TRINET GROUP INC

PART I

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. 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. We are the largest publicly traded company in the U.S. that focuses primarily on the PEO business, in terms of the number of WSEs we serve. In 2024, we processed $73 billion in payroll and payroll taxes for our clients and ended the year with approximately 360,700 WSEs.

We aim to differentiate ourselves from other PEOs in three substantive areas. First, we offer a high-quality, integrated service solution that is tailored to high-income, employee-centric SMBs. Our primary targeted industry verticals include technology, financial services, life sciences, nonprofit, professional services, and main street. Second, we offer our clients a premium HR advisory experience featuring high-touch services and efficient issue resolution, to yield a high level of customer satisfaction and retention. Finally, we believe our risk-based model allows our clients to better manage their benefits costs over the long term.

Our medium-term strategy includes taking actions to increase revenue growth through improved benefits options and risk management capabilities, expanded sales force scale, tenure, and productivity, and expanded distribution channels. In addition, we will focus on cost discipline, operational efficiencies in our service delivery model, and prudent capital allocation, while being strategic with re-investments.

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.

We deliver our services primarily through our PEO services that we provide via our co-employment model, and to a lesser extent, through our ASO-only services, which we anticipate will grow in the future.

PEO Services

TriNet has historically focused almost exclusively on the PEO business, and PEO services remain our core business. Our PEO services offer our clients our most complete HCM solution generally including all of the services described below.

ASO Services

Until recently, we offered a SaaS-only solution as the primary offering of our HRIS services. We are however currently transitioning this SaaS-only solution to offerings that combine the SaaS solution with a significant service component. 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. Unlike our PEO services, our ASO services do not include co-employment or access to our TriNet sponsored health benefit plans. However, our ASO clients will have access to our benefits administration platform that can administer third-party benefits and integrates with 401(k) retirement plans.

This transition from our HRIS offering to our ASO offering will result in not only a significant change in the level of service but also price for our clients currently using HRIS. As a result, we anticipate significant attrition in our existing HRIS client population during 2025.

Our Services

Our comprehensive HR solutions include the following capabilities:

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 do this by incorporating our knowledge and experience into our services and our technology platforms and by making our professionals available to consult with clients on a variety of HR needs, including talent management, retention and terminations, benefits enrollment, immigration and visas, payroll tax credits, employment compliance and regulatory developments and many other industry-specific and general HR topics. 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.

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. We believe that our TriNet-sponsored programs help our PEO clients compete for talent against larger businesses. Our benefit and insurance programs are designed to comply with federal, state and local regulations, and our benefit and insurance service offerings include plan selection and administration, enrollment management, leave management, plan document distribution and WSE and client communications.

Under these benefit and insurance programs, we pay third-party insurance carriers for WSE insurance benefits and reimburse insurance carriers or third-party administrators for claims payments within our insurance deductible layer, where applicable.

We sponsor and administer several employee benefit plans for our WSEs through a broad range of carriers, including group health, dental, vision, short- and long-term disability, and life insurance as an employer plan sponsor under Section 3(5) of ERISA. 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. For further discussion of our insurance programs, including policies where we reimburse our carriers for certain amounts relating to claims, refer to Note 1 in Part II, Item 8. Financial Statements and Supplementary Data, of this Form 10-K.

We also offer PEO clients the option to obtain their own client-sponsored benefits through our OMS product family. 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.

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 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.

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. 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.

Our PEO services provide fully-insured workers' compensation insurance coverage for our clients and WSEs through insurance policies that we negotiate with third-party insurance carriers. We manage the deductible risk that we assume in connection with these policies by being selective in the types of businesses that we take on as new clients, and by monitoring claims data and performance of our carriers and third-party claims management service providers. In addition, we advise clients on workers’ compensation best practices, including by performing workplace assessment consultations and assisting with client efforts to identify conditions or practices that might lead to employee injuries.

We also provide EPLI coverage for our PEO clients through an insurance policy that we obtain from a third-party EPLI carrier. This policy provides coverage for certain claims that arise in the course of the employment relationship, such as discrimination, harassment, and certain other employee claims, with a per-claim retention amount. The retention amount under this policy, which functions like a deductible, is allocated on a pre-determined basis between the client and TriNet. 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

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. 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. In addition, for clients with employees outside the U.S., we provide payroll and HR support through international employer of record partners.

Our PEO Co-Employment Model

Our PEO services operate on the basis of a co-employment model, under which employment-related responsibilities are allocated by contract between us and our PEO clients. 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. Each of our PEO clients enters into a client service agreement with us that defines the suite of services and benefits to be provided by us, the fees payable to us, and the division of responsibilities between us and our clients as co-employers. WSEs also separately acknowledge the co-employment relationship and the allocation of employment-related responsibilities between TriNet and the client co-employer. 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.

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.

As a result of co-employment relationships for PEO services, we are liable for payment of salary, wages and certain other compensation to the WSEs as reported and paid to us by our client, and we are responsible for providing specified employee benefits to such persons to the extent provided in each client service agreement and under federal and state law. In most instances, clients are required to remit payment prior to the applicable payroll date by wire transfer or ACH.

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. We perform these functions as the statutory employer for federal employment tax purposes since our clients transfer legal control over these payroll functions to us. The laws that govern the payment of salaries, wages and related payroll taxes for our WSEs are complex and the various federal, state and local laws that govern such payments can vary significantly. 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. 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. 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.

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. 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. 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. 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. Many of the key economic assistance programs that SMBs relied on during the COVID-19 pandemic have now expired, including the ERTC. Although these programs have expired, processing backlogs and a temporary halt in September 2023 in processing new ERTC claims at the IRS have resulted in many SMBs, including some of our clients, continuing to wait to receive their tax credits. In many cases, SMBs still participated in these programs retroactively via payroll tax filing amendments. Many SMBs continue to wait for their credits to be processed.

•Interest Rates. After a period of rising interest rates, we saw short-term rates begin to decrease in the second half of 2024. While this period of higher interest rates may have resulted in lower overall hiring among our SMB clients, we have not yet seen hiring rates rise as a result of the recent decrease in short-term rates. Further, the lower short-term interest rates resulted in reduced interest income on our cash deposits, a driver of our financial results, but will also result in lower interest expense on our outstanding borrowings under our 2021 Revolver.

•Privacy Laws and Regulations. 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. 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. 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.

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. 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.

In 2024, we continued to develop our next-generation cloud-based platform. This new platform, which combines elements of our original PEO and HRIS platforms, is intended to further modernize our customers’ experience through more self-service capabilities and other important functions to, in turn, enable us to service SMBs throughout a larger portion of their lifecycle. Moreover, we have also begun to explore integrating new technologies, including expanding our existing AI/ML capabilities, into the customer experience to allow us to create efficiencies in the way we serve our customers and the way we operate internally.

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. 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. 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. Nearly all of our revenues are generated within the United States and its territories and substantially all our long-lived assets are located in the United States.

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.

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 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. 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.

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. 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. 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 through our sales organization, offering our solutions directly to clients and through key strategic partnerships with brokers and other channel partners. 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, brand, lead generation efforts, and referral sources and networks. We increasingly use technology and remote communication tools to engage with customers and prospects virtually.

Our marketing organization supports our sales representatives across the entire customer journey, from brand awareness and lead generation to customer nurturing, and leverages referral sources and networks. We increasingly utilize technology and remote communication tools to engage with customers and prospective customers effectively.

To connect with SMBs, we leverage diverse channels, including sponsorships with associations and aligned brands. Key initiatives include promoting our PEO and ASO services through both physical and virtual events and workshops. Programs such as TriNet PeopleForce, monthly PEO, and ongoing ASO virtual events allow us to target specific verticals and geographic markets. As a sponsor of the Small Business Association’s National Small Business Week, we also host a dedicated week-long event to deliver valuable, targeted content to the SMB community. During these events, we frequently include specialists and customers to provide actionable, real-world insights.

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.

Our digital marketing programs aim to drive awareness, generate interest, and capture leads across our portfolio. These efforts encompass digital advertising, search engine marketing, retargeting, and email campaigns.

Our marketing and corporate communications teams lead efforts to building brand awareness, overseeing reputation management, driving lead generation, retaining customers, and delivering relevant thought leadership to the SMB community. The team manages our website and other owned properties, creates content for outbound and inbound channels, and supports sales enablement, promotional campaigns, brand initiatives, and partner enablement. In 2024, we also published “The State of the Workplace”, which provided a comprehensive analysis of both employer and employee perspectives in the U.S. small business community. Additionally, our Corporate Communications and Editorial team is responsible for managing our press and media relations, overseeing internal and external communications, driving organic social media initiatives, and developing comprehensive crisis communication strategies to safeguard and further enhance our reputation.

With SMB behavior evolving rapidly, we have adopted digital tools such as telepresence, chat, and interactive assessments to enable us to engage SMBs in innovative ways. In 2024, we enhanced our digital engagement with tools such as conversational marketing on our website and interactive self-assessments.

Our brand campaigns are designed to create a unifying "umbrella effect" to amplify awareness across the industry. Our 2024 brand campaign, centered on our organizing principle "People Matter," employed an omnichannel approach that we expect will continue to evolve in 2025.

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. 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".

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. The term “employer” has different definitions for different purposes under the Code and ERISA, and for most purposes are interpreted under complex multi-factor tests under common law. 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. 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. 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. For additional information on our state and federal employer status and the ERISA and other state requirements that apply to us and their collective impact on our business and results of operations, refer to Part I, Item 1A. Risk Factors, of this Form 10-K, under the heading - "If we are not recognized as an employer of 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".

Health Insurance and Health Care Reform

Our sponsored employee health and welfare offerings are an important component of the services that we provide. The future of health care reform continues to evolve in the U.S. For example, the passage of the ACA in 2010 implemented sweeping health care reforms with staggered effective dates from 2010 through 2022, and many provisions in the ACA are still subject to the issuance of additional guidance from the DOL, the IRS, the U.S. Department of Health and Human Services and various U.S. states. Passage of the TCJA in 2017 eliminated the individual mandate tax penalty under the ACA beginning in 2019, while retaining employer ACA mandate obligations. States have developed, and will continue to develop, varying approaches to state-based health exchanges and mandates. 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. For additional information on health care reform and its impact on our business and results of operations, refer to Part I, Item 1A. Risk Factors, of this Form 10-K, under the heading - "Changing laws and regulations governing health insurance and other traditional employee benefits at the federal, state and local level could negatively affect our business".

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. As a sponsor of employee benefit plans, we also have access to certain protected health information (PHI) of our WSEs and colleagues. Management of PHI is subject to several regulations at the federal level, including HIPAA and the HITECH Act. 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. 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.

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. 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. 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. Similarly, as we continue to expand our operations and services, we may be required to comply with similarly complex privacy security laws in the countries or regions in which we operate or provide services. 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. 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. Risk Factors, of this Form 10-K, under the heading - "Data Privacy and Security Risks".

Licensing Laws

Nearly all states have adopted laws and regulations for licensing, registration, certification or recognition of PEOs and the IRS has implemented a voluntary federal certification program for PEOs. We expect states without such laws and regulations to adopt them in the future. While these laws and regulations can vary widely, most regulators monitor the financial health and other relevant business information of PEOs on an annual or quarterly basis. In some cases, these laws and regulations codify and clarify the co-employment relationship for certain payroll, unemployment, workers' compensation and other employment-related purposes or require specific client contractual terms and/or WSE disclosures. 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. We partner with brokers to provide these services and have elected to obtain state insurance licenses as a result. As each state’s licensing requirements differ, maintaining current licenses is complex and we are subject to insurance audits, investigations and fines if we fail to comply with insurance license requirements.

Other state regulatory authorities impose licensing requirements on companies involved in the transmission of cash, such as banks, and other money transmitters. We do not believe that our current activities require any such licenses, but we and others in our industry have received inquiries from regulatory authorities in the past and could receive them in the future.

For additional information on the impact of licensing laws, refer to Part I, Item 1A. Risk Factors, of this Form 10-K, under the heading "If we do not comply with our regulatory license requirements, or if we are deemed to be operating in various non-PEO licensed industries without the required licenses, we and our clients could be adversely impacted".

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. Tax reform efforts, and other payroll tax changes, at the federal, state and local level can impact our payroll tax reporting obligations for our clients and the services we can provide. State unemployment tax rates vary by state based in part on prior years’ total wages, unemployment taxes paid and unemployment claims experience and may also vary based on the overall claims experience of a PEO in states in which we are required to report and pay unemployment taxes using one of our accounts and rates. As a result, depending on where client WSEs perform services for our clients, the fees we charge PEO clients for unemployment taxes can be higher or lower than a client could obtain without use of a PEO. In some cases, taxing authorities can retroactively increase the unemployment taxes we pay to cover deficiencies in the unemployment tax funds. 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.

We have seen a growing trend, particularly at the federal level, of using payroll tax credits, deferrals and other related payroll tax programs as a mechanism for incentivizing SMB development and economic recovery. 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 PATH Act allows SMBs to use R&D tax credits submitted on the SMB’s business income tax return to reduce certain payroll taxes. 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. This means that we file client tax credit claims, and pass the associated tax credit refunds to our clients based on information supplied by our clients, which we do not control. These programs have generally not been designed with the PEO industry in mind and these programs are subject to broad agency interpretations given their complexity. While our clients are contractually responsible to us for their errors in tax credit submissions and for repaying us for all rejected tax credits under our service contracts, taxing authorities may still look to TriNet for repayment and we may not be able to effectively enforce or collect on these obligations. For additional information tax credit programs, and the risks they post to our operations, refer to Part I, Item 1A. Risk Factors, of this Form 10-K, under the heading - "Our business is subject to numerous complex laws, and changes in, uncertainty regarding, or adverse application of these laws could negatively affect our business."

Other Employment Regulations

We must also comply with labor and employment laws, which change frequently at the federal, state and local level. In particular for our PEO services, regulatory focus on the classification of employers, employees and independent contractors has the potential to significantly change how we and other PEOs operate and the services that we and other PEOs can provide to our clients and WSEs. 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.

We must also comply with state and federal rules and guidelines around both independent contractor and joint employer status. 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. For example, In January 2024, the DOL proposed a new rule for determining independent contractor status and in August 2023, the DOL proposed new regulations that address the salary requirements for white collar minimum wage and overtime exemptions under the FLSA. Meanwhile, the NLRB also modified its own independent contractors test in June 2023 and issued a new standard for determining whether two businesses are joint employers under the NLRA in October 2023. We do not believe that we are a joint employer under any law or rule, or that these rule changes impact our status as a co-employer. However, laws regarding independent contractor and joint employer status can impact the types of SMB workers we can service and the potential liability that we have for the actions of our SMB clients and their employees. For additional information, refer to Part I, Item 1A. 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".

Our Human Capital Resources

As of December 31, 2024, we had approximately 360,700 WSEs and 3,600 colleagues.

Oversight and Management

At TriNet, we power the success of SMBs by supporting their growth and enabling their people. 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. 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. We 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. We are accountable to each other and empowered to make decisions.

•Be incredible - We invest in the development of our colleagues. 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. The results are shared with our colleagues and reviewed by senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedback to drive meaningful improvements in colleague engagement. None of our colleagues are covered by a collective bargaining agreement.

Attracting and Retaining our Colleagues

We must attract, develop and retain highly motivated and qualified colleagues to continue to provide the services that our clients need, to achieve our strategic objectives, and to grow our business. 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.

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”.

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. 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.

The Impact of Seasonality on Our Business

Our business is affected by seasonality in client business activity, hiring and benefit selections, health claims costs and payroll taxes:

•PEO clients generally change their payroll service providers at the beginning of the payroll tax and benefits enrollment year; as a result, we have historically experienced our highest volumes of new clients joining and terminating clients in the month of January. 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. We generally experience the largest proportion of WSE benefit changes in the first and second quarters.

•Health claims costs tend to increase throughout the year as the utilization of medical services above each WSE's deductible causes our insurance costs to increase. In addition, the overall use of medical services by WSEs, including elective procedures, tends to increase later in the calendar year.

•Certain payroll tax related billings are based on annual taxable wage bases up to a set cap. 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.

Our Owned and Licensed Intellectual Property

We own or license from third parties various software and other intellectual property rights, used in our business. We protect our intellectual property rights through the use of confidentiality and non-disclosure agreements with our colleagues and third-party partners and vendors as well as policies incorporated and enforceable by contract. We also own registered trademarks in the United States, Australia, Canada, the United Kingdom, and the European Union covering our name and other trademarks and logos that we believe are materially important to our operations. We generally protect our trademarks through federal registration or through the commercial use of our trademarks. Trademark registrations must generally be renewed every five to ten years and we renew the registration of trademarks that we deem to have continuing value to our business.

Corporate and Other Available Information

We were incorporated in 1988 as TriNet Employer Group, Inc., a California corporation. We reincorporated as TriNet Merger Corporation, a Delaware corporation, in 2000 and during that year changed our name to TriNet Group, Inc. Our principal executive office is located at One Park Place, Suite 600, Dublin, CA 94568 and our telephone number is (510) 352-5000. Our website address is www.trinet.com. Information contained in or accessible through our website is not a part of this report.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge at investor.trinet.com as soon as reasonably practicable after we file such material with, or furnish it to, the SEC. 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.