BARRETT BUSINESS SERVICES INC

Previous wording

Additionally, our clients may be eligible for various legislative and regulatory programs, including those established under the CARES Act and the American Rescue Plan Act, such as the Employee Retention Tax Credit (“ERC”), which use payroll tax credits or deferrals as the mechanism to provide benefits to small businesses and employees. When current and former clients utilize ERCs and other similar programs, the IRS has required the associated tax forms to be filed through the PEO. We have made such filings for many of our current and former clients claiming ERCs. These filings are currently under examination by the IRS to assess the eligibility of the ERCs claimed by our PEO clients. During the second quarter of 2026, the Company received a notice of proposed adjustment from the IRS that may result in the disallowance of up to approximately $63.0 million of credits previously paid to client companies. Determining eligibility for ERCs and other programs is complex and is based on company-specific data that PEOs do not possess for their clients. Notwithstanding that PEOs do not determine eligibility for such credits and do not receive the economic benefit of such credits, the IRS has taken the general position that certain third-party payors, including PEOs, as well as their clients, are responsible for repaying disallowed tax credit claims under the ERC program. While we disagree with the IRS’s position and our clients are contractually and statutorily responsible for repaying any disallowed tax credits previously paid by the IRS, recovery from our clients cannot be assured. Failure to recover a significant amount of disallowed tax credits from our clients where the IRS seeks to hold BBSI liable likely would have a material adverse effect on our business, reputation, results of operations, and financial condition.

Current wording

Additionally, our clients may be eligible for various legislative and regulatory programs, including those established under the CARES Act and the American Rescue Plan Act, such as the Employee Retention Tax Credit (“ERC”), which use payroll tax credits or deferrals as the mechanism to provide benefits to small businesses and employees. When current and former clients utilize ERCs and other similar programs, the IRS has required the associated tax forms to be filed through the PEO. We have made such filings for many of our current and former clients claiming ERCs. These filings are currently under examination by the IRS to assess the eligibility of the ERCs claimed by our PEO clients. During the second quarter of 2026, the Company received a notice of proposed adjustment from the IRS that may result in the disallowance of up to approximately $54.6 million of credits previously paid to client companies. The Company initiated the IRS administrative appeals process and is contesting the proposed disallowance.

Previous wording

(2) On August 4, 2025, the Board of Directors authorized the repurchase of up to $100.0 million of the Company’s common stock over a two-year period beginning August 4, 2025. As of June 30, 2026, the Company had repurchased 1,797,799 shares at an aggregate purchase price of $59.7 million.

Current wording

(2) On August 4, 2025, the Board of Directors authorized the repurchase of up to $100.0 million of the Company’s common stock over a two-year period beginning August 4, 2025. As of September 30, 2026, the Company had repurchased 2,071,494 shares at an aggregate purchase price of $68.8 million.