability claims, regulatory penalties, and damage to our reputation.
Any such outcome or adjustment would require significant investment in time, cost and management attention and would have a material impact on our clients and WSEs and the type of products and services we provide to them, which could have a material adverse effect on our business and results of operations.
Any such outcome or adjustment would require significant investment in time, cost and management attention and would have an adverse impact on our clients and WSEs and the type of products and services we provide to them, which could have a material adverse effect on our business and results of operations.
Our future operating results and stock price are subject to fluctuations and quarterly variations based upon a variety of factors, many of which are not within our control, including, without limitation: • the volume and severity of health and workers' compensation insurance claims made by our WSEs, recorded as part of our insurance costs, and the timing of related claims information provided by our insurance carriers, • the amount and timing of our insurance premiums and other insurance costs, operating expenses and capital expenditures, • the number of our new clients and the number of WSEs or HRIS Users employed by each new client, • the retention or loss of existing clients, for any reason, including third-party acquisition, • a reduction in the number of WSEs or HRIS Users employed by existing clients, • a reduction in the rate of WSE or HRIS User hiring by existing clients, • the timing of client payments and payment defaults by clients, • the costs associated with our acquisitions of companies, assets and technologies, • any payments or draw downs on our credit facility, • any unanticipated expenses, such as litigation or other dispute-related settlement payments and compliance expenses arising from changes in regulations or regulatory enforcement, • any expenses we incur for geographic and service expansion and service enhancements, • any changes in laws or adverse interpretation or enforcement of laws, which may require us to change the manner in which we operate and/or increase our regulatory compliance costs, • any changes in our effective tax rate, • the issuance of common stock or debt to pay for future acquisitions, which could dilute our stockholders or subject us to significant debt service obligations, TRINET 28 2023 FORM 10-K RISK FACTORS Table of Contents • the repurchase of our common stock under our stock repurchase program or otherwise, which could impact earnings per share and increase the ownership percentage of non-participating stockholders, • amortization expense, or the impairment of intangible assets and goodwill, associated with past or future acquisitions, and • the impact of new accounting pronouncements.
Our future operating results and stock price are subject to fluctuations and quarterly variations based upon a variety of factors, many of which are not within our control, including, without limitation: • the volume and severity of health and workers' compensation insurance claims made by our WSEs, recorded as part of our insurance costs, and the timing of related claims information provided by our insurance carriers, • the amount and timing of our insurance premiums and other insurance costs, operating expenses and capital expenditures, • the number of our new clients and the number of WSEs employed by each new client, • the retention or loss of existing clients, for any reason, including third-party acquisition, • a reduction in the number of WSEs employed by existing clients, • a reduction in the rate of WSE hiring by existing clients, • the timing of client payments and payment defaults by clients, • the costs associated with our acquisitions of companies, assets and technologies, • any payments or draw downs on our credit facility, TRINET 28 2024 FORM 10-K RISK FACTORS Table of Contents • any unanticipated expenses, such as litigation or other dispute-related settlement payments and compliance expenses arising from changes in regulations or regulatory enforcement, • any expenses we incur for geographic and service expansion and service enhancements, • any changes in laws or adverse interpretation or enforcement of laws, which may require us to change the manner in which we operate and/or increase our regulatory compliance costs, • any changes in our effective tax rate, • the issuance of common stock or debt to pay for future acquisitions, which could dilute our stockholders or subject us to significant debt service obligations, • the repurchase of our common stock under our stock repurchase program or otherwise, which could impact earnings per share and increase the ownership percentage of non-participating stockholders, • amortization expense, or the impairment of intangible assets and goodwill, associated with past or future acquisitions, and • the impact of new accounting pronouncements.
As an employer of WSEs under ERISA, we must manage our plans in accordance with ERISA requirements, which could impact how we fulfill plan obligations, how we price services, the features of our benefit plans, and how we administer and operate our plans.
As the employer of WSEs under ERISA, we must manage our plans in accordance with ERISA requirements, which could impact how we fulfill plan obligations, how we price services, the features of our benefit plans, and how we administer and operate our plans.
Acquisitions involve numerous risks, some of which we have experienced in the past and which we may experience in the future, including: • over-valuing and over-paying for businesses and technologies, • increased operating costs and unanticipated costs to successfully integrate the clients, WSEs and HRIS Users, operations, systems, technologies, services and personnel of the acquired business, • establishing or maintaining required internal controls, procedures and policies for the acquired business, • unanticipated costs and risks arising from the unique corporate culture and risk appetite of acquired businesses, • diversion of management’s attention from other business concerns, • litigation resulting from the activities of the acquired business, • insufficient revenues, insurance or seller indemnification to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired businesses, • entering markets in which we have no prior experience and may not succeed, and • potential loss of key employees or key clients of the acquired business as a result of the acquisition or integration of the acquired business.
Acquisitions involve numerous risks, some of which we have experienced in the past and which we may experience in the future, including: • over-valuing and over-paying for businesses and technologies, • increased operating costs and unanticipated costs to successfully integrate the clients and WSEs, operations, systems, technologies, services, personnel and other stakeholders of the acquired business, • establishing or maintaining required internal controls, procedures and policies for the acquired business, • unanticipated costs and risks arising from the unique corporate culture and risk appetite of acquired businesses, • diversion of management’s attention from other business concerns, • litigation resulting from the activities of the acquired business, • insufficient revenues, insurance or seller indemnification to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired businesses, • entering markets in which we have no prior experience and may not succeed, and • potential loss of key employees or key clients of the acquired business as a result of the acquisition or integration of the acquired business.
Estimating these accrued costs requires us to consider a number of factors, such as the components of MCT, seasonal trends and the impact of events like the COVID-19 pandemic, which requires significant judgment.
Estimating these accrued costs requires us to consider a number of factors, such as the components of MCT, seasonal trends and the impact of events such as the COVID-19 pandemic, which requires significant judgment.
Any such consequence may result in a material adverse effect on our business and results of operations. We have seen increased state efforts to regulate PEO health plans.
Any such consequence may result in a material adverse effect on our business and results of operations. We have seen state efforts to regulate PEO health plans.
New laws, changes in laws or adverse application or interpretation of laws that depend on the residence and work location of WSEs and HRIS Users could reduce or eliminate the attractiveness of our services, significantly increase our compliance costs and the cost to provide our services, or require us to make substantial changes to the way in which we operate, and any one of these outcomes could result in a material adverse effect on our financial condition and results of operations.
New laws, changes in laws or adverse application or interpretation of laws that depend on the residence and work location of WSEs could reduce or eliminate the attractiveness of our services, significantly increase our compliance costs and the cost to provide our services, or require us to make substantial changes to the way in which we operate, and any one of these outcomes could result in a material adverse effect on our financial condition and results of operations.
Refer to Note 1 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for further discussion of these policies. Under our risk-based health insurance policies, which make up the majority of our health plans and claims p aid in 2023, we assume the risk of variability in future health claims costs for our enrollees.
Refer to Note 1 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for further discussion of these policies. Under our risk-based health insurance policies, which make up the majority of our health plans and claims p aid in 2024, we assume the risk of variability in future health claims costs for our enrollees.
Business, of this Form 10-K, whether they apply to employers generally or specifically to PEOs or to our co-employment relationships could: • reduce or eliminate the value and benefits that clients realize by using our services, • change or eliminate the types of services we provide, • require us to make significant changes to how we do business and provide services, • require us to modify our current business practices or operations, • affect the extent and type of employee benefits that employers and co-employers can or must provide employees, TRINET 24 2023 FORM 10-K RISK FACTORS Table of Contents • alter the amount, timing and type of taxes employers, co-employers, clients, WSEs, and HRIS Users are required to pay and that we must manage for and collect from our clients, • increase the cost and complexity of the licensing requirements for our business operations, • create or increase our liability and responsibilities to our clients and WSEs, HRIS Users, and/or • mandate new compliance requirements, disclosures or services.
Business, of this Form 10-K, whether they apply to employers generally or specifically to PEOs or to our co-employment relationships could: TRINET 24 2024 FORM 10-K RISK FACTORS Table of Contents • reduce or eliminate the value and benefits that clients realize by using our services, • change or eliminate the types of services we provide, • require us to make significant changes to how we do business and provide services, • require us to modify our current business practices or operations, • affect the extent and type of employee benefits that employers and co-employers can or must provide employees, • alter the amount, timing and type of taxes employers, co-employers, clients and WSEs are required to pay and that we must manage for and collect from our clients, • increase the cost and complexity of the licensing requirements for our business operations, • create or increase our liability and responsibilities to our clients and WSEs, and/or • mandate new compliance requirements, disclosures or services.
Any such disruption, even if only for a short period of time and even if we are not at fault, can have a significant impact on our clients, WSEs and HRIS Users by preventing us from timely processing payroll, paying payroll taxes and other liabilities and otherwise disrupting our business operations.
Any such disruption, even if only for a short period of time and even if we are not at fault, can have a significant impact on our clients and WSEs by preventing us from timely processing payroll, paying payroll taxes and other liabilities and otherwise disrupting our business operations.
While regulations governing HRIS services and tax credit support services do not involve the complexity of a co-employment relationship, these services are in some ways also highly regulated and such regulations can, and do, change regularly at the federal, state and local levels.
While regulations governing ASO services and tax credit support services do not involve the complexity of a co-employment relationship, these services are in some ways also highly regulated and such regulations can, and do, change regularly at the federal, state and local levels.
We will continue to vigorously defend our position that we are the sole employer of our WSEs for the purposes of Sections 3(5) and 3(40) of ERISA, and therefore that our health plans are single employer plans entitled to ERISA’s preemption of applicable state laws.
We will continue to vigorously defend our opinion that we are the sole employer of our WSEs for the purposes of Sections 3(5) and 3(40) of ERISA, and therefore that our health plans are single employer plans entitled to ERISA’s preemption of applicable state laws.
Any state regulations that change existing definitions and classifications of employers, employees and independent contractors could affect the types of client employees we can support through our PEO and HRIS services, the way in which we provide TriNet-sponsored benefits to our WSEs, the way in which we report and remit payroll taxes to tax authorities, and our legal liability for the actions and inactions of our clients, which may negatively impact client demand for the services we provide, require us to modify or change how we operate our business and have a material adverse effect on our business and results of operations.
Regulations that change existing definitions and classifications of employers, employees and independent contractors could affect the types of client employees we can support through our PEO and ASO services, the way in which we provide TriNet-sponsored benefits to our WSEs, the way in which we report and remit payroll taxes to tax authorities, and our legal liability for the actions and inactions of our clients, which may negatively impact client demand for the services we provide, require us to modify or change how we operate our business and have a material adverse effect on our business and results of operations.
For example, we have significant concentrations of PEO clients in California, New York, Florida, Texas and Massachusetts, which account for approximately 64% in aggregate of our paid WSEs for the year ended December 31, 2023.
For example, we have significant concentrations of PEO clients in California, New York, Florida, Texas and Massachusetts, which account for approximately 64% in aggregate of our paid WSEs for the year ended December 31, 2024.
Maintaining the security and confidentiality of this information is critically important to our clients, WSEs, HRIS Users and colleagues. For more information regarding our cybersecurity risk management framework and governance, refer to Part I, Item 1C. Cybersecurity .
Maintaining the security and confidentiality of this information is critically important to our clients, WSEs and colleagues. For more information regarding our cybersecurity risk management framework and governance, refer to Part I, Item 1C. Cybersecurity .
The operation of our business relies on the complex integration of numerous hardware and software subsystems across several service centers to manage a large volume of daily client, WSE and HRIS User transactions.
The operation of our business relies on the complex integration of numerous hardware and software subsystems across several service centers to manage a large volume of daily client and WSE transactions.
Our HRIS services can also be subject to complex federal, state and local laws and regulations regarding payroll agents, employment and payroll taxes, insurance producers, banking and money transmission, and other licensing requirements.
Our ASO services can also be subject to complex federal, state and local laws and regulations regarding payroll agents, employment and payroll taxes, insurance producers, banking and money transmission, and other licensing requirements.
Our credit facility contains, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us subject to customary exceptions, including restricting our ability to: • incur, assume or prepay debt or incur or assume liens, • pay dividends or distributions or redeem or repurchase capital stock, • make loans, investments or acquisitions, • enter into sale-leaseback transactions, • enter into new lines of business, • complete a significant corporate transaction, such as a merger or sale of our company or its assets, and • enter into agreements that prohibit the incurrence of liens or the payment by our subsidiaries of dividends and distributions.
Our credit facility and the indentures governing the 2029 Notes and the 2031 Notes contain, and any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on us subject to customary exceptions, including restricting our ability to: • incur, assume or prepay debt or incur or assume liens, • pay dividends or distributions or redeem or repurchase capital stock, • make loans, investments or acquisitions, • enter into sale-leaseback transactions, • enter into new lines of business, • complete a significant corporate transaction, such as a merger or sale of our company or its assets, and • enter into agreements that prohibit the incurrence of liens or the payment by our subsidiaries of dividends and distributions.
Other threats include inadvertent security breaches or disclosure, misuse or unauthorized access or other improper actions by our colleagues, clients, WSEs, HRIS Users, service providers and other business partners. Cyber-attacks, breaches, disclosures and other data-related incidents are increasing in frequency and evolving in nature.
Other threats include inadvertent security breaches or disclosures, misuse or unauthorized access or other improper actions by our colleagues, clients, WSEs, service providers and other business partners. Cyber-attacks, breaches, disclosures and other data-related incidents are increasing in frequency and evolving in nature.
We believe that we qualify as the sole employer of WSEs for the purposes of Sections 3(5) and 3(40) of ERISA and that our health plans are single-employer plans that, as such, are entitled to ERISA’s preemption of state law.
In our opinion, we qualify as the sole employer of WSEs for the purposes of Sections 3(5) and 3(40) of ERISA and that our health plans are single-employer plans that, as such, are entitled to ERISA’s preemption of state law.
Business , above for more details. Our competitors, regardless of industry, may have greater marketing and financial resources than we have, and may be better positioned than we are in certain markets. Increased competition in our industry could result in price reductions or loss of market share, any of which could harm our business.
Our competitors, regardless of industry, may have greater marketing and financial resources than we have, and may be better positioned than we are in certain markets. Increased competition in our industry could result in price reductions or loss of market share, any of which could harm our business.
TRINET 17 2023 FORM 10-K RISK FACTORS Table of Contents Our co-employment relationship with our worksite employees exposes us to unique business risks. As a co-employer of client WSEs, we assume some of the risks and obligations of an employer.
TRINET 18 2024 FORM 10-K RISK FACTORS Table of Contents Our co-employment relationship with our worksite employees exposes us to unique business risks. As a co-employer of client WSEs, we assume some of the risks and obligations of an employer.
As of January 31, 2024, Atairos beneficially owned approximately 36% of our outstanding common stock, and all of our directors, executive officers and their affiliates, including Atairos, beneficially own, in the aggregate, approximately 37% of our outstanding common stock.
As of January 31, 2025, Atairos beneficially owned approximately 37% of our outstanding common stock, and all of our directors, executive officers and their affiliates, including Atairos, beneficially own, in the aggregate, approximately 37% of our outstanding common stock.
Our insurance costs, which comprise a significant portion of our overall costs, are significantly affected by WSEs health and workers' compensation insurance claims experience. We use fully insured risk-based, and fully insured guaranteed-cost, insurance plans provided by third-party insurance carriers.
Our insurance costs, which comprise a significant portion of our overall costs, are significantly affected by WSEs' health and workers' compensation insurance claims experience. We use fully insured risk-based, and fully insured guaranteed-cost, insurance policies provided by third-party insurance carriers.
Our ability to control the workplace environment of our clients is limited. Yet, we may be subject to liability for violations of labor and employment laws, workers' compensation laws, industry-specific laws that apply to the businesses our clients operate, and other laws that apply to our clients or to employers generally.
We do not control the workplace environment of our clients. Yet, we may be subject to liability for violations of labor and employment laws, workers' compensation laws, industry-specific laws that apply to the businesses our clients operate, and other laws that apply to our clients or to employers generally.
Our top five PEO markets, California, New York, Florida, Texas and Massachusetts, accounted for approximately 64% in aggregate of our paid WSEs for the year ended December 31, 2023.
Our top five PEO markets, California, New York, Florida, Texas and Massachusetts, accounted for approximately 63% in aggregate of our paid WSEs for the year ended December 31, 2024.
In order to attract and retain clients, we believe that we must compete in our industry effectively on the basis of the value proposition that we deliver to our clients, which includes TRINET 19 2023 FORM 10-K RISK FACTORS Table of Contents • client experience and satisfaction, • the relevance and cost-effectiveness of our PEO benefit plans, • our PEO vertical market expertise, • our service and product pricing, • our brand awareness and reputation, • our ability to innovate and respond to client needs and regulatory mandates rapidly, • the performance of our online and mobile solutions, software and technology platforms, and • our human resources subject matter expertise.
In order to attract and retain clients, we believe that we must compete in our industry effectively on the basis of the value proposition that we deliver to our clients, which includes • client experience and satisfaction, • the relevance and cost-effectiveness of our PEO benefit plans, • our PEO vertical market expertise, • our service and product pricing, • our brand awareness and reputation, • our ability to innovate and respond to client needs and regulatory mandates rapidly, • the performance of our online and mobile solutions, software and technology platforms, and • our human resources subject matter expertise.
We face significant competition on a national and regional level from other PEOs, ASOs that do not use co-employment relationships, and HRIS software providers, as well as from other existing, and potential, companies and industries that service, or may in the future service, client HCM needs. Refer to the heading “ Competition” under Part I, Item 1.
We face significant competition on a national and regional level from other PEOs, and ASOs that do not use co-employment relationships, as well as from other existing, and potential, companies and industries that service, or may in the future service, client HCM needs. Refer to the heading “ Competition” under Part I, Item 1. Business , above for more details.
The terms of our credit facility may restrict our current and future operations, which would impair our ability to respond to changes in our business and to manage our business.
The terms of our current or future indebtedness may restrict our current and future operations, which would impair our ability to respond to changes in our business and to manage our business.
TRINET 23 2023 FORM 10-K RISK FACTORS Table of Contents For details regarding these data privacy and security laws and regulations discussed above and that apply to our operations, refer to Part I, Item 1. Business , of this Form 10-K, under the heading “ The Laws and Regulations that affect Our Business: Data Privacy and Security Regulations” .
For details regarding these data privacy and security laws and regulations discussed above and that apply to our operations, refer to Part I, Item 1. Business , of this Form 10-K, under the heading “ The Laws and Regulations that affect Our Business: Data Privacy and Security Regulations” .
For example, for a variety of reasons, including due to changes in industry or client focus, compensation structure, third-party competition for sales talent and other factors we have experienced elevated sales force attrition in the past and may experience it in the future.
For example, for a variety of reasons, including due to changes in industry or client focus, compensation structure, third-party competition for sales talent and other factors we have experienced elevated sales force attrition in the TRINET 21 2024 FORM 10-K RISK FACTORS Table of Contents past and may experience it in the future.
Depending on the applicable jurisdiction, these laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts, requiring attention to changing regulatory requirements.
TRINET 23 2024 FORM 10-K RISK FACTORS Table of Contents Depending on the applicable jurisdiction, these laws may be more stringent or broader in scope, or offer greater individual rights, with respect to confidential, sensitive and personal information than federal, international or other state laws, and such laws may differ from each other, which may complicate compliance efforts, requiring attention to changing regulatory requirements.
The laws and regulations that govern employees were not drafted with remote workers in mind and changes in, uncertainty regarding, or adverse application of these laws could negatively affect our business.
The laws and regulations that govern employees were not drafted with remote workers in mind and changes in, uncertainty regarding, or adverse application of these laws could negatively affect our business. Many employees, including WSEs, are working from home.
The definition of employers, employees and independent contractors is evolving. Changes to the laws and regulations that govern what it means to be an employer or an employee may require us to make significant changes in our operations and may negatively affect our business.
Such changes could have a material adverse effect on our business and results of operations. The definition of employers, employees and independent contractors is evolving. Changes to the laws and regulations that govern what it means to be an employer or an employee may require us to make significant changes in our operations and may negatively affect our business.
TriNet TRINET 27 2023 FORM 10-K RISK FACTORS Table of Contents does not provide broker insurance, but we do maintain producer licenses in all 50 states and select U.S. territories for our HRIS services and for our OMS product family, which offers clients the option to receive PEO services from TriNet while sponsoring their own health benefits obtained through brokers.
TriNet does not provide broker insurance, but we do maintain producer licenses in all 50 states and select U.S. territories for our ASO services and for our OMS product family, which offers clients the option to receive PEO services from TriNet while sponsoring their own health benefits obtained through brokers.
Angelakis, the Chairman and CEO of Atairos, to our board of directors and agreed to nominate Mr. Angelakis or another designee of Atairos reasonably acceptable to our Nominating and Corporate Governance Committee for election at future annual meetings until Atairos’ beneficial ownership falls below 15% of our common stock.
Angelakis or another designee of Atairos reasonably acceptable to our Nominating and Corporate Governance Committee for election at future annual meetings until Atairos’ beneficial ownership falls below 15% of our common stock.
TRINET 21 2023 FORM 10-K RISK FACTORS Table of Contents We and our third-party service providers and subcontractors collect, store, use, retain, disclose, transfer and process a significant amount of confidential, sensitive and personal information from and about our actual and potential clients, WSEs, HRIS Users and colleagues, including bank account numbers, social security numbers, tax information, PHI, health claim information, retirement account information, and payroll data.
We and our third-party service providers and subcontractors collect, store, use, retain, disclose, transfer and process a significant amount of confidential, sensitive and personal information from and about our actual and potential clients, WSEs and colleagues, including bank account numbers, social security numbers, tax information, PHI, health claim information, retirement account information, and payroll data.
We may be unable to recover costs related to these claims based on the fees established in our client service agreements, and any failure to recover such costs may have a material adverse effect on our business, financial condition and results of operations.
We may be unable to recover costs related to TRINET 19 2024 FORM 10-K RISK FACTORS Table of Contents these claims based on the fees established in our client service agreements, and any failure to recover such costs may have a material adverse effect on our business, financial condition and results of operations.
TRINET 30 2023 FORM 10-K PROPERTIES, LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES Table of Contents
TRINET 31 2024 FORM 10-K PROPERTIES, LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES Table of Contents
Atairos, our largest stockholder, may have significant influence over our Company, and the ownership of capital stock, and thus the voting control, of our Company remains concentrated in our executive officers, directors and their affiliates, which limits your ability to influence corporate matters.
Atairos, our largest stockholder, may have significant influence over our Company, and the ownership of capital stock, and thus the voting control, of our Company remains concentrated in our executive officers, directors and their affiliates, which limits your ability to influence corporate matters. On February 1, 2017, an entity affiliated with Atairos Group, Inc.
TRINET 25 2023 FORM 10-K RISK FACTORS Table of Contents If we are not recognized as an employer of our worksite employees, and if our benefit plans are deemed to not satisfy plan requirements, under federal and state regulations, we and our clients could be adversely impacted.
If we are not recognized as an employer of our worksite employees, and if our benefit plans are deemed to not satisfy plan requirements, under federal and state regulations, we and our clients could be adversely impacted.
We expect to see additional, similar expansions of PEO responsibility and we cannot guarantee that we will be able to recover the costs to comply with such changes from our clients, which could have a material adverse effect on our business.
We may see expansions of PEO responsibility and we cannot guarantee that we will be able to recover compliance costs related to such expansions from our clients, which could have a material adverse effect on our business.
In order to sponsor some of our most important employee benefit plan offerings for WSEs, including health plans, we must qualify as an employer of WSEs, and our plans must qualify as employer-sponsored plans, under applicable provisions of the Code and ERISA.
TRINET 25 2024 FORM 10-K RISK FACTORS Table of Contents In order to sponsor some of our most important employee benefit plan offerings for WSEs, including health plans, we must qualify as the employer of WSEs, and our plans must qualify as employer-sponsored plans, under applicable provisions of the Code and ERISA.
Our success depends in part on our ability to maintain competitive health and workers' compensation coverage options and insurance rates through well-known insurance carriers.
Changes in our insurance coverage, or in our relationships with key insurance carriers, could harm our business. Our success depends in part on our ability to maintain competitive health and workers' compensation coverage options and insurance rates through well-known insurance carriers.
Due to the size and complexity of our technology platform and services, the amount of confidential, sensitive and personal information that we store, we and our service providers are potentially susceptible to a variety of intentional or inadvertent cyber-attacks, breaches, disclosures and other data-related incidents and threats. Cybersecurity threats can take a variety of forms.
TRINET 22 2024 FORM 10-K RISK FACTORS Table of Contents Due to the size and complexity of our technology platform and services, the amount of confidential, sensitive and personal information that we store, we and our service providers are potentially susceptible to a variety of intentional or inadvertent cyber-attacks, breaches, disclosures and other data-related incidents and threats.
If we are unable to attract and retain qualified personnel, in either or both of the US and India (or any other jurisdiction into which we expand), our business may suffer.
For example, as we continue to expand our operations in India, we are also entering a new labor market. If we are unable to attract and retain qualified personnel, in either or both of the US and India (or any other jurisdiction into which we expand), our business may suffer.
For example, we rely on software systems, including the software systems used by our banking institutions, to process payroll, payroll tax and benefits data and make related payments, and to access insurance carrier networks and databases that manage WSE and HRIS User benefits and claims.
For example, we rely on software systems, including the software systems used by our banking institutions, to process payroll, payroll tax and benefits data and make related payments, and to access insurance carrier networks and databases that manage WSE benefits and claims. These software systems run on computer hardware that we or our service providers house in various service centers.
TRINET 18 2023 FORM 10-K RISK FACTORS Table of Contents In addition, most of our PEO clients operate in a relatively small number of verticals, including the technology, professional services, financial services, life sciences and not-for-profit verticals.
In addition, most of our PEO clients operate in a relatively small number of verticals, including the technology, professional services, financial services, life sciences and not-for-profit verticals.
Our failure to comply with these restrictions and the other terms and conditions under our credit facility could result in a default, which in turn could result in the termination of the lenders’ commitments to extend further credit to us under our credit facility and acceleration of a substantial portion of our indebtedness then outstanding under our credit facility.
Our failure to comply with the restrictions and the other terms and conditions under our credit facility and the indentures governing the 2029 Notes and the 2031 Notes could result in a default, which in turn could result in the termination of the lenders’ commitments to extend further credit to us under our credit facility and acceleration of a substantial portion of these borrowings before their due date.
Businesses similar to our HRIS services have been subject to such licensing requirements in the past and although we believe that our operations have been designed to be compliant and avoid such requirements, we cannot guarantee that all regulators will agree.
Businesses similar to our ASO services have been subject to such licensing requirements in the past and although TRINET 27 2024 FORM 10-K RISK FACTORS Table of Contents we believe that our operations have been designed to be compliant and avoid such requirements, we cannot guarantee that all regulators will agree.
As the patchwork of privacy laws to which we are subject becomes increasingly complex, the cost of complying with all of the requirements will rise and we cannot guarantee our compliance efforts will be successful.
As the patchwork of privacy laws to which we are subject becomes increasingly complex, the cost of complying with all of the requirements will rise and we cannot guarantee our compliance efforts will be successful. We are exploring the use of AI and ML in an effort to deploy capabilities that are beneficial to our clients and WSEs.
Although we believe that we qualify as an employer of WSEs under the Code, we cannot assure you that the IRS will not challenge our position or continue to provide favorable determination letters.
Although we believe that we qualify as an employer of WSEs under the Code, we cannot assure you that the IRS will not challenge our position or continue to provide favorable determination letters. Moreover, the IRS' 401(k) guidance and qualification requirements are not applicable to the operation of our cafeteria plans.
Managing these projects also typically requires changes to our internal operational, financial and management controls as well as our reporting systems and procedures.
We have and will continue to devote substantial time, money and management resources to these projects. Managing these projects also typically requires changes to our internal operational, financial and management controls as well as our reporting systems and procedures.
We must continue to work to improve our services to meet the expectations of our clients and regulators, or we may lose our clients and materially harm our business.
TRINET 20 2024 FORM 10-K RISK FACTORS Table of Contents We must continue to work to improve our services to meet the expectations of our clients and regulators, or we may lose our clients and materially harm our business.
Malicious actors may develop and deploy viruses, worms and other malicious software programs that attack our networks and data centers or those of our service providers. Malicious actors may also direct social engineering, phishing, credential stuffing, ransomware, denial or degradation of service attacks and similar types of attacks against any or all of us, our clients and our service providers.
Malicious actors may also direct social engineering, phishing, credential stuffing, ransomware, denial or degradation of service attacks and similar types of attacks against any or all of us, our clients and our service providers.
We expect that we will continue to experience competitive pricing pressure and competition from new technologies and HCM service models, any one of which could have a material adverse effect on our business.
We expect that we will continue to experience competitive pricing pressure and competition from new technologies and HCM service models, any one of which could have a material adverse effect on our business. We may not be able to keep pace with changes in technology or provide timely enhancements to our solutions and support.
If our new technologies and services perform poorly, or fail to satisfy regulatory requirements, we could experience client dissatisfaction, adverse publicity, loss of sales, and client claims against us, any of which could materially harm our business. For example, like other PEOs, our federal R&D tax credit programs require the IRS to provide tax credit refunds for our clients.
If our new technologies and services perform poorly, or fail to satisfy regulatory requirements, we could experience client dissatisfaction, adverse publicity, loss of sales, and client claims against us, any of which could materially harm our business.
Further, if we are not recognized as an employer of our WSEs under the Code or by any state tax authority, we may be required to change the method by which we report and remit payroll taxes to the IRS or such tax authorities. Such changes could have a material adverse effect on our business and results of operations.
TRINET 26 2024 FORM 10-K RISK FACTORS Table of Contents Further, if we are not recognized as an employer of our WSEs under the Code or by any state tax authority, we may be required to change the method by which we report and remit payroll taxes to the IRS or such tax authorities.
Other employees may work at home in one state or city some of the time and in an office in another state or city at other times. The work location and residence of an employee can create confusion regarding the federal, state and local laws that apply, including labor and employment, payroll and payroll tax, and unemployment laws.
The work location and residence of an employee can create confusion regarding the federal, state and local laws that apply, including labor and employment, payroll and payroll tax, and unemployment laws.
Our SMB clients are particularly affected by volatility in the economic environment. SMBs can be particularly susceptible to changes in the level of overall economic activity in the markets in which they operate.
Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations. Our SMB clients are particularly affected by volatility in the economic environment. SMBs can be particularly susceptible to changes in the level of overall economic activity in the markets in which they operate.
This change would negatively impact SMBs by terminating the availability of the ERTC early. Any new laws, changes in existing laws, or any adverse application, interpretation or enforcement of new or existing laws, including those described in Part I, Item 1.
Any new laws, changes in existing laws, or any adverse application, interpretation or enforcement of new or existing laws, including those described in Part I, Item 1.
We are subject to legal and tax proceedings that may result in adverse outcomes. We are subject to claims, lawsuits, government investigations, and other legal and regulatory proceedings arising from the ordinary course of our business. Refer to Note 9 in Part II, Item 8.
We are subject to claims, lawsuits, government investigations, and other legal and regulatory proceedings arising from the ordinary course of our business. Refer to Note 9 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for additional information about the legal proceedings we are currently involved in and future proceedings that we may face.
Views on employers, employees and independent contractors are changing at a rapid rate at federal, state and local levels.
Views on employers, employees and independent contractors continue to change at federal, state and local levels.
In addition, the tax authorities in the U.S. regularly examine our tax returns. Refer to Note 12 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K for additional details regarding tax examinations and disputes. The ultimate outcome of tax examinations and disputes cannot be predicted with certainty.
Financial Statements and Supplementary Data, of this Form 10-K for additional details regarding tax examinations and disputes. The ultimate outcome of tax examinations and disputes cannot be predicted with certainty.
At the federal level, the DOL published a final rule in January 2024 on independent contractor status. Meanwhile, the National Labor Relation Board (NLRB) modified its own independent contractor standard under the National Labor Relations Act (NLRA) in a decision published in June 2023.
At the federal level, the DOL published a final rule in January 2024 identifying new criteria for the DOL's classification of employees and independent contractors under the FLSA. Meanwhile, the NLRB modified its standard for determining independent contractor status under the NLRA in a June 2023 decision.
TRINET 29 2023 FORM 10-K RISK FACTORS Table of Contents On February 1, 2017, an entity affiliated with Atairos Group, Inc. (together with its affiliates, “Atairos”) became our largest stockholder when it acquired the shares of TriNet common stock previously held by General Atlantic. In connection with this transaction, we appointed Michael J.
(together with its affiliates, “Atairos”) became our largest stockholder when it acquired the shares of TriNet common stock previously held by General Atlantic. In connection with this transaction, we appointed Michael J. Angelakis, the Chairman and CEO of Atairos, to our board of directors and agreed to nominate Mr.
We have reported data breaches to regulators, affected individuals, clients and other third parties in the past and we expect to do so in the future as appropriate.
We have reported data breaches to regulators, affected individuals, clients and other third parties in the past and we expect to do so in the future as appropriate. While we do not believe that any such past events constitute a material cybersecurity incident or resulted in material expenditures, future events could result in a material adverse impact on our operations.
While we devote substantial time and resources to training our colleagues to identify and avoid such incidents, no training or cybersecurity program can offer absolute protection against such attacks and incidents. Any actual or attempted cyber-attack, breach, disclosure or other data-related incident, could have a material adverse effect on our business, reputation, financial condition or results of operation.
While we devote substantial time and resources to training our colleagues to identify and avoid such incidents, no training or cybersecurity program can offer absolute protection against such attacks and incidents.
More and more employees, including WSEs and HRIS Users, are working from home and SMBs, including our clients, are increasingly hiring employees in locations where they have not previously had employees and/or permitting existing employees to relocate to other locations and work entirely remotely.
SMBs, including our clients, have hired and continue to hire employees in locations where they have not previously had employees, and/or permitting existing employees to relocate to other locations and work entirely remotely. Other employees may work at home in one state or city some of the time and in an office in another state or city at other times.
A cyber-attack on a key third-party software service provider, or a new vulnerability identified in software that we use, could disrupt our services or compromise client data entrusted to that service provider. In March 2022, a hacking group announced that they had compromised several systems, including those of Microsoft and Okta, both TriNet vendors.
A cyber-attack on a key third-party software service provider, or a new vulnerability identified in software that we use, could disrupt our services or compromise client data entrusted to that service provider. New software vulnerabilities are identified regularly, by organizations like the U.S. Cybersecurity and Infrastructure Security Agency.
Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations. If we are unable to attract, maintain and manage qualified personnel, including our sales force, our business may be harmed. To succeed, we must be able to attract and retain highly motivated and qualified personnel.
If we are unable to attract, maintain and manage qualified personnel, including our sales force, our business may be harmed. To succeed, we must be able to attract and retain highly motivated and qualified personnel. Competition for skilled employees is intense, and like many businesses, we are susceptible to fluctuations in the labor market.
Client attrition due to the stoppage of the discretionary credits could reduce our revenues and have a material adverse effect on our business, financial condition and results of operations. Changes in our insurance coverage, or in our relationships with key insurance carriers, could harm our business.
A disruption to, or our failure to successfully integrate, our operations in India could have a material adverse effect on our business, financial condition and results of operations.
The costs associated with any cyber-attacks, breaches, disclosure or other data-related incidents could result in a material adverse effect on our financial condition and results of operations.
Any actual or attempted cyber-attack, breach, disclosure or other data-related incident, could result in data loss, the unauthorized access or use of personally identifiable information, or business interruption, which could have a material adverse effect on our business, reputation, financial condition or results of operation.
For example, while the amount of medical claims we experienced in 2023 increased as compared to 2022, our insurance costs remained slightly below expectations, which still had a significant impact on our results due to volume. Under our fully insured workers' compensation insurance policies, we assume the risk for losses up to $1 million per claim occurrence (deductible layer).
In addition, if we underestimate future levels of healthcare cost inflation, it could increase our cost of claims, which in turn could have a material adverse effect on our financial condition and results of operations. Under our fully insured workers' compensation insurance policies, we assume the risk for losses up to $1 million per claim occurrence (deductible layer).
Any such outcome could result in a material adverse effect on our business, financial condition and results of operations. Our efforts to improve our operational effectiveness and resiliency require significant time, resources and costs and if these efforts fail or significantly divert management attention, our business and results of operations may suffer.
Any of these risks could have an adverse impact on our ability to successfully manage our business and consequently have a material adverse effect on our business, financial condition and results of operations.
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These software systems run on computer hardware that we or our service providers house in various service centers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information on the potential impact of cybersecurity incidents on our business strategy, operations, or financial condition, refer to Part I, Item 1A. Risk Factors, of this Form 10-K, under the heading “ Data Privacy and Security Risks ”.
Biggest changeRefer to the “Risk Factors” section contained in Item 1A of this Form 10-K for more information on our cybersecurity-related risks. Cyber Risk Governance Our Cyber Risk Management Strategy described in this Item 1C. is overseen by senior executives with experience in cybersecurity and our business operations and is ultimately overseen by the Risk Committee.
Our CSO leads our Global Security Organization which is responsible for overseeing the Company's cyber risk management strategy. Our CSO has over 20 years of industry experience, including serving in similar roles leading and overseeing cybersecurity programs at other companies.
Our CSO leads our Global Security Organization which is responsible for overseeing, assessing and monitoring the Company's cyber risk management strategy. Our CSO has over 20 years of industry experience, including serving in similar roles leading and overseeing cybersecurity programs at other companies.
The ERM Steering Committee is similarly tasked with providing relevant updates to the Risk Committee regarding cybersecurity threats. Additionally, we have developed a process that is specific to the management and analysis of cybersecurity incidents.
The ERM Steering Committee is similarly tasked with providing relevant updates to the Risk Committee, via the ERM Program, regarding significant cybersecurity threats. Additionally, we have developed a process that is specific to the management and analysis of cybersecurity incidents.
This process includes weekly and monthly updates from the CIRT along with escalation criteria that allows for incidents to be reviewed for materiality on an ad hoc basis. These updates are also provided to the ERM Steering Committee and the Risk Committee as necessary.
This process includes weekly and monthly updates from the CIRT along with escalation criteria that allows for significant cybersecurity threats to be reviewed for materiality on an ad hoc basis. These updates are also provided to the ERM Steering Committee and the Risk Committee as necessary.
Specifically, the IRM Steering Committee, consisting of senior leaders from the security, privacy, data governance, technology, records management, and third-party risk management programs, reports to the ERM Steering Committee and has the responsibility to provide updates regarding the identification, management, and remediation of significant cybersecurity threats.
Specifically, the IRM Steering Committee, consisting of senior leaders from the security, privacy, data governance, technology, records management, and third-party risk management programs, reports to the ERM Steering Committee and has the responsibility to provide updates regarding the prevention, detection, mitigation, and remediation of significant cybersecurity threats.
In the event that a cybersecurity risk is identified, as and to the extent appropriate, the Global Security Organization manages the day-to-day response to such material risk and provides regular reports to the ERM Steering Committee, or the Risk Committee of the Board, or the Board, as appropriate.
In the event that a cybersecurity risk is identified, as and to the extent appropriate, the Global Security Organization manages the day-to-day response to such material risk and provides regular reports to the ERM Steering Committee, or the Risk Committee, or the Board, as appropriate. The CSO is also an advisor to the Company's Disclosure Committee, which meets quarterly.
TRINET 31 2023 FORM 10-K PROPERTIES, LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES Table of Contents In addition to the regularly scheduled programmatic updates that are provided to the ERM Steering Committee and the Risk Committee, we also established a process to inform such committees of cybersecurity events and allow them to monitor corresponding remediation efforts.
In addition to the regularly scheduled programmatic updates that are provided to the ERM Steering Committee and the Risk Committee, we also established a process to inform such committees of significant cybersecurity events and allow them to monitor corresponding remediation efforts.
We also seek to regularly update and upgrade our technology investments in an effort to further support our ability to identify and assess risks from cybersecurity incidents. We have not identified any cyber threats or incidents that have materially affected or are reasonably likely to materially affect us.
We also seek to regularly update and upgrade our technology investments in an effort to further support our ability to identify and assess risks from cybersecurity incidents.
The Risk Committee provides updates to the full Board of Directors regarding the state of the Company’s ERM program. Cyber risks are an enterprise risk that the ERM Program monitors and thus such risks are an ongoing area of focus of the ERM Steering Committee and, as a result, the Risk Committee.
Cyber risks are an enterprise risk that the ERM Program monitors and thus such risks are an ongoing area of focus of the ERM Steering Committee and, as a result, the Risk Committee. On a monthly basis, the ERM Steering Committee is convened and receives pertinent updates regarding our management of cyber risks, as necessary.
Team members who support our Global Security team have relevant educational and industry experience, including holding similar positions at other large companies.
He holds a B.S. degree from Azusa Pacific University and an M.B.A. from the University of Southern California. Team members who support our Global Security team have relevant educational and industry experience, including holding similar positions at other large companies.
Cyber Risk Governance Our Cyber Risk Management Strategy described in this Item 1C. is overseen by senior executives with experience in cybersecurity and our business operations and is ultimately overseen by the Risk Committee of the Board. Our Global Security Organization is tasked with executing this strategy through the implementation of cybersecurity policies, procedures, and strategies.
Our Global Security Organization is tasked with executing this strategy through the implementation of cybersecurity policies, procedures, and strategies.
The CSO is also an advisor to the Company's Disclosure Committee, which meets quarterly. On a quarterly basis, a meeting of the Risk Committee is convened to discuss and evaluate our management of enterprise-wide risks. Each meeting of the Risk Committee is facilitated by our Executive Director for ERM and includes programmatic updates from the CSO.
On a quarterly basis, a meeting of the Risk Committee is convened to discuss and evaluate our management of enterprise-wide risks.
Finally, through our ERM program, updates and discussion regarding our cybersecurity risk management are provided to and occur at the Risk Committee of our Board of Directors. To supplement our cyber risk management capabilities, we utilize certain third-party vendors. These vendors support our ability to proactively secure our network and systems, in addition to ongoing monitoring of our cyber environment.
For example, our employees with network access participate in required training, covering topics such as spear phishing, social engineering and other cybersecurity threat awareness training. To supplement our cyber risk management capabilities, we utilize certain third-party vendors. These vendors support our ability to proactively secure our network and systems, in addition to ongoing monitoring of our cyber environment.
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On a monthly basis, the ERM Steering Committee is convened and receives pertinent updates regarding our management of cyber risks.
Added
Finally, through our ERM program, updates and discussion regarding our cybersecurity risk management are provided to and occur at the Risk Committee. We provide on at least an annual basis cybersecurity awareness training to our employees.
Added
As of December 31, 2024, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, and financial condition. We continue to invest in cyber-resilience and cyber-threat response preparedness as we anticipate ongoing risks from cybersecurity threats.
Added
Each meeting of the Risk Committee is facilitated by our Executive Director for ERM and TRINET 32 2024 FORM 10-K PROPERTIES, LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES Table of Contents includes programmatic updates from the CSO, among other enterprise risk topics. The Risk Committee provides updates to the full Board regarding the state of the Company’s ERM program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease space for our offices in various U.S. states, including the following: Corporate Headquarters: Significant Client Service Centers: • Dublin, California • Bradenton, Florida • Austin, Texas For more information regarding our leases, refer to Note 7 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K.
Biggest changeItem 2. Properties We lease space for our offices in various U.S. states, including the following: Corporate Headquarters: Significant Client Service Centers: • Dublin, California • Bradenton, Florida • Austin, Texas • Hyderabad, India For more information regarding our leases, refer to Note 7 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe cumulative dollar total returns shown on the graph represent the value that such investments would have had at each year end. COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN Among TriNet Group, Inc., the S&P 500 Index, and a Peer Group (1) (1) The Peer Group Index used in the chart above consists of the following companies: Automatic Data Processing, Inc.
Biggest changeTRINET 34 2024 FORM 10-K STOCK ACTIVITIES Table of Contents COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN Among TriNet Group, Inc., the S&P 500 Index, and a Peer Group (1) (1) The Peer Group Index used in the chart above consists of the following companies: Automatic Data Processing, Inc. Insperity, Inc. Paychex, Inc. Barrett Business Services, Inc. Intuit, Inc.
The cumulative total return is based on the assumption that $100 had been invested in TriNet Group, Inc. common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and common stock of members of a Peer Group Index, all on December 31, 2018 and that all dividends were reinvested.
The cumulative total return is based on the assumption that $100 had been invested in TriNet Group, Inc. common stock, the Standard & Poor’s 500 Stock Index (S&P 500) and common stock of members of a Peer Group Index, all on December 31, 2019 and that all dividends were reinvested.
(2) Includes shares surrendered by employees to us to satisfy tax withholding obligations that arose upon vesting of restricted stock units granted pursuant to approved plans. (3) We repurchased a total of approximately $13 million of our outstanding stock during the three months ended December 31, 2023.
(2) Includes shares surrendered by employees to us to satisfy tax withholding obligations that arose upon vesting of restricted stock units granted pursuant to approved plans. (3) We repurchased a total of approximately $28 million of our outstanding stock during the three months ended December 31, 2024.
For more information about our stock repurchases and the restrictions imposed by our credit facility, refer to Note 8 and Note 11 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K. TRINET 34 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
For more information about our stock repurchases and the restrictions imposed by our credit facility, refer to Note 8 and Note 11 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K. TRINET 35 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
From time to time, our board of directors authorizes increases to our stock repurchase program and has approved an aggregate total of $2,715 million as of December 31, 2023. The total remaining authorization for future stock repurchases under our stock repurchase program was $433 million as of December 31, 2023. The program does not have an expiration date.
From time to time, our board of directors authorizes increases to our stock repurchase program and has approved an aggregate total of $2,715 million as of December 31, 2024. The total remaining authorization for future stock repurchases under our stock repurchase program was $251 million as of December 31, 2024. The program does not have an expiration date.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Our common stock is traded on the New York Stock Exchange under the symbol “TNET”. As of February 8, 2024, we had 70 holders of record of our common stock per Computershare Trust Company N.A., our transfer agent.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record Our common stock is traded on the New York Stock Exchange under the symbol “TNET”. As of February 6, 2025, we had 64 holders of record of our common stock per Computershare Trust Company N.A., our transfer agent.
Dividend Policy We did not declare or pay cash dividends in 2023 or 2022. The decision to pay cash dividends in the future is made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions under our credit facility (refer to Note 8 in Part II, Item 8.
Dividend Policy The decision to pay cash dividends in the future is made at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions under our credit facility (refer to Note 8 in Part II, Item 8.
We use our stock repurchase program to return value to our stockholders and to offset dilution from the issuance of stock under our equity-based incentive plans and employee purchase plan. As part of our stock repurchase program, we repurchased approximately $1.1 billion of our common stock in 2023.
We use our stock repurchase program to return value to our stockholders and to offset dilution from the issuance of stock under our equity-based incentive plans and employee purchase plan. As part of our stock repurchase program, we repurchased approximately $182 million of our common stock in 2024.
TRINET 33 2023 FORM 10-K STOCK ACTIVITIES Table of Contents Issuer Purchases of Equity Securities The following table provides information about our purchases of TriNet common stock during the fourth quarter of 2023: Period Total Number of Shares Purchased (2) Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (in millions) (3) October 1 - October 31, 2023 98,722 $ 109.78 98,390 $ 435 November 1 - November 30, 2023 77,037 $ 109.28 24,717 $ 433 December 1 - December 31, 2023 75,899 $ 118.96 — $ 433 Total 251,658 123,107 (1) In May 2014, our board of directors approved a stock repurchase program pursuant to which we are authorized to repurchase our common stock in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934.
Issuer Purchases of Equity Securities The following table provides information about our purchases of TriNet common stock during the fourth quarter of 2024: Period Total Number of Shares Purchased (2) Weighted Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans (in millions) (3) October 1 - October 31, 2024 101,248 $ 86.56 101,106 $ 270 November 1 - November 30, 2024 142,117 $ 92.93 95,959 $ 261 December 1 - December 31, 2024 183,153 $ 90.91 118,674 $ 251 Total 426,518 315,739 (1) In May 2014, our board of directors approved a stock repurchase program pursuant to which we are authorized to repurchase our common stock in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934.
Financial Statements and Supplementary Data, of this Form 10-K), capital requirements, business prospects and other factors our board of directors may deem relevant. Performance Graph The graph below compares the cumulative total return on our common stock since December 31, 2018 with the cumulative total return on the S&P 500 Index and a Peer Group Index.
Performance Graph The graph below compares the cumulative total return on our common stock since December 31, 2019 with the cumulative total return on the S&P 500 Index and a Peer Group Index.
We plan to use current cash and cash generated from ongoing operating activities to fund our stock repurchase program. Under our previously announced tender offer which concluded in the third quarter of 2023, we purchased 5,981,308 of our shares for an aggregate cost of approximately $640 million, including fees and expenses.
We plan to use current cash and cash generated from ongoing operating activities to fund our stock repurchase program. Our stock repurchases are subject to certain restrictions under the terms of our credit facility.
Removed
Insperity, Inc. Paychex, Inc. Barrett Business Services, Inc. Intuit, Inc.
Added
Financial Statements and Supplementary Data, of this Form 10-K), capital requirements, business prospects and other factors our board of directors may deem relevant. In 2024, we declared dividends on common stock on a quarterly basis of $0.25 per share, with payments beginning in April 2024. We did not declare or pay cash dividends in 2023.
Removed
Concurrently, through a purchase agreement with our largest stockholder, Atairos Group, Inc we purchased 3,364,486 of our shares for approximately $360 million, including fees and expenses. Our stock repurchases are subject to certain restrictions under the terms of our credit facility.
Added
The cumulative dollar total returns shown on the graph represent the value that such investments would have had at each year end.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

86 edited+27 added−35 removed38 unchanged
Biggest changeTRINET 46 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents (in millions) $923 2022 Operating Expense +4 COPS increased, driven primarily by higher compensation expense to support WSEs and incremental costs related to our HRIS cloud services. +43 S&M increased, driven primarily by higher compensation from the growth in our sales force, together with higher advertising, conference and events expenses, technology spend and broker commissions. -30 G&A decreased, driven primarily by lower transaction and integration expenses as well as lower costs in consulting and facilities expenses. -8 SD&P decreased, driven primarily by lower net compensation and consulting expenses due to higher capitalization of internally developed software. +8 D&A increased, due to the amortization of intangible assets recognized for the Zenefits and Clarus R+D acquisitions as well as higher amortization related to recently deployed software. $940 2023 Operating Expenses The primary spend type drivers to the changes in our OE are presented below: TRINET 47 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Other Income (Expense) Other income (expense) consists primarily of interest income from cash and investments and interest expense on our outstanding debt.
Biggest change(in millions) $980 2023 Expenses -3 COPS decreased primarily due to lower compensation and professional fees, partially offset by higher tax and licenses expenses. +4 S&M increased primarily due to higher compensation to support our sales force, partially offset by lower advertising costs and lower conferences and events expenses. +21 G&A increased primarily due to restructuring costs in the fourth quarter, partially offset by lower consulting and transaction and integration costs. +3 SD&P increased primarily due to higher compensation, partially offset by lower hosting and external software costs. +3 D&A increased, driven primarily by higher software amortization costs. +22 IE increased, driven primarily by the additional interest on our 2031 Notes issued in the third quarter of 2023 and the draw down of the 2021 Revolver. $1,030 2024 Expenses The primary spend type drivers to the changes in our expenses are presented below: TRINET 47 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Income Taxes Our ETR was 23% and 25% for 2024 and 2023, respectively.
We use the following measures to analyze changes in insurance costs: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in cost trend associated with each of our insurance service offerings, and • Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings (health plan enrollment).
We use the following measures to analyze changes in insurance costs: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in cost trend associated with each of our insurance service offerings, and • Mix - all other changes including the composition of our enrolled co-employed WSEs within our insurance service offerings (health plan enrollment).
Non-GAAP Measure Definition How We Use The Measure Adjusted EBITDA • Net income, excluding the effects of: - income tax provision, - interest expense, bank fees and other, - depreciation, - amortization of intangible assets, - stock based compensation expense, - amortization of cloud computing arrangements, and - transaction and integration costs. • Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-recurring costs, which include transaction and integration costs, as well as certain non-cash charges such as depreciation and amortization, and stock-based compensation and certain impairment charges recognized based on the estimated fair values.
Non-GAAP Measure Definition How We Use The Measure Adjusted EBITDA • Net (loss) income, excluding the effects of: - income tax provision, - interest expense, bank fees and other, - depreciation, - amortization of intangible assets, - stock based compensation expense, - amortization of cloud computing arrangements, - transaction and integration costs, and - restructuring costs. • Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-recurring costs, which include restructuring costs, as well as certain non-cash charges such as depreciation and amortization, and stock-based compensation and certain impairment charges recognized based on the estimated fair values.
We believe these charges are either not directly resulting from our core operations or not indicative of our ongoing operations. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. • Provides a measure, among others, used in the determination of incentive compensation for management. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to total revenues.
We believe these charges are either not directly resulting from our core operations or not indicative of our ongoing operations. • Enhances comparisons to the prior period and, accordingly, facilitates the development of future projections and earnings growth prospects. • Provides a measure, among others, used in the determination of incentive compensation for management. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to total revenues.
Approximately 86% of our group health insurance costs relate to risk-based plans in which we agree to reimburse our carriers for any claims paid within an agreed-upon per-person deductible layer up to a maximum aggregate exposure limit per policy. These deductible dollar limits and maximum limits vary by carrier and year.
Approximately 87% of our group health insurance costs relate to risk-based plans in which we agree to reimburse our carriers for any claims paid within an agreed-upon per-person deductible layer up to a maximum aggregate exposure limit per policy. These deductible dollar limits and maximum limits vary by carrier and year.
We review the amount and the anticipated holding period of these investments regularly in conjunction with our estimated long-term workers' compensation liabilities and anticipated claims payment trend. At December 31, 2023, our investments had a weighted average duration of less than two years and an average S&P credit rating of AA.
We review the amount and the anticipated holding period of these investments regularly in conjunction with our estimated long-term workers' compensation liabilities and anticipated claims payment trend. At December 31, 2024, our investments had a weighted average duration of less than two years and an average S&P credit rating of AA+.
The effect of this new fee is that we are now receiving revenue from two types of users on our PEO platform, those that are co-employed in our PEO business and those that are utilizing our PEO platform, albeit in a more limited fashion. The table below illustrates how those two components comprise our Total WSE and Average WSE metrics.
The effect of this new fee is that we are now receiving revenue from two types of users on our PEO platform, those that are co-employed in our PEO business and those that are utilizing our PEO platform, albeit in a more limited capacity. The table below illustrates how those two components comprise our Total WSE and Average WSE metrics.
This variability typically results from changing trends in the volume, severity and ultimate cost of medical and pharmaceutical claims, due to changes to the components of MCT, which we define as changes in participant use of services, including the introduction of new treatment options, changes in treatment guidelines and mandates, and changes in the mix, cost of providing treatment and timing of services provided to plan participants.
This variability typically results from changing trends in the volume, severity and ultimate cost of medical and pharmaceutical claims, due to changes to the components of medical cost trend, which we define as changes in participant use of services, including the introduction of new treatment options, changes in treatment guidelines and mandates, and changes in the mix, cost of providing treatment and timing of services provided to plan participants.
Working capital for WSEs related activities We designate funds to ensure that we have adequate current assets to satisfy our current obligations associated with WSEs. We manage our WSE payroll and benefits obligations through collections of payments from our clients which generally occur two to three days in advance of client payroll dates.
Working capital for WSEs and TriNet Trust related activities We designate funds to ensure that we have adequate current assets to satisfy our current obligations associated with WSEs. We manage our WSE payroll and benefits obligations through collections of payments from our clients which generally occur two to three days in advance of client payroll dates.
Adjusted Net Income • Net income, excluding the effects of: - effective income tax rate (1) , - stock based compensation, - amortization of intangible assets, net, - non-cash interest expense (2) , - transaction and integration costs, and - the income tax effect (at our effective tax rate (1) of these pre-tax adjustments. • Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.
Adjusted Net Income • Net (loss) income, excluding the effects of: - effective income tax rate (1), - stock based compensation, - amortization of intangible assets, net, - non-cash interest expense, - transaction and integration costs, - restructuring costs, and - the income tax effect (at our effective tax rate (1) of these pre-tax adjustments.) • Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.
We intend to continue our ongoing effort to ensure that our billing practices best match the expectations of our customers and in the future we may identify additional individuals that should be included in Total WSEs and Average WSEs.
We intend to continue our ongoing effort to ensure that our billing practices best match the services we provide and the expectations of our customers and in the future we may identify additional individuals that should be included in Total WSEs and Average WSEs.
Capital Expenditures During the twelve months ended December 31, 2023 and 2022, we continued to make investments in software and hardware as we enhanced our existing service offerings and technology platform. We expect capital investments in our software and hardware to continue in the future.
Capital Expenditures During the twelve months ended December 31, 2024 and 2023, we continued to make investments in software and hardware as we enhanced our existing service offerings and technology platform. We expect capital investments in our software and hardware to continue in the future.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Operational Highlights Our consolidated results for 2023 reflect our continuing efforts to serve our clients, attract new clients and invest in our platform.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Operational Highlights Our consolidated results for 2024 reflect our continuing efforts to serve our clients, attract new clients and invest in our platform.
Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 15, 2023.
Management's Discussion and Analysis in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 15, 2024.
As concerns about market liquidity subsided, we repaid $200 million in March and $295 million in April. In September of 2023, we drew down $200 million under our 2021 Revolver to partially fund our share repurchases in the third quarter of 2023 noted above.
As concerns about market liquidity subsided, we repaid $200 million in March and $295 million in April. In September of 2023, we drew down $200 million under our 2021 Revolver to partially fund our share repurchases in the third quarter of 2023 noted above. In 2024, we repaid $110 million of the outstanding balance.
As of December 31, 2023, we held approximately $1.9 billion in restricted and unrestricted cash, cash equivalents and investments, of which $287 million was unrestricted cash and cash equivalents and $208 million was unrestricted investments. Refer to Note 2 in Part II, Item 8. Financial Statements and Supplemental Data, in this Form 10-K for a summary of these funds.
As of December 31, 2024, we held approximately $1.9 billion in restricted and unrestricted cash, cash equivalents and investments, of which $360 million was unrestricted cash and cash equivalents. Refer to Note 2 in Part II, Item 8. Financial Statements and Supplemental Data, in this Form 10-K for a summary of these funds.
The following table illustrates the sensitivity of changes in the MCT on our year end estimate of insurance costs (in millions of dollars): Change in medical cost trend Change in insurance costs +3.0% $21 +2.0% $14 +1.0% $7 -1.0% $(7) -2.0% $(14) -3.0% $(21) Completion factors are an actuarial estimate based on historical experience and analysis of current trends, of paid costs to carriers as a percentage of the expected ultimate costs to carriers.
The following table illustrates the sensitivity of changes in the MCT on our year end estimate of insurance costs (in millions of dollars): Change in medical cost trend Change in insurance costs +3.0% $23 +2.0% $16 +1.0% $8 -1.0% $(8) -2.0% $(16) -3.0% $(23) Completion factors are an actuarial estimate based on historical experience and analysis of current trends, of paid costs to carriers as a percentage of the expected ultimate costs to carriers.
We use the following measures to analyze changes in ISR: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in fees associated with each of our insurance service offerings, • Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings (health plan enrollment), and • Credit - the weighted average amounts recognized for our 2022 Credits.
We use the following measures to analyze changes in ISR: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in fees associated with each of our insurance service offerings, and • Mix - all other changes including the composition of our enrolled co-employed WSEs within our insurance service offerings (health plan enrollment).
We define WSEs to include co-employees and other individuals receiving PEO services, such as individuals who receive COBRA benefits post co-employment or are subject to K-1 tax reporting as well as individuals who utilize our PEO platform on behalf of TriNet PEO clients.
We define WSEs to include co-employees and other individuals receiving PEO services, such as individuals who receive COBRA benefits or are subject to partnership tax reporting as well as individuals who utilize our PEO platform on behalf of TriNet PEO clients.
ISR consists of insurance-related billings and administrative fees collected from PEO clients and withheld from WSEs for workers' compensation insurance and health benefit insurance plans provided by third-party insurance carriers. Monthly total revenues per Average WSE is a measure we use to monitor our PEO pricing strategies. This measure increased 6% in 2023 compared to 2022.
ISR consists of insurance-related billings and administrative fees collected from PEO clients and withheld from WSEs for workers' compensation insurance and health benefit insurance plans provided by third-party insurance carriers. Monthly revenues per co-employed Average WSE is a measure we use to monitor our PEO pricing strategies. This measure increased 1% in 2024 compared to 2023.
Key judgments and evaluations in arriving at loss estimates by class and the accrued costs selection overall include: • the selection of method used and the relative weights given to selecting the method used for each policy year, • the underlying assumptions of LDF used in these models, • the effect of any changes to the insurers' claims handling and payment processes, • evaluation of medical and indemnity cost trends, costs from changes in the risk exposure being evaluated and any applicable changes in legal, regulatory or judicial environment.
Key judgments and evaluations in arriving at loss estimates by class and the accrued costs selection overall include: • the selection of method used and the relative weights given to selecting the method used for each policy year, • the underlying assumptions of LDF used in these models, • the effect of any changes to the insurers' claims handling and payment processes, TRINET 52 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents • evaluation of medical and indemnity cost trends, costs from changes in the risk exposure being evaluated and any applicable changes in legal, regulatory or judicial environment.
The following table summarizes our purchase obligations as of December 31, 2023, Payments Due by Period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Purchase obligations (1) $ 120 $ 79 $ 40 $ 1 $ — (1) Our purchase obligations primarily consist of software licenses, consulting and maintenance agreements, and future sales and marketing events.
The following table summarizes our purchase obligations as of December 31, 2024, Payments Due by Period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Purchase obligations (1) $ 110 $ 71 $ 39 $ — $ — (1) Our purchase obligations primarily consist of software licenses, consulting and maintenance agreements, and future sales and marketing events.
TRINET 38 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Reconciliation of GAAP to Non-GAAP Measures The table below presents a reconciliation of Net income to Adjusted EBITDA: Year Ended December 31, (in millions) 2023 2022 2021 Net income $ 375 $ 355 $ 338 Provision for income taxes 126 127 103 Stock based compensation 59 62 50 Interest expense, bank fees and other (1) 40 39 20 Depreciation and amortization of intangible assets (2) 72 64 54 Amortization of cloud computing arrangements 8 4 — Transaction and integration costs 17 37 — Adjusted EBITDA $ 697 $ 688 $ 565 Adjusted EBITDA Margin 14.2 % 14.1 % 12.5 % (1) 2022 Interest expense, bank fees and other includes $17M of realized investments losses on sales and impairments related to AFS securities.
TRINET 38 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Reconciliation of GAAP to Non-GAAP Measures The table below presents a reconciliation of Net income to Adjusted EBITDA: Year Ended December 31, (in millions) 2024 2023 2022 Net income $ 173 $ 375 $ 355 Provision for income taxes 53 126 127 Stock based compensation 65 59 62 Interest expense, bank fees and other (1) 62 40 39 Depreciation and amortization of intangible assets 75 72 64 Amortization of cloud computing arrangements 8 8 4 Transaction and integration costs — 17 37 Restructuring costs 49 — — Adjusted EBITDA $ 485 $ 697 $ 688 Adjusted EBITDA Margin 9.6 % 14.2 % 14.1 % (1) 2022 Interest expense, bank fees and other includes $17M of realized investments losses on sales and impairments related to AFS securities.
Such factors include, but are not limited to: the timing of the emergence of claims, volume, TRINET 54 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents severity and complexity of claims, social and judicial trends, medical treatment trends, the extent of our historical loss data versus industry information, rates of participant turnover, the impact of MCT and seasonal trends, the impact of setting prices in advance of benefit periods, new treatment options, and the impact of unanticipated events.
Such factors include, but are not limited to: the timing of the emergence of claims, volume, severity and complexity of claims, social and judicial trends, medical treatment trends, the extent of our historical loss data versus industry information, rates of participant turnover, the impact of MCT and seasonal trends, the impact of setting prices in advance of benefit periods, new treatment options, and the impact of unanticipated events.
Insurance Costs Insurance costs include insurance premiums for coverage provided by insurance carriers, payments for claims costs and expenses for other risk management and administrative services, reimbursement of claims payments made by insurance carriers or third-party administrators below a predefined deductible limit, and changes in accrued costs related to contractual obligations with our workers' compensation and health benefit carriers.
TRINET 44 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Insurance Costs Insurance costs include insurance premiums for coverage provided by insurance carriers, payments for claims costs and expenses for other risk management and administrative services, reimbursement of claims payments made by insurance carriers or third-party administrators below a predefined deductible limit, and changes in accrued costs related to contractual obligations with our workers' compensation and health benefit carriers.
The following table summarizes our workers' compensation obligations, gross of collateral, as of December 31, 2023, Payments Due by Period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Workers' compensation obligations (1) $ 175 $ 51 $ 54 $ 23 $ 47 (1) Represents estimated payments that are expected to be made to carriers for various workers' compensation programs under the contractual obligations.
The following table summarizes our workers' compensation obligations, gross of collateral, as of December 31, 2024, Payments Due by Period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Workers' compensation obligations (1) $ 158 $ 45 $ 48 $ 20 $ 45 (1) Represents estimated payments that are expected to be made to carriers for various workers' compensation programs under the contractual obligations.
PSR represents fees charged to clients for processing payroll-related transactions on behalf of our PEO and HRIS clients, access to our HR expertise, employment and benefit law compliance services, other HR-related and tax credit filing services and fees charged to access our cloud-based HRIS services .
Total Revenues Our revenues consist of PSR, ISR and interest income. PSR represents fees charged to clients for processing payroll-related transactions on behalf of our PEO and ASO clients, access to our HR expertise and technology, employment and benefit law compliance services, other HR-related and tax credit filing services and fees charged to access our cloud-based ASO services.
The following table illustrates the sensitivity of changes in the LDFs on our year end estimate of insurance costs (in millions of dollars): Change in loss development factor Change in insurance costs -5.0% ($31) -2.5% ($18) +2.5% $19 +5.0% $38 Accrued Health Insurance Costs We sponsor and administer a number of employee benefit plans for our WSEs, including group health, dental, vision and life insurance as an employer plan sponsor under section 3(5) of the ERISA.
The following table illustrates the sensitivity of changes in the LDFs on our year end estimate of insurance costs (in millions of dollars): Change in loss development factor Change in insurance costs -5.0% ($29) -2.5% ($17) +2.5% $18 +5.0% $36 TRINET 53 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Accrued Health Insurance Costs We sponsor and administer a number of employee benefit plans for our WSEs, including group health, dental, vision and life insurance as an employer plan sponsor under section 3(5) of the ERISA.
For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).” (3) For the year ended December 31, 2022, reflects HRIS Users from February 15, 2022, the date on which we acquired Zenefits, to the end of the period. The following table summarizes our balance sheet data as of December 31, 2023, 2022 and 2021.
For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).” (3) For the year ended December 31, 2022, reflects HRIS Users from February 15, 2022, the date on which we acquired Zenefits, to the end of the period.
TRINET 41 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Under our fully-insured workers' compensation insurance policies, we assume the risk for losses up to $1 million per claim occurrence (deductible layer). The ultimate cost of the workers’ compensation services provided cannot be known until all the claims are settled.
Under our fully-insured workers' compensation insurance policies, we assume the risk for losses up to $1 million per claim occurrence (deductible layer). The ultimate cost of the workers’ compensation services provided cannot be known until all the claims are settled.
Anticipated revenues for future periods can diverge from the revenue expectation derived from Average WSEs or Total WSEs due to pricing differences across our HCM solutions and services and the degree to which clients and TRINET 40 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents WSEs elect to participate in our solutions during future periods.
Anticipated revenues for future periods can diverge from the revenue expectation derived from Average WSEs or Total WSEs due to pricing differences across our HCM solutions and services and the degree to which clients and WSEs elect to participate in our solutions during future periods.
During the year ended December 31, 2023, we repurchased 10,734,790 shares of our common stock for approximately $1,112 million through our existing stock repurchase program in addition to 128,551 shares acquired to satisfy tax withholding obligations related to SBC vesting. As of December 31, 2023, approximately $433 million remained available for repurchase under all authorizations by our board of directors.
During the year ended December 31, 2024, we repurchased 1,771,254 shares of our common stock for approximately $182 million through our existing stock repurchase program in addition to 110,779 shares acquired to satisfy tax withholding obligations related to SBC vesting. As of December 31, 2024, approximately $251 million remained available for repurchase under all authorizations by our board of directors.
The 2021 Credit Agreement includes negative covenants that limit our ability to incur indebtedness and liens, sell assets and make restricted payments, including dividends and investments, subject to certain exceptions.
The 2021 Credit Agreement includes negative covenants that limit our ability to incur indebtedness and liens, sell assets and make restricted payments, including dividends and investments, subject to certain exceptions. In addition, the 2021 Credit Agreement also contains other customary affirmative and negative covenants and customary events of default.
As a result, increases in insurance costs above our projections, reflected as a higher ICR, result in lower net income.
As a result, any increases in insurance costs above our projections, will be reflected as a higher ICR, and result in lower net income. Any decreases in insurance costs below our projections, will be reflected as a lower ICR and result in higher net income.
Insurance Service Revenues ISR consists of insurance services-related billings and administrative fees collected from PEO clients and withheld from WSE payroll for health benefits and workers' compensation insurance provided by third-party insurance carriers.
TRINET 43 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Insurance Service Revenues ISR consists of insurance services-related billings and administrative fees collected from PEO clients and withheld from WSE payroll for health benefits and workers' compensation insurance provided by third-party insurance carriers.
We continue to invest in efforts intended to enhance client experience, improve our new sales performance, and manage client attrition, through product development as well as operational and process improvements.
We report the impact of client and WSE participation differences as a change in mix. We continue to invest in efforts intended to enhance client experience, improve our new sales performance, and manage client attrition, through product development as well as operational and process improvements.
Year Ended December 31, % Change (in millions) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Balance Sheet Data: Cash and cash equivalents $ 287 $ 354 $ 612 (19) % (42) % Working capital 115 338 700 (66) % (52) % Total assets 3,693 3,443 3,309 7 % 4 % Debt 1,093 496 495 120 % — % Total stockholders’ equity 78 775 881 (90) % (12) % TRINET 37 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents A discussion regarding our financial condition and results of operations for 2022 compared to 2021 can be found under Part II, Item 7.
Year Ended December 31, % Change (in millions) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Balance Sheet Data: Cash and cash equivalents $ 360 $ 287 $ 354 25 % (19) % Working capital 199 115 338 73 % (66) % Total assets 4,119 3,693 3,443 12 % 7 % Debt 983 1,093 496 (10) % 120 % Total stockholders’ equity 69 78 775 (12) % (90) % A discussion regarding our financial condition and results of operations for 2023 compared to 2022 can be found under Part II, Item 7.
In addition to co-employees for whom payroll may not be regularly run, this includes individuals authorized by our clients to access and use the PEO platform for functions such as bookkeeping and benefits management. The amount of the fee is comparable to the fee we charge for users of our HRIS platform.
In addition to co-employees for whom payroll may not be regularly run, such as partners in a partnership, this also includes individuals authorized by our clients to access and use the PEO platform for functions such as bookkeeping and benefits management.
Year Ended December 31, (in millions) 2023 2022 Financing activities Repurchase of common stock, net of issuance costs $ (1,137) $ (536) Proceeds from issuance of 2031 Notes 400 — Payment of long-term financing fees and debt issuance costs (9) — Draw down from revolving credit agreement borrowings 695 — Repayment of borrowings under revolving credit agreement (495) — Cash used in financing activities $ (546) $ (536) In February 2023, our board of directors authorized a $300 million incremental increase to our ongoing stock repurchase program initiated in May 2014.
Year Ended December 31, (in millions) 2024 2023 Financing activities Change in WSE and TriNet Trust related assets and liabilities, net $ 139 $ 6 Repurchase of common stock, net of issuance costs (199) (1,137) Proceeds from issuance of 2031 Notes — 400 Payment of long-term financing fees and debt issuance costs — (9) Proceeds from revolving credit agreement borrowings — 695 Repayment of borrowings under revolving credit facility (110) (495) Dividends paid (37) — Cash used in financing activities $ (207) $ (540) In February 2023, our board of directors authorized a $300 million incremental increase to our ongoing stock repurchase program initiated in May 2014.
We also use the following measures to further analyze changes in total revenue: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the combined weighted average percentage changes in service fees for each vertical service and changes in service fees associated with each insurance service offering, • Mix - the change in composition of Average WSEs within our verticals combined with the composition of our enrolled WSEs within our insurance service offerings and the composition of products and services our clients receive, including Clarus R+D, • Credit - the weighted average change in amounts recognized for our 2022 Credits, and • HRIS - incremental HRIS cloud services revenue.
We also use the following measures to further analyze changes in total revenue: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the combined weighted average percentage changes in service fees for each vertical service and changes in service fees associated with each insurance service offering, • Mix - the change in composition of co-employed Average WSEs within our verticals combined with the composition of our enrolled co-employed WSEs within our insurance service offerings and the composition of products and services our clients receive, such as PEO Platform Users, • HRIS - cloud services revenue, which includes our new ASO services revenue, and • Interest income.
As part of an ongoing effort to ensure that our billing practices best match the expectations of our customers, in the third quarter of 2023 we determined that certain individuals such as those described above and certain co-employees were not previously or consistently counted in Total WSEs and Average WSEs.] This resulting adjustment increased our reported Total WSEs by approximately 4,500 for December 31, 2023 and Average WSEs by approximately 4,800 and 1,500 for the fourth quarter of 2023 and the full year 2023, respectively.
As part of an ongoing effort to ensure that our billing practices best match the expectations of our customers, in the third quarter of 2023 we determined that certain individuals such as those described above and certain co-employees were not previously or consistently counted in Total WSEs and Average WSEs.
TRINET 50 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Investing Activities Cash used in investing activities for the periods presented below primarily consisted of purchases of investments, capital expenditures and acquisition of business, partially offset by proceeds from the sale and maturity of investments.
Investing Activities Cash provided by (used in) investing activities for the periods presented below primarily consisted of purchases of investments, capital expenditures and acquisition of business, partially offset by proceeds from the sale and maturity of investments.
This market trend was partially offset by strong new client additions and improved client retention in 2023. Total WSEs can be used to estimate our beginning WSEs for the next period and, as a result, can be used as an indicator of our potential future success in generating revenue, growing our business and retaining clients.
Total WSEs can be used to estimate our beginning WSEs for the next period and, as a result, can be used as an indicator of our potential future success in generating revenue, growing our business and retaining clients.
While the amount of revenue we recognized in 2023 for this service was not significant, these users of the PEO platform for whose access we charged this fee increased our reported Total WSEs by approximately 12,000 as of December 31, 2023 and Average WSEs by approximately 4,000 and 1,000 for the fourth quarter of 2023 and the full year ended December 31, 2023, respectively.
While the amount of revenue we recognized for this service to date has not been significant, these users of the PEO platform for whose access we charged this fee increased our reported Total WSEs by approximately 30,600 as of December 31, 2024 and Average WSEs by approximately 20,200 and 1,000 for the years ended December 31, 2024 and 2023, respectively.
Our principal source of liquidity for operations is derived from cash provided by operating activities. We rely on cash provided by operating activities to meet our short-term liquidity requirements, which primarily relate to the payment of corporate payroll and other operating costs, and capital expenditures.
We rely on cash provided by operating activities to meet our short-term liquidity requirements, which primarily relate to the payment of corporate payroll and other operating costs, and capital expenditures. Our cash flow related to WSE payroll and benefits is generally matched by advance collection from our PEO clients.
TRINET 45 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Operating Expenses OE includes COPS, S&M, G&A, SD&P, and D&A. We had approximately 3,600 colleagues as of December 31, 2023 primarily across the U.S. but also in India and Canada. Compensation costs for our colleagues include payroll, payroll taxes, SBC, bonuses, commissions and other payroll- and benefits-related costs.
TRINET 45 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Expenses Expenses include COPS, S&M, G&A, SD&P, D&A, collectively referred to as OE, as well as IE. We had approximately 3,600 colleagues as of December 31, 2024 primarily across the U.S. but also in India and Canada.
TRINET 43 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents PSR from PEO Services customers and HRIS cloud services clients was as follows: (in millions) 2023 2022 PEO Services $ 704 $ 711 HRIS Cloud Services 52 43 Total $ 756 $ 754 We also analyze changes in PSR with the following measures: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in fees for each vertical, • Mix - the change in composition of Average WSEs across our verticals and the composition of products and services our clients receive, including TriNet Clarus R+D, and • HRIS - incremental HRIS cloud services revenue.
PSR from PEO Services customers and HRIS services clients was as follows: (in millions) 2024 2023 PEO Services $ 723 $ 704 HRIS Services 42 52 Total $ 765 $ 756 We also analyze changes in PSR with the following measures: • Volume - the percentage change in period over period co-employed Average WSEs, • Rate - the weighted average percentage change in fees for each vertical, • Mix - the change in composition of co-employed Average WSEs across our verticals and the composition of products and services our clients receive, including PEO Platform Users, and • HRIS - cloud services revenue, which includes our new ASO services revenue.
In August 2023, we issued $400 million aggregate principal amount of our 2031 Notes to partially fund share repurchases in the third quarter of 2023.
TRINET 51 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents In August 2023, we issued $400 million aggregate principal amount of our 2031 Notes to partially fund share repurchases in the third quarter of 2023.
We use actuaries to evaluate, review and recommend accrued workers' compensation costs on a quarterly basis. The data is segmented by class and state and analyzed by policy year, and states where we have small exposure are aggregated into a single grouping.
The data is segmented by class and state and analyzed by policy year, and states where we have small exposure are aggregated into a single grouping.
Our cash flow related to WSE payroll and benefits is generally matched by advance collection from our PEO clients. To minimize the credit risk associated with remitting the payroll and associated taxes and benefits costs, we require PEO clients to prefund the payroll and related payroll taxes and benefits costs.
To minimize the credit risk associated with remitting the payroll and associated taxes and benefits costs, we require PEO clients to prefund the payroll and related payroll taxes and benefits costs.
As workers' compensation costs for a particular period are not known for many years after the losses have occurred, these costs represent our best estimate of unpaid claim TRINET 53 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents losses and loss adjustment expenses within the Deductible Layer in accordance with our insurance policies.
As workers' compensation costs for a particular period are not known for many years after the losses have occurred, these costs represent our best estimate of unpaid claim losses and loss adjustment expenses within the Deductible Layer in accordance with our insurance policies. We use actuaries to evaluate, review and recommend accrued workers' compensation costs on a quarterly basis.
(1) Non-GAAP effective tax rate is 25.6% for 2023, and 25.5% for 2022 and 2021, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes. (2) Non-cash interest expense represents amortization and write-off of our debt issuance costs and loss on a terminated derivative.
(1) Non-GAAP effective tax rate is 25.6% for 2024 and 2023, and 25.5% for 2022, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.
For details of the critical accounting judgments and estimates that could affect the Results of Operations, see the Critical Accounting Judgments and Estimates section within MD&A.
Results of Operations The following table summarizes our results of operations for the three years ended December 31, 2024, 2023 and 2022. For details of the critical accounting judgments and estimates that could affect the Results of Operations, see the Critical Accounting Judgments and Estimates section within MD&A.
TRINET 51 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Financing Activities Net cash used in financing activities in the years ended December 31, 2023 and 2022 consisted of our debt and equity-related activities.
Financing Activities Net cash used in financing activities in the years ended December 31, 2024 and 2023 consisted of our debt and equity-related activities.
In addition to focusing on growing our Average WSE and Total WSE counts, we also focus on pricing strategies, benefit participation and service differentiation to expand the value we provide to our clients and our resulting revenue opportunities. We report the impact of client and WSE participation differences as a change in mix.
In addition to focusing on growing our Average WSE and Total WSE counts, we also focus on pricing strategies, benefit participation and service differentiation to expand TRINET 40 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents the value we provide to our clients and our resulting revenue opportunities.
We consider industry and issuer concentrations in our investment policy. We also invest funds held as collateral to satisfy our long-term obligation towards workers' compensation liabilities. These investments are classified on our balance sheets as restricted cash, cash equivalents and investments.
TRINET 50 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents We also invest funds held as collateral to satisfy our long-term obligation towards workers' compensation liabilities. These investments are classified on our balance sheets as restricted cash, cash equivalents and investments.
We regularly review our collateral balances with our insurance carriers and anticipate funding further collateral in the future based upon our capital requirements. We classify our restricted cash, cash equivalents and investments as current and noncurrent assets to match against the anticipated timing of payments to carriers.
We classify our restricted cash, cash equivalents and investments as current and noncurrent assets to match against the anticipated timing of payments to carriers.
For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).” Our total revenues increased 1%, primarily driven by inflationary rate increases, partially offset by lower volume due to decreases in Average WSEs. Our Average WSEs decreased 5% and Total WSEs was approximately flat year over year.
For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs).” Our total revenues increased 1%, driven by higher Average co-employed WSEs and rate increases, partially offset by lower health plan enrollment.
The table below presents a reconciliation of Net income to Adjusted Net Income: Year Ended December 31, (in millions) 2023 2022 2021 Net income $ 375 $ 355 $ 338 Effective income tax rate adjustment (2) 5 (10) Stock based compensation 59 62 50 Amortization of other intangible assets, net ( ¹ ) 20 18 12 Non-cash interest expense 2 1 3 Transaction and integration costs 17 37 — Income tax impact of pre-tax adjustments (25) (30) (17) Adjusted Net Income $ 446 $ 448 $ 376 (1) Amount includes impairment of customer relationship intangibles in 2021.
The table below presents a reconciliation of Net income to Adjusted Net Income: Year Ended December 31, (in millions) 2024 2023 2022 Net income $ 173 $ 375 $ 355 Effective income tax rate adjustment (5) (2) 5 Stock based compensation 65 59 62 Amortization of other intangible assets, net 19 20 18 Non-cash interest expense 3 2 1 Transaction and integration costs — 17 37 Restructuring costs 49 — — Income tax impact of pre-tax adjustments (35) (25) (30) Adjusted Net Income $ 269 $ 446 $ 448 TRINET 39 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Operating Metrics Worksite Employees (WSE) Average WSE change is a volume measure we use to monitor the performance of our PEO business.
We manage our sponsored benefit and workers' compensation insurance obligations by maintaining collateral funds in restricted cash, cash equivalents and investments. These collateral amounts are generally determined at the beginning of each plan year and we may be required by our insurance carriers to adjust our collateral balances when facts and circumstances change.
These collateral amounts are generally determined at the beginning of each plan year and we may be required by our insurance carriers to adjust our collateral balances when facts and circumstances change. We regularly review our collateral balances with our insurance carriers and anticipate funding further collateral in the future based upon our capital requirements.
Additionally, Total WSEs includes approximately 4,500 incremental WSEs for December 31, 2023 and Average WSEs includes approximately 4,800 for the fourth quarter of 2023 (1,500 for the full year 2023) additional service recipients. These were identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers.
(2) Total WSEs and Average WSEs include incremental WSEs that were charged a platform user access fee and incremental additional service recipients. These were identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers.
The ratio of OE to total revenues was 19% in 2023 and 2022. % represents portion of compensation related expense included in operating expenses We analyze and present our OE based upon the business functions COPS, S&M, G&A and SD&P and D&A. The charts below provide a view of the expenses of the business functions.
The ratio of expenses to total revenues was 20% in 2024 and 2023. % represents portion of compensation related expense included in expenses TRINET 46 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents We analyze and present our expenses based upon the functional categories of COPS, S&M, G&A, SD&P, D&A and IE.
Year Ended December 31, % Change (in millions, except operating metrics data) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Income Statement Data: Professional service revenues $ 756 $ 754 $ 639 — % 18 % Insurance service revenues 4,166 4,131 3,901 1 6 Total revenues 4,922 4,885 4,540 1 8 Insurance costs 3,513 3,463 3,339 1 4 Operating expenses 940 923 746 2 24 Total costs and operating expenses 4,453 4,386 4,085 2 7 Operating income 469 499 455 (6) 10 Other income (expense): Interest expense, bank fees and other (40) (39) (20) 3 95 Interest income 72 22 6 227 267 Income before provision for income taxes 501 482 441 4 9 Income taxes 126 127 103 (1) 23 Net income $ 375 $ 355 $ 338 6 % 5 % Cash Flow Data: Net cash provided by operating activities 545 562 218 (3) % 158 % Net cash used in investing activities (70) (226) (135) (69) 67 Net cash provided by (used in) financing activities (546) (536) 12 2 (4,567) Non-GAAP measures (1) : Adjusted EBITDA 697 688 565 1 % 22 % Adjusted Net income 446 448 376 — 19 Corporate Operating Cash Flow 539 497 415 8 20 Operating Metrics: Insurance Cost Ratio 84 % 84 % 86 % — % (2) % Average WSEs (2) 331,423 348,543 340,067 (5) 2 Total WSEs (2) 347,542 348,652 364,940 — (4) Average HRIS Users (3) 215,295 248,496 N/A (13) N/A (1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading " Non-GAAP Financial Measures ".
Year Ended December 31, % Change (in millions, except operating metrics data) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Income Statement Data: Professional service revenues $ 765 $ 756 $ 754 1 % — % Insurance service revenues 4,224 4,166 4,131 1 1 Interest income 64 72 22 (11) 227 Total revenues 5,053 4,994 4,907 1 2 Insurance costs 3,797 3,513 3,463 8 1 Operating expenses 968 940 923 3 2 Interest expense, bank fees and other 62 40 39 55 3 Total costs and expenses 4,827 4,493 4,425 7 2 Income before tax 226 501 482 (55) 4 Income taxes 53 126 127 (58) (1) Net income $ 173 $ 375 $ 355 (54) % 6 % Cash Flow Data: Net cash provided by operating activities 279 539 497 (48) % 8 % Net cash provided by (used in) investing activities 153 (70) (226) (319) (69) Net cash used in financing activities (207) (540) (471) (62) 15 Non-GAAP measures (1) : Adjusted EBITDA 485 697 688 (30) % 1 % Adjusted Net income 269 446 448 (40) — Operating Metrics: Insurance Cost Ratio 90 % 84 % 84 % 6 % — % Average WSEs (2) 352,681 331,423 348,543 6 (5) Total WSEs (2) 360,681 347,542 348,652 4 — (1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".
In February of 2024, our board of directors declared a cash dividend of $0.25 per share, for a total payment of approximately $13 million. Capital Resources As of December 31, 2023, $500 million and $400 million aggregate principal of our 2029 Notes and 2031 Notes was outstanding, respectively.
We initiated a common stock dividend of $0.25 per share in April, July and October 2024 and declared common stock dividends of $0.25 per share to be paid in the first quarter of 2025. Capital Resources As of December 31, 2024, $500 million and $400 million aggregate principal of our 2029 Notes and 2031 Notes was outstanding, respectively.
We were in compliance with all financial covenants under our 2021 Credit Agreement, 2029 Notes and 2031 Notes at December 31, 2023.
The 2021 Credit Agreement also contains a financial covenant that requires the Company to maintain certain maximum total net leverage ratios. We were in compliance with all financial covenants under our 2021 Credit Agreement, 2029 Notes and 2031 Notes at December 31, 2024.
The increase in insurance costs for the year was primarily driven by higher rates paid for services, partially offset by lower health plan enrollment and lower volume due to lower Average WSEs. The rate increases were primarily driven by higher costs associated with medical services utilization, in particular outpatient services and pharmacy costs.
The increase in ISR for the year was primarily driven by rate increases and higher co-employed Average WSEs, partially offset by lower health plan enrollment.
Dollars are presented in millions and percentages represent year-over-year change.
The charts below provide a view of the expenses of the business functions. Dollars are presented in millions and percentages represent year-over-year change.
We believe our existing corporate TRINET 49 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents cash and cash equivalents and positive working capital will be sufficient to meet our working capital expenditure needs for at least the next twelve months.
We hold both corporate cash and cash associated with WSEs across multiple financial institutions to reduce concentrations of counterparty risk. We believe our existing corporate cash and cash equivalents and positive working capital will be sufficient to meet our working capital expenditure needs for at least the next twelve months.
Cash Flows The following table presents our cash flow activities for the stated periods: Year Ended December 31, (in millions) 2023 2022 Corporate WSE Total Corporate WSE Total Net cash provided by (used in): Operating activities $ 539 $ 6 $ 545 $ 497 $ 65 $ 562 Investing activities (65) (5) (70) (214) (12) (226) Financing activities (546) — (546) (536) — (536) Effect of exchange rate changes on cash and cash equivalents — — — (1) — (1) Net increase (decrease) in cash and cash equivalents, unrestricted and restricted $ (72) $ 1 $ (71) $ (254) $ 53 $ (201) Cash and cash equivalents, unrestricted and restricted: Beginning of period $ 406 $ 1,131 $ 1,537 $ 660 $ 1,078 $ 1,738 End of period $ 334 $ 1,132 $ 1,466 $ 406 $ 1,131 $ 1,537 Net increase (decrease) in cash and cash equivalents: Unrestricted $ (67) $ — $ (67) $ (258) $ — $ (258) Restricted (5) 1 (4) 4 53 57 Operating Activities Components of net cash provided by operating activities are as follows: Year Ended December 31, (in millions) 2023 2022 Net cash provided by operating activities $ 545 $ 562 Net cash provided by operating activities - Corporate $ 539 $ 497 Net cash provided by operating activities - WSE $ 6 $ 65 The year-over-year change in net cash provided by operating activities for WSE purposes was primarily driven by timing of client payments, payments of payroll and payroll taxes, settlement of our previously announced 2022 Credits, and insurance claim activities.
The following table presents our cash flow activities for the stated periods: Year Ended December 31, (in millions) 2024 2023 Corporate WSE & TriNet Trust Total Corporate WSE & TriNet Trust Total Net cash provided by (used in): Operating activities $ 279 $ — $ 279 $ 539 $ — $ 539 Investing activities 148 5 153 (65) (5) (70) Financing activities (346) 139 (207) (546) 6 (540) Net increase (decrease) in cash and cash equivalents, unrestricted and restricted $ 81 $ 144 $ 225 $ (72) $ 1 $ (71) Cash and cash equivalents, unrestricted and restricted: Beginning of period $ 334 $ 1,132 $ 1,466 $ 406 $ 1,131 $ 1,537 End of period $ 415 $ 1,276 $ 1,691 $ 334 $ 1,132 $ 1,466 Net increase (decrease) in cash and cash equivalents: Unrestricted $ 72 $ 1 $ 73 $ (67) $ — $ (67) Restricted 9 143 152 (5) 1 (4) Operating Activities The year-over-year change in net cash provided by operating activities was primarily driven by the decrease in our net income and the timing of our payments of corporate obligations.
Although we are not subject to regulatory restrictions that require us to do so, we distinguish and manage our corporate assets and liabilities separately from those current assets and liabilities held by us to satisfy our employer obligations associated with our WSEs as follows: TRINET 48 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents December 31, 2023 2022 (in millions) Corporate WSE Total Corporate WSE Total Current assets: Cash and cash equivalents $ 287 $ — $ 287 $ 354 $ — $ 354 Investments 65 — 65 76 — 76 Restricted cash, cash equivalents and investments 22 1,247 1,269 22 1,241 1,263 Other current assets 73 884 957 78 555 633 Total current assets $ 447 $ 2,131 $ 2,578 $ 530 $ 1,796 $ 2,326 Total current liabilities 332 2,131 $ 2,463 $ 192 $ 1,796 $ 1,988 Working capital $ 115 $ — $ 115 $ 338 $ — $ 338 As of December 31, 2023, we did not have any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
December 31, 2024 2023 (in millions) Corporate WSE & TriNet Trust Total Corporate WSE & TriNet Trust Total Current assets: Cash and cash equivalents $ 359 $ 1 $ 360 $ 287 $ — $ 287 Investments — — — 65 — 65 Restricted cash, cash equivalents and investments 23 1,390 1,413 22 1,247 1,269 Other current assets 95 1,312 1,407 73 884 957 Total current assets $ 477 $ 2,703 $ 3,180 $ 447 $ 2,131 $ 2,578 Total current liabilities 278 2,703 $ 2,981 $ 332 $ 2,131 $ 2,463 Working capital $ 199 $ — $ 199 $ 115 $ — $ 115 As of December 31, 2024, we did not have any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
TRINET 55 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents Recent Accounting Pronouncements Refer to Note 1 in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K for additional information related to recent accounting pronouncements. TRINET 56 2023 FORM 10-K QUANTITATIVE AND QUALITATIVE DISCLOSURES Table of Contents
TRINET 54 2024 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents The following table illustrates the sensitivity of changes in completion factors on our year end estimate of insurance costs (in millions of dollars): Change in completion factors Change in insurance costs -0.75% $21 -0.50% $14 -0.25% $7 +0.25% $(7) +0.50% $(14) +0.75% $(21) Recent Accounting Pronouncements Refer to Note 1 in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K for additional information related to recent accounting pronouncements.
Additionally, Total WSEs includes approximately 4,500 incremental WSEs for December 31, 2023 and Average WSEs includes approximately 4,800 for the fourth quarter of 2023 (1,500 for the full year 2023) additional service recipients. These were identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers.
Average WSEs and Total WSEs increased 6% and 4%, respectively, compared to the same period in 2023, primarily due to additional PEO Platform Users and additional service recipients identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers.
TRINET 42 2023 FORM 10-K MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents PSR ISR - % represents proportion of insurance service revenues to total revenues *Total revenues generated from PEO services only The increase in total revenue for the year was primarily driven by inflationary rate increases.
PSR ISR - % represents proportion of insurance service revenues to total revenues *Total revenues generated from PEO services only, excluding interest income The increase in total revenue for the year ended December 31, 2024 was primarily driven by higher co-employed Average WSEs and rate increases, partially offset by lower health plan enrollment.
Compensation-related expense represented 65% and 63% of our OE in 2023 and 2022, respectively. Transaction and integration costs associated with our 2022 acquisitions of Zenefits and Clarus R+D are included in G&A. These costs include advisory, legal, employee retention costs tied to ongoing employment. In 2023, we experienced OE growth of 2% compared to 2022.
Compensation costs for our colleagues include payroll, payroll taxes, SBC, bonuses, commissions and other payroll- and benefits-related costs. Compensation-related expense represented 63% and 66% of our expenses in 2024 and 2023, respectively. Transaction and integration costs associated with our 2022 acquisitions of Zenefits and TriNet Clarus R+D are included in G&A for 2023.
The decrease in rates was primarily due to an increase in excludable income for state tax purposes and an increase in tax benefits related to stock-based compensation. Liquidity and Capital Resources Liquidity Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations.
Liquidity and Capital Resources Liquidity Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. Our principal source of liquidity for operations is derived from cash provided by operating activities.
As we continue our work in combining our PEO platform and our HRIS SaaS capabilities into a single platform, these various types of TriNet users will all be served from the same platform. In addition to focusing on retaining and growing our WSE base, we continue to review acquisition opportunities that would expand our product offering and provide further scale.
In addition to focusing on retaining and growing our WSE base, we continue to review acquisition opportunities that would expand our product offering and provide further scale. Insurance Cost Ratio (ICR) ICR is a performance measure calculated as the ratio of insurance costs to insurance service revenues.
These obligations include the costs of reimbursing the carriers for paying claims within the deductible layer in accordance with the workers' compensation insurance policy.
These obligations include the costs of reimbursing the carriers for paying claims within the deductible layer in accordance with the workers' compensation insurance policy. Because the liabilities of the TriNet Trust are largely driven by how much in cash has been deposited into the trust, there is generally no significant working capital in that entity.
Year Ended December 31, % Change 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Average WSEs 331,423 348,543 340,067 (5) 2 Co-Employed 330,423 348,543 340,067 (5) 2 PEO Platform Users 1,000 N/A N/A N/A N/A Total WSEs 347,542 348,652 364,940 — (4) Co-Employed 335,543 348,652 364,940 (4) (4) PEO Platform Users 11,999 N/A N/A N/A N/A Average WSEs decreased 5% when comparing 2023 to 2022, primarily due to lower hiring in our installed base across most verticals during the past twelve months, especially within our Technology vertical.
Year Ended December 31, % Change 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Average WSEs 352,681 331,423 348,543 6 (5) Co-Employed 332,456 330,423 348,543 1 (5) PEO Platform Users 20,225 1,000 N/A n.m. N/A Total WSEs 360,681 347,542 348,652 4 — Co-Employed 330,104 335,543 348,652 (2) (4) PEO Platform Users 30,577 11,999 N/A n.m.
Working capital for corporate purposes Corporate working capital as of December 31, 2023 decreased $223 million from December 31, 2022, primarily due to the $109 million increase in current liabilities from our borrowings under our 2021 Revolver and the $67 million decrease in corporate unrestricted cash and cash equivalents.
Working capital for corporate purposes Corporate working capital as of December 31, 2024 increased $84 million from December 31, 2023, primarily driven by a $72 million increase in corporate unrestricted cash and cash equivalents, partially offset by a $65 million decrease in the current portion of our unrestricted investment portfolio and a $54 million decrease in corporate current liabilities, mostly driven by the $34 million reduction in the current portion of our outstanding debt.
Year Ended December 31, (in millions) 2023 2022 Investments: Purchases of investments $ (281) $ (410) Proceeds from sale and maturity of investments 286 469 Acquisition of subsidiaries — (229) Cash provided by (used in) investments $ 5 $ (170) Capital expenditures: Software and hardware $ (70) $ (47) Office furniture, equipment and leasehold improvements (5) (9) Cash used in capital expenditures $ (75) $ (56) Cash used in investing activities $ (70) $ (226) Investments We invest a portion of available cash in investment-grade securities with effective maturities less than five years that are classified on our balance sheets as investments.
Year Ended December 31, (in millions) 2024 2023 Investments: Purchases of investments $ (190) $ (281) Proceeds from sale and maturity of investments 421 286 Cash provided by investments $ 231 $ 5 Capital expenditures: Software and hardware $ (73) $ (70) Office furniture, equipment and leasehold improvements (5) (5) Cash used in capital expenditures $ (78) $ (75) Cash provided by (used in) investing activities $ 153 $ (70) In 2024, we liquidated the unrestricted portion of our investment portfolio and used the funds to pay down our outstanding debt and for additional operational liquidity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk Our exposure to changes in interest rates relates primarily to our investment portfolio. Changes in U.S. interest rates affect the interest earned on the Company's cash, cash equivalents and the fair value of our investments.
Biggest changeChanges in interest rates affect the interest earned on the Company's cash, cash equivalents and the fair value of our investments as well as the cost of borrowing under our 2021 Revolver. Our cash equivalents consist primarily of money market mutual funds, which are not significantly exposed to interest rate risk.
We attempt to limit our exposure to interest rate risk and credit risk by investing in instruments that meet the minimum credit quality, liquidity, diversification and other requirements of our investment policy. Our investments consist of liquid, investment-grade securities. The risk of rate changes on investment balances was not material at December 31, 2023 and 2022.
We attempt to limit our exposure to interest rate risk and credit risk by investing in instruments that meet the minimum credit quality, liquidity, diversification and other requirements of our investment policy. Our investments consist of liquid, investment-grade securities. The risk of interest rate changes on investment balances was not material at December 31, 2024 and 2023.
Our cash equivalents consist primarily of money market mutual funds, which are not significantly exposed to interest rate risk. Our investments are subject to interest rate risk because these securities generally include a fixed interest rate. As a result, the market values of these securities are affected by changes in prevailing interest rates.
Our investments are subject to interest rate risk because these securities generally include a fixed interest rate. As a result, the market values of these securities are affected by changes in prevailing interest rates.
As of December 31, 2023, we had drawn down $200 million under our floating rate 2021 Revolver. The impact of a 100 basis point increase or decrease in market interest rates to interest expense on our 2021 Revolver as of December 31, 2023 over the next twelve months was approximately $2 million.
The impact of a 100 basis point increase or decrease in market interest rates to interest expense on our 2021 Revolver as of December 31, 2024 over the next twelve months was approximately $1 million increase or decrease to interest expense for the twelve months ended December 31, 2025. TRINET 56 2024 FORM 10-K FINANCIAL STATEMENTS Table of Contents
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TRINET 57 2023 FORM 10-K FINANCIAL STATEMENTS Table of Contents
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in connection with our business, which primarily relate to fluctuations in interest rates. Our exposure to changes in interest rates relates primarily to our investment portfolio and outstanding borrowings under our floating rate 2021 Revolver.
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In February 2021, we issued $500 million aggregate principal of 3.50% senior unsecured notes maturing in March 2029 (our 2029 Notes) and in August 2023, we issued $400 million aggregate principal of 7.125% senior unsecured notes maturing in August 2031 (our 2031 Notes). Our 2029 Notes and 2031 Notes are carried at their cost, net of issuance costs.
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Since our 2029 Notes and 2031 Notes bear interest at fixed rates, we have no financial statement risk associated with changes in interest rates. However, the fair value of our 2029 Notes and our 2030 Notes fluctuates when interest rates change. As of December 31, 2024, we had drawn down $90 million under our floating rate 2021 Revolver.

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