8 unchanged sentences
See “Forward-Looking Information” in Item 7 of Part II of this report and “Risk Factors” in Item 1A of Part I of this report.
−Removed: Common Stock Split
−Removed: On June 4, 2024, we amended our Charter to increase the number of authorized shares of common stock from 20,500,000 shares to 82,000,000 shares, and our Board of Directors declared a four-for-one split of the Company’s common stock effected in the form of a stock dividend (the “2024 Stock Split”).
−Removed: Each stockholder of record at the close of business on June 14, 2024 received a dividend of three additional shares of common stock for each then-held share, distributed after close of trading on June 21, 2024.
−Removed: All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the 2024 Stock Split.
−Removed: The shares of common stock retain a par value of $0.01 per share.
−Removed: Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from additional paid-in capital to common stock.
Business Strategy
11 unchanged sentences
BBSI’s core purpose is to advocate for business owners, particularly in the small and mid-sized business segment.
−Removed: Our evolution from an entrepreneurially run company to a professionally managed organization
−Removed: has helped to form our view that all businesses experience inflection points at key stages of growth.
+Added: Our evolution from an entrepreneurially run company to a professionally managed organization has helped to form our view that all businesses experience inflection points at key stages of growth.
The insights gained through our own growth, along with the trends we see in working with more than 8,200 companies each day, define our approach to guiding business owners through the challenges associated with being an employer.
3 unchanged sentences
The first stage focuses on the mutual setting of expectations and is essential to a successful client relationship.
−Removed: It begins with a process of assessment and discovery in which the business owner’s business objectives, attitudes, and culture are aligned with BBSI’s processes, controls and culture.
+Added: It begins with a process of assessment and discovery in which the business owner’s
+Added: business objectives, philosophies and culture are aligned with BBSI’s processes, controls and culture.
This stage includes an implementation process, which addresses the administrative components of employment.
7 unchanged sentences
We work to manage and reduce job injury claims, identify fraudulent claims and structure optimal work programs, including modified duty.
−Removed: In 2023, BBSI began offering additional employee benefit programs to our clients.
−Removed: The new benefit programs available to clients include medical, dental and vision plans, flexible spending accounts and health savings accounts, life insurance and voluntary accident coverage, critical illness and disability coverage, among others.
−Removed: These additional employee benefit programs are offered through fully insured arrangements with third-party carriers and are designed to provide strategic value to our clients through access to best-in-class plans and service.
+Added: BBSI also offers employee benefit programs to our clients.
+Added: The benefit programs available to our clients include medical, dental and vision plans, flexible spending accounts and health savings accounts, life insurance and voluntary accident coverage, and critical illness and disability coverage, among others.
+Added: These employee benefit programs are offered through fully insured arrangements with third-party carriers and are designed to provide strategic value to our clients through access to best-in-class plans and service.
Categories of Services
3 unchanged sentences
We enter into a client services agreement to establish a co-employment relationship with each client company, assuming responsibility for payroll, payroll taxes, workers’ compensation (if elected) and benefits coverage (if elected) and certain other administrative functions for the client’s existing workforce.
−Removed: We provide our PEO clients access to human resource advisors, retirement plans, a learning management system and our web-based technology platform, myBBSI.
+Added: We provide our PEO clients with access to human resource advisors and a human resources information system (HRIS), retirement plans, a learning management system and our web-based technology platform, myBBSI.
We refer to employees of our PEO clients as worksite employees (“WSEs”).
14 unchanged sentences
It is nevertheless possible that claims not satisfied or covered through indemnification or insurance may be asserted against us, which could adversely affect our results of operations.
−Removed: We have PEO client services agreements with customers in a diverse array of industries, including, among others, construction, manufacturing, transportation and warehousing, waste management and remediation services, retail, leisure and hospitality and wholesale trade.
−Removed: None of our clients individually represented more than 1% o f our total revenues in 2024 .
+Added: We have PEO client services agreements with customers in a diverse array of industries, including, among others, construction, waste management and remediation services, manufacturing, transportation and warehousing, health care, leisure and hospitality, retail, professional and advisory services and wholesale trade.
+Added: None of our clients individually represented more than 1% of our total revenues in 2025.
Market Opportunity
1 unchanged sentence
Our integrated management platform has enabled us to capitalize on these needs within the small to mid-size business sector.
−Removed: The small and mid‑sized business segment is particularly attractive because:
+Added: The small and mid‑sized business sector is particularly attractive because:
• it is large, continues to offer significant growth opportunity and remains underserved by professional services companies;
12 unchanged sentences
Growth Strategy
−Removed: We believe our clients are one of our best advocates and powerful drivers of referral-based growth.
+Added: We believe our clients are our best advocates and powerful drivers of referral-based growth.
In each market, operations teams provide expertise, consultation and support to our clients, driving growth and supporting retention.
12 unchanged sentences
We intend to expand our geographic presence as opportunities arise.
−Removed: We continue to refine our approach to geographic expansion, which now includes an "asset-light" entry to new markets until sufficient scale is reached to warrant a physical office location.
+Added: We continue to refine our approach to geographic expansion, which includes an "asset-light" entry to new markets until sufficient scale is reached to warrant a physical office location.
As part of this effort to expand geographically, we have become licensed to provide PEO services nationwide.
5 unchanged sentences
It is in the mutual interests of the client and BBSI to commit to workplace safety and risk mitigation.
−Removed: We maintain clear guidelines for our area managers and risk management consultants, directly tying their continued employment to their diligence in understanding and addressing the risks of accident or injury associated with the industries in which client companies operate and in monitoring clients’ compliance with workplace safety requirements.
+Added: We maintain clear guidelines for our area managers and risk management consultants, directly tying their incentive compensation to their diligence in understanding and addressing the risks of accident or injury associated with the industries in which client companies operate and in monitoring clients’ compliance with workplace safety requirements.
Elements of Workers' Compensation System
State law (and for certain types of employees, federal law) generally mandates that an employer reimburse its employees for the costs of medical care and other specified benefits for injuries or illnesses, including catastrophic injuries and fatalities, incurred in the course and scope of employment.
−Removed: Most states require employers to maintain workers' compensation insurance or otherwise demonstrate financial responsibility to meet workers' compensation obligations to employees.
+Added: require employers to maintain workers' compensation insurance or otherwise demonstrate financial responsibility to meet workers' compensation obligations to employees.
The benefits payable for various categories of claims are determined by state regulation and vary with the severity and nature of the injury or illness and other specified factors.
5 unchanged sentences
Approximately 86% of the Company’s workers’ compensation exposure is covered through the insured program.
−Removed: Effective July 1, 2021, the Company entered into a fully insured arrangement for its insured program, whereby third-party insurers assume substantially all risk of loss for claims incurred under the program.
−Removed: This fully insured arrangement has been extended annually and covers claims incurred between July 1, 2021 and June 30, 2025, with an option to renew through June 30, 2026.
−Removed: Each annual fully insured policy allows BBSI to participate in savings if claims develop favorably up to a maximum per policy year ranging from $20.5 million to $28.5 million, depending on the policy period.
−Removed: For only the policy period from July 1, 2021 to June 30 2022, BBSI can also incur additional premium up to $7.5 million if claims develop adversely.
−Removed: No additional premium can be charged based on claim performance for other policy years.
+Added: The Company maintains a fully insured arrangement for its insured program, whereby third-party insurers assume substantially all risk of loss for claims incurred under the program.
+Added: This fully insured arrangement covers claims incurred between July 1, 2021 and June 30, 2026.
+Added: The Company's fully insured policies allow for return premiums if claims develop favorably, ranging from $20.0 million to $30.0 million, depending on the policy period.
+Added: For the policy period beginning July 1, 2021, BBSI can incur additional premiums up to $7.5 million if claims develop adversely.
+Added: For all other policy years, no additional premiums can be charged based on claim performance.
Premiums incurred but not paid are recorded as either current or long-term premium payable on the consolidated balance sheets based on the expected timing of the payments.
9 unchanged sentences
Claims Management
−Removed: As a result of our status as a self-insured employer in four states and our remaining retention arrangements, our workers' compensation expense is tied directly to the incidence and severity of covered workplace injuries.
+Added: As a result of our status as a self-insured employer in four states, our remaining retention arrangements, and the premium adjustments allowable under our fully insured policies, our workers' compensation expense is tied directly to the incidence and severity of covered workplace injuries.
We seek to contain our workers' compensation costs through a comprehensive approach to claims management.
We use managed-care systems to reduce medical costs and keep time-loss costs to a minimum by assigning injured workers, whenever possible, to short-term assignments which accommodate the workers' physical limitations.
−Removed: We believe that these assignments minimize both time actually lost from work and covered time-loss costs.
+Added: We believe that these assignments minimize both time actually lost from work and covered
+Added: time-loss costs.
We engage a third-party claims administrator ("TPA") to provide the primary claims management expertise.
3 unchanged sentences
Sponsored Benefits
−Removed: In 2023, BBSI began offering employee benefits to its PEO client employees.
+Added: BBSI offers employee benefits to its PEO client employees.
As a plan sponsor, BBSI engages with third-party insurance carriers to enter into fully insured arrangements to offer a wide range of employee benefit programs to our clients, including medical, dental and vision plans, flexible spending accounts and health savings accounts, life insurance and voluntary accident coverage, and critical illness and disability coverage, among others.
12 unchanged sentences
This involves promoting diversity and treating all employees with dignity and respect, while providing our management employees with fair, market-based, competitive and equitable compensation.
−Removed: Because of our continuous commitment to our employees, we have recently been recognized as a Great Place to Work Certified company for our fourth consecutive year.
−Removed: We motivate our management employees through a compensation package that includes a competitive base salary and the opportunity for profit sharing.
+Added: Because of our continuous commitment to our employees, we have recently been recognized as a Great Place to Work Certified company for our fifth consecutive year.
+Added: We motivate our management employees through a compensation package that includes a competitive base salary and the opportunity for profit sharing and other incentive compensation.
At the branch level, profit sharing is in direct correlation to client WSE growth and workers’ compensation claims performance, reinforcing a culture focused on achievement of client goals.
4 unchanged sentences
Our qualified staffing and management employee benefit plans include our 401(k) plan.
−Removed: Beginning in 2023, qualified employees may enroll upon reaching 21 years of age and completing six months of service.
+Added: Qualified employees may
+Added: enroll upon reaching 21 years of age and completing six months of service.
We match 100% of contributions by management and staffing employees up to 3% of each participating employee's annual compensation and 50% of the employee's contributions up to an additional 2% of annual compensation.
1 unchanged sentence
WSEs covered under a PEO arrangement may participate in our 401(k) plan at the sole discretion of the PEO client.
−Removed: We also offer a cafeteria plan under Section 125 of the Internal Revenue Code and group health, life insurance and disability insurance plans to qualified staffing and management employees.
+Added: We also offer a cafeteria plan under Section 125 of the Internal Revenue Code and group health, life insurance and disability insurance plans to qualified management and staffing employees.
Generally, qualified employee benefit plans are subject to provisions of both the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 ("ERISA").
6 unchanged sentences
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Acts”) subject us to potential penalties unless we offer to our employees minimum essential healthcare coverage that is affordable.
−Removed: Because each PEO client is considered to be the sole employer in the application of any rule or law included within the scope of the Acts, we are not required to offer health care coverage to the WSEs of our PEO clients.
−Removed: However, in 2023 we began offering
−Removed: sponsored benefits, including healthcare coverage, to eligible PEO client employees as part of our PEO service offering.
−Removed: To comply with the employer mandate provision of the Acts for our staffing and management employees, we offer health care coverage to all staffing and management employees eligible for coverage under the Acts.
+Added: Although we are not required to offer health care coverage to the WSEs of our PEO clients, because each PEO client is considered to be the sole employer in the application of any rule or law included within the scope of the Acts, we offer sponsored benefits, including healthcare coverage, to eligible PEO client employees as part of our PEO service offering.
+Added: To comply with the employer mandate provision of the Acts for our staffing and management employees, we offer health care coverage to all management and staffing employees eligible for coverage under the Acts.
Regulatory and Legislative Environment
8 unchanged sentences
As an employer, we are subject to all federal statutes and regulations governing our employer-employee relationships for staffing and management employees.
−Removed: Subject to the discussion of risk factors below, we believe that our operations comply in all material respects with applicable federal statutes and regulations.
+Added: Subject to the discussion of risk factors below, we
+Added: believe that our operations comply in all material respects with applicable federal statutes and regulations.
Due to the nature of our operations, we collect, store, process, use and retain significant amounts of confidential and sensitive personal employee and client information.
1 unchanged sentence
For further discussion on the federal and state laws and regulations associated with data privacy and security, including protected health information ("PHI") and the related federal and state regulations such as HIPAA and the HITECH act, refer to “Risk Factors” in Item 1A of Part I of this report.
+Added: Beginning in 2026, we are required to disclose information regarding the Company’s greenhouse gas emissions and climate-related risks under California’s Climate Corporate Data Accountability Act (CCDAA) and the Climate-Related Financial Risk Act (CRFRA).
+Added: We are not currently materially impacted by any other state or federal environmental regulations.
+Added: However, in recent years, an increasing number of state and federal laws and regulations have been enacted or proposed that require new climate and environmental-related disclosures.
+Added: Therefore, we may in the future be subject to additional state or federal environmental regulations or disclosure requirements.
Additional Information
5 unchanged sentences
In addition to other information contained in this report, the following risk factors should be considered carefully in evaluating our business.
−Removed: Risks Relating to Workers’ Compensation
+Added: Risks Related to Workers’ Compensation
Our ability to continue our business operations under our present service model is dependent on maintaining workers' compensation insurance coverage.
5 unchanged sentences
For all claims incurred under the Company’s self-insured programs, the Company retains risk of loss up to the first $3.0 million per occurrence, except in Maryland and Colorado, where the Company’s retention per occurrence is $1.0 million and $2.0 million, respectively.
−Removed: For claims incurred under the Company’s self-insured programs prior to July 1, 2020, the Company retains risk of loss up to the first $5.0 million per occurrence, except in Maryland and Colorado, where the retention per occurrence is $1.0 million and $2.0 million, respectively.
−Removed: On June 29, 2020, the Company entered into a loss portfolio transfer agreement (“LPT 1”) to remove all outstanding workers’ compensation claims obligations for claims incurred under its insured program between February 1, 2014 and December 31, 2017.
−Removed: On June 30, 2021, the Company entered into a loss portfolio transfer agreement (“LPT 2”) to remove all remaining outstanding workers’ compensation claims obligations for client policies issued under its insured program up to June 30, 2018.
−Removed: Thus, for claims incurred before July 1, 2020, the Company has financial risk for most workers’ compensation claims under $5.0 million on a per occurrence basis, except for claims transferred under the insured program as part of LPT 1 and LPT 2.
+Added: For claims incurred under the Company’s
+Added: self-insured programs prior to July 1, 2020, the Company retains risk of loss up to the first $5.0 million per occurrence, except in Maryland and Colorado, where the retention per occurrence is $1.0 million and $2.0 million, respectively.
+Added: In 2020 and 2021, the Company entered into loss portfolio transfer agreements to remove all outstanding workers’ compensation claims obligations for claims incurred under its insured program between February 1, 2014 and June 30, 2018.
+Added: Thus, for claims incurred before July 1, 2020, the Company has financial risk for most workers’ compensation claims under $5.0 million on a per occurrence basis, except for claims transferred under the insured program as part of the loss portfolio transfer agreements.
For claims incurred between July 1, 2020 and June 30, 2021, the Company has financial risk for most workers' compensation claims under $3.0 million on a per occurrence basis.
10 unchanged sentences
If we fail to meet those expectations, we may lose clients and harm our business.
−Removed: To attract and retain clients and satisfy their expectations, the software, hardware and networking technologies we use must be frequently and rapidly upgraded, enhanced and improved in response to technological advances, competitive pressures, client expectations, and new and changing laws.
+Added: To attract and retain clients and satisfy their expectations, the software, hardware, networking technologies and artificial intelligence ("AI") tools we use must be frequently and rapidly upgraded, enhanced and improved in response to technological advances, competitive pressures, client expectations, and new and changing laws.
Failure to successfully implement technological improvements could result in harm to our reputation, loss of market share, reduced revenue, or client claims against us, any of which could materially harm our business.
As we continue to invest in upgrades or replacements to our existing systems, including enhancements and additional security measures, we may incur substantial costs and risks relating to development, installation and implementation, including disruptions in our service offerings or increases in expected costs, which may have a material adverse effect on our operating results and financial condition.
+Added: Furthermore, if we determine that a software project is no longer probable of being completed and placed in service, or if there is a significant change in the expected use of such technology, we may be required to recognize impairment charges or write-offs of previously capitalized development costs.
+Added: Any such charges, or the failure to realize the anticipated benefits of these investments, could have a material adverse effect on our operating results and financial condition.
We are dependent upon technology services, and if we experience damage, service interruptions or failures in our computer and telecommunications systems, our client relationships and our ability to attract new clients may be adversely affected.
15 unchanged sentences
Additionally, as our employees may work from home more frequently and access the Company's systems remotely, the Company may be exposed to heightened security risks, including the risk of cyber-attacks.
−Removed: The methods and techniques used by cyber threat actors to gain entry into our network and access our computer systems, software and data will become more advanced with the use of artificial intelligence ("AI") and may become increasingly difficult or impossible to detect and prevent.
+Added: The methods and techniques used by cyber threat actors to gain entry into our network and access our computer systems, software and data will become more advanced with the use of AI and may become increasingly difficult or impossible to detect and prevent.
As these threats continue to evolve, we may be required to invest significant additional resources to modify and enhance our information security and controls or to investigate and remediate any security vulnerabilities.
6 unchanged sentences
Our business may be materially affected – either positively or negatively – by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space.
−Removed: The safe and responsible integration of AI functionality as it rapidly evolves presents emerging ethical and legal challenges, and the use of such technologies may result in diminished brand trust and reputational harm.
−Removed: As with many innovations, AI presents risks and challenges that could significantly disrupt our business model.
−Removed: In addition, the use of AI by bad actors presents increasingly complex and sophisticated security threats to our confidential customer, employee, and Company data, and we must make additional efforts to maintain network security.
+Added: The thoughtful adoption of AI may create opportunities to enhance efficiency, improve client experiences and strengthen our competitive position.
+Added: However, the safe and responsible integration of AI functionality as it rapidly evolves presents emerging ethical and legal challenges, and the use of such technologies may result in diminished brand trust and reputational harm.
+Added: As with many innovations, AI presents risks and challenges that could disrupt our business model, such as risks related to implementation of AI technologies, including operational risks stemming from system failures or disruptions of business processes, as well as increased costs associated with acquiring, deploying, and maintaining AI technologies.
+Added: In addition, the use of AI by bad actors presents increasingly complex and sophisticated security threats to our data and the confidential data of our clients and employees.
+Added: These potential security threats require additional efforts and investments to maintain network security and the security of the data we possess.
The regulatory landscape surrounding AI technologies is evolving, and the ways in which these technologies will be regulated by governmental authorities, self-regulatory institutions, or other regulatory authorities remains uncertain and may be inconsistent from jurisdiction to jurisdiction.
−Removed: Certain jurisdictions in which we operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data, such as the recent Executive Order on AI.
−Removed: Such regulations may result in operational costs to modify, maintain, or align our business practices, or constrain our ability to develop, deploy, or maintain these technologies.
+Added: Certain jurisdictions in which we operate are considering or have proposed or enacted legislation and policies regulating AI and non-personal data, such as a recent Executive Order seeking to centralize AI policies and to identify and challenge inconsistent state laws.
+Added: Such regulations may result in operational costs to modify, maintain, or align our business practices with rapidly evolving, potentially unclear, or conflicting regulatory regimes, or constrain our ability to develop, deploy, or maintain these technologies.
Other Risks Related to our Business and Industry
4 unchanged sentences
Failure to successfully implement new service offerings, including the appropriate controls, policies and procedures, information systems, and data privacy and security, could have a material adverse effect on our business, reputation, results of operations and financial condition.
−Removed: New service offerings, including health care benefits, may also introduce additional legislative and regulatory requirements with which we are not familiar, or from which we are currently exempt.
−Removed: Violation of such laws and regulations could subject us to fines, penalties, and damages, damage our reputation, constitute a breach of our client agreements, impair our ability to obtain and renew required licenses, and decrease our profitability or competitiveness.
+Added: New or highly regulated service offerings, such as health care benefits, may also introduce additional legislative and regulatory requirements with which we are not familiar, or from which we are currently exempt.
+Added: Violation of such laws and regulations could subject us to fines, penalties, and damages, damage our reputation, constitute a breach of our client agreements, impair our ability to obtain and
+Added: renew required licenses, and decrease our profitability or competitiveness.
If any of these effects were to occur, our operating results and financial condition could be materially adversely affected.
1 unchanged sentence
The Company’s revenue growth can be volatile and is dependent on same customer sales and the addition of new clients.
−Removed: Revenues increased 7.0% in 2024 and increased 1.4% in 2023.
+Added: Revenues increased 8.4% in 2025 and 7.0% in 2024.
There can be no assurance that we will continue to maintain current levels of revenues.
8 unchanged sentences
In turn, these businesses could cut costs, including trimming employees from their payrolls, or closing locations or ceasing operations altogether.
−Removed: If current economic conditions were to weaken further, these forces may result in decreased revenues due both to the downsizing of our current clients and increased difficulties in attracting new clients in a poor economic environment.
+Added: If current economic conditions were to weaken, these forces may result in decreased revenues due both to the downsizing of our current clients and increased difficulties in attracting new clients in a poor economic environment.
An economic downturn may also result in additional bad debt expense to the extent that existing clients cease operations or are otherwise unable to meet their financial obligations.
Additionally, weak economic conditions may result in higher unemployment, which is correlated with increased workers’ compensation claims.
−Removed: The spread of a highly infectious or contagious disease, and the response by federal, state, and local government agencies, including preventative actions taken such as shelter-in-place orders, restrictions on travel, temporary closures of businesses deemed to be high-risk or non-essential, and other government mandates, could create significant economic disruption that results in a material reduction in business operations.
−Removed: Clients who are impacted by government restrictions and economic disruptions may experience liquidity and other financial issues, which may reduce their capacity to pay for our services.
−Removed: Additionally, trade policies, including tariffs or other import restrictions, may increase costs for our clients, particularly those reliant on global supply chains.
−Removed: Higher input costs due to tariffs could lead our clients to reduce payroll expenses, delay hiring, or cut jobs, which could negatively impact our revenue.
−Removed: Supply chain disruptions caused by trade restrictions may also result in business slowdowns or closures, further affecting our ability to grow and retain clients.
+Added: AI has the potential to create new types of roles and generate new industries and service opportunities.
+Added: To the extent that clients adopt AI in ways that expand or transform their workforce needs, we may benefit from new areas of demand for our services.
+Added: However, these emerging technologies—including automation tools, AI, and other advanced software—may reduce the need for businesses to hire employees or maintain the same number of positions.
+Added: As AI capabilities expand, clients may increasingly automate tasks historically performed by employees, which could reduce the size of their workforces or slow the pace of new hiring.
+Added: In some cases, AI tools may directly replace existing positions entirely.
+Added: If these technologies reduce clients’ need for human capital, demand for our services may decline, adversely impacting our results of operations.
+Added: Changes in U.S.
+Added: and foreign trade policies, including tariffs, related retaliatory measures, and other trade restrictions, could adversely affect our clients and our business.
+Added: Developments in U.S.
+Added: and foreign trade policies—including the imposition or escalation of tariffs, retaliatory measures by trading partners, and other trade restrictions such as export bans or suspensions on exporting critical raw materials—may materially impact our clients and in turn our business, particularly for those clients that rely on global supply chains.
+Added: executive branch has imposed or threatened tariffs to address trade imbalances, promote domestic manufacturing, and respond to national security concerns.
+Added: In response, countries such as China have implemented or threatened retaliatory actions, including higher tariffs on U.S.
+Added: goods and restrictions on the export of strategic resources such as rare earth elements and key industrial inputs.
+Added: These measures can significantly raise the cost of raw materials, components, and finished goods, placing considerable financial pressure on our clients in certain industries that rely on imports, such as construction, manufacturing and logistics.
+Added: To mitigate these impacts, clients may reduce payroll, delay hiring, or implement workforce reductions—all of which could lead to decreased demand for our services, adversely affecting our revenue.
+Added: In addition, increased costs and supply chain disruptions resulting from these trade policies may strain our clients’ operations, which could result in client business slowdowns or closures, further affecting our ability to attract and retain clients.
+Added: Clients affected by such trade restrictions may also experience liquidity constraints or broader financial difficulties, which could impair their ability to pay for our services.
These factors could have a material adverse effect on our results of operations and financial condition.
5 unchanged sentences
and public health crises.
−Removed: The spread of highly infectious diseases can reduce workforce participation due to illness, quarantine requirements, or caregiving responsibilities.
−Removed: Economic downturns or shifts in labor market dynamics can impact workforce participation rates and overall labor availability.
−Removed: Additionally, changes in government administrations can result in shifts in immigration policies, which may affect our clients’ ability to recruit and retain workers.
+Added: The spread of highly infectious diseases may reduce workforce participation due to illness, quarantine requirements, or caregiving responsibilities.
+Added: Economic downturns or shifts in labor market dynamics may impact workforce participation rates and overall labor availability.
+Added: Additionally, changes in government administrations may result in shifts in immigration policies, which may affect our clients’ ability to recruit and retain workers.
Stricter visa requirements, limitations on work permits, delays in processing, or reductions in visa allocations could lead to labor shortages, particularly in industries that rely on immigrant labor, such as agriculture, construction, and hospitality.
1 unchanged sentence
Any of these factors could adversely impact our business and financial performance.
+Added: In addition, the spread of a highly infectious or contagious disease, and the response by federal, state, and local government agencies, including preventative actions taken such as shelter-in-place orders, restrictions on travel, temporary closures of businesses deemed to be high-risk or non-essential, and other government mandates, could create significant economic disruption that results in a material reduction in business operations.
+Added: Clients that are impacted by government restrictions and economic disruptions may experience liquidity and other financial issues, which may reduce their capacity to pay for our services.
Our staffing business is vulnerable to economic fluctuations.
4 unchanged sentences
We generally assume credit risk associated with our clients’ employee payroll obligations, including liability for payment of salaries and wages (including payroll taxes), as well as retirement benefits.
−Removed: These obligations are fixed whether or not the client makes payments to us as required by our services
+Added: These obligations are fixed whether or not the client makes payments to us as required by our services agreement.
We attempt to mitigate this risk by invoicing our clients at the end of their specific payroll processing cycle.
22 unchanged sentences
If we experience significant incidents involving any of the above-described risk areas, we could face substantial out-of-pocket losses, fines or negative publicity.
−Removed: In addition, such claims may give rise to
−Removed: litigation, which may be time-consuming, distracting and costly, and could have a material adverse effect on our business.
+Added: In addition, such claims may give rise to litigation, which may be time-consuming, distracting and costly, and could have a material adverse effect on our business.
With respect to claims involving our co-employer relationships, although our client services agreement provides that the client will indemnify us for any liability attributable to the conduct of the client or its employees, we may not be able to enforce such contractual indemnification, or the client may not have sufficient assets to satisfy its obligations to us.
3 unchanged sentences
We may not be able to retain all our executives, senior managers and key personnel in light of competition for their services.
−Removed: If we lose the services of one of our executive officers or a significant number of our senior managers, our results of operations likely would be adversely affected.
+Added: If we lose the services of one of our executive officers or a significant number of our senior managers, our results of operations would likely be adversely affected.
We depend on attracting and retaining qualified employees;
10 unchanged sentences
Failure to maintain health insurance coverage or significant increases in the cost of health insurance coverage could adversely affect our business and results of operations.
−Removed: In 2023, BBSI began offering health insurance benefits as part of our PEO services.
+Added: We offer health insurance benefits as part of our PEO services.
Our arrangement with third-party insurers provides health insurance coverage to BBSI’s PEO clients through December 31, 2026, with the possibility of additional annual renewals.
−Removed: If our third-party insurers are unwilling or unable to renew our arrangement in the future, we would need to seek coverage from alternative insurers.
+Added: If our third-party insurers are unwilling or unable to renew an arrangement in the future, we would need to seek coverage from alternative insurers.
If replacement coverage were unavailable or available only on significantly less favorable terms, our business and results of operations would be materially adversely affected.
2 unchanged sentences
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, the “Acts”) subject us to potential penalties unless we offer our employees minimum essential healthcare coverage that is affordable.
−Removed: To comply with the employer mandate provision of the Acts, we offer health care coverage to all temporary and permanent employees eligible for coverage under the Acts other than employees of our PEO clients, which are responsible for providing required
−Removed: health care coverage to their employees.
+Added: To comply with the employer mandate provision of the Acts, we offer health care coverage to all temporary and permanent employees eligible for coverage under the Acts other than employees of our PEO clients, which are responsible for providing required health care coverage to their employees.
Designating employees as eligible is complex and is subject to challenge by employees and the Internal Revenue Service (“IRS”).
While we believe we have properly identified eligible employees, a later determination that we failed to offer the required health coverage to eligible employees could result in penalties that may materially harm our business.
−Removed: Additionally, we began offering employee health and welfare benefits to our PEO clients beginning in 2023.
+Added: Additionally, we offer employee health and welfare benefits to our PEO clients.
We cannot be certain that compliant insurance coverage will remain available to us on reasonable terms, and we could face additional risks arising from future changes to or repeal of the Acts or changed interpretations of our obligations under the Acts.
1 unchanged sentence
Failure to comply with applicable data security and privacy regulations related to our health care offering could adversely affect our business.
−Removed: As BBSI began offering health benefits to our PEO clients in 2023, we have access to protected health information ("PHI") of our client employees.
+Added: By offering health benefits to our PEO clients, we have access to protected health information ("PHI") of our client employees.
Compliance with federal and state regulations such as HIPAA and the HITECH Act is required for handling this PHI.
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companies that are focused on co-employment, such as Insperity, Inc., and TriNet Group, Inc.;
−Removed: and companies that primarily provide payroll processing services, such as Automatic Data Processing, Inc.
+Added: and human capital management companies, such as Automatic Data Processing, Inc.
and Paychex, Inc.
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• aggressively price products and services and increase benefits in ways that we may not be able to match financially.
+Added: Effective integration of AI into our platform may enhance our operational efficiency, expand our service capabilities and strengthen our competitive position by enabling us to deliver more value to clients, potentially creating new opportunities for growth.
+Added: However, rapid advancements in AI may intensify competition.
+Added: Competitors that adopt or develop AI‑enabled capabilities more successfully may be able to deliver services more efficiently, at lower cost, or with enhanced features, which could reduce the demand for our services or give such competitors a significant advantage.
+Added: AI tools may also enable clients to automate or internally perform certain HR, payroll, benefits administration, compliance, or workforce‑management functions that we currently provide, which could reduce the need for our services altogether.
+Added: If we are unable to adapt to these technological changes or incorporate AI effectively into our own offerings, our competitive position could be materially adversely affected.
To compete effectively in our markets, we must target our potential clients carefully, continue to improve our efficiencies and the scope and quality of our services, and rely on our service quality, innovation, education and program clarity.
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If we discover compliance or regulatory issues after an acquisition, encounter greater than anticipated costs and/or use of management time associated with evaluating potential acquisitions and integrating acquired businesses into our operations, or are unable to successfully identify appropriate acquisition candidates, negotiate favorable terms, and successfully integrate an acquisition, our business, financial condition, and results of operation could be materially and adversely affected.
+Added: Climate impacts may adversely affect our business, financial condition, and results of operations.
+Added: Concerns over the long-term effects of changes in climate have led to governmental efforts around the world to mitigate those impacts.
+Added: In the U.S., federal policy has shifted away from climate change initiatives, including scaling back participation in international agreements and reducing regulatory requirements for banks to address climate-related risks.
+Added: Conversely, state and local governments, including some within our market areas, have enacted or advanced significant climate change legislation.
+Added: Consumers and businesses also may voluntarily change their behavior as a result of concerns regarding climate change or related legislation.
+Added: Both the Company and its clients will need to respond to changing policies, laws, and regulations, as well as consumer and business preferences regarding climate-related concerns.
+Added: The Company and its clients may face resulting cost increases, asset value reductions, and operating process changes.
+Added: The impact on our clients will likely vary depending on their specific attributes, including reliance on, or role in, carbon-intensive activities, while the Company may experience a drop in demand for our services, particularly in certain business sectors or geographic regions, due to the negative impact of new laws and regulations or changes in consumer or business behavior.
Risks Related to Our Regulatory Environment
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Compliance with these laws requires significant resources, and failure to comply with payroll tax laws in any jurisdiction in which we operate could subject us to financial penalties, interest charges and other liabilities.
+Added: As new tax laws and regulations are adopted— including recently enacted legislation such as the One Big Beautiful Bill Act—we must update and modify our systems and processes to address these changes.
+Added: These updates require substantial time, investment, and operational resources, and expose us to an increased risk of errors or noncompliance during implementation.
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.
−Removed: When clients and former clients wish to utilize these programs, the associated tax forms must be filed through the PEO, which creates additional administrative effort for the PEO.
−Removed: Additionally, determining eligibility for these programs is complex and is based on company-specific data that PEOs do not possess for their clients.
−Removed: If the IRS determines that clients who received payroll tax credits through BBSI are ineligible, and if the tax authorities or our clients attempt to hold BBSI liable for these amounts, this could have a materially adverse effect on our business, reputation, results of operation, and financial condition.
+Added: When current and former clients utilize ERCs and other similar programs, the associated tax forms must be filed through the PEO.
+Added: We have made such filings for many of our current and former clients claiming ERCs.
+Added: These filings are currently under examination by the IRS to assess the eligibility of the ERCs claimed by our PEO clients.
+Added: Determining eligibility for ERCs and other programs is complex and is based on company-specific data that PEOs do not possess for their clients.
+Added: Notwithstanding, the IRS has taken the position that certain third-party payors, including PEOs, as well as their clients, are responsible for repaying rejected tax credit claims under the ERC program.
+Added: While we disagree with the IRS’s position and our clients are contractually and statutorily responsible for repaying any rejected tax credits, this does not guarantee recovery, and any failure to recover rejected tax credits
+Added: from our clients where the IRS attempts to hold BBSI liable could have a material adverse effect on our business, reputation, results of operations, and financial condition.
We operate in a complex regulatory environment, and failure to comply with applicable laws and regulations could adversely affect our business.
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If we are determined not to be an “employer” under certain laws and regulations, our clients may stop using our services, and we may be subject to additional liabilities.
−Removed: We are the administrative employer in our co-employment relationships under the various laws and regulations of the IRS and the U.S.
+Added: We are the administrative employer sponsoring single-employer plans in our co-employment relationships under the various laws and regulations of the IRS and the U.S.
Department of Labor.
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Some clients or prospective clients may view such potential liability as an unacceptable risk, discouraging current clients from continuing a relationship with us or prospective clients from entering into a new relationship with us.
−Removed: Any determination that we are not the administrative employer for purposes of ERISA could also adversely affect our ability to offer health care benefits to our PEO clients by subjecting us to additional state and federal laws and regulations, and could materially adversely affect our business, financial condition, and results of operations.
+Added: Any determination that we are not the administrative employer sponsoring single-employer plans for purposes of ERISA could also adversely affect our ability to offer health care benefits to our PEO clients by subjecting us to additional state and federal laws and regulations, and could materially adversely affect our business, financial condition, and results of operations.
Changes in government regulations may result in restrictions or prohibitions applicable to the provision of employment services or the imposition of additional licensing, regulatory or tax requirements.
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These laws, regulations and codes may be inconsistent across jurisdictions and are subject to evolving and differing (sometimes conflicting) interpretations.
−Removed: Government officials and regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data.
+Added: Government officials and regulators, privacy advocates and class action attorneys are increasingly scrutinizing how companies collect, process, use, store, share and transmit personal data, including through the use of AI technologies.
This scrutiny can result in new and shifting interpretations of existing laws, thereby further impacting our business.
State laws on privacy, data and related technologies create additional privacy and security compliance obligations and expand the scope of potential liability.
+Added: As privacy, data‑protection and technology‑related laws—including those governing the use of AI—continue to expand and diverge across federal and state jurisdictions, the regulatory environment is becoming increasingly complex.
+Added: We expect the costs of monitoring and complying with these evolving requirements to rise, and the risk of compliance challenges or failures to increase accordingly.
+Added: In addition, various states have enacted biometric privacy laws, such as those regulating the collection, use, storage, retention, and destruction of biometric identifiers and biometric information.
+Added: Because our clients may utilize time clock systems, workforce‑management tools, or HR technologies that capture or rely on biometric data—including fingerprints, facial recognition, or other biometric identifiers—our role in supporting those systems may expose us to additional legal and compliance risks.
+Added: Failure by us or our clients to comply with applicable biometric privacy laws can result in significant statutory damages, regulatory enforcement actions, and private litigation, any of which could adversely affect our business, reputation, and financial condition.
The dynamic and evolving nature of these laws, regulations and codes, as well as their interpretation by regulators and courts, may affect our ability to implement our business models effectively and to adequately address disclosure requirements.
−Removed: Perception of our practices and services, even if unfounded, as a violation of individual privacy, data protection rights or cybersecurity requirements, may subject us to public criticism, lawsuits, investigations, claims and other proceedings by regulators, industry groups or
−Removed: other third parties, all of which could disrupt or adversely impact our business and reputation and expose us to increased liability, fines and other punitive measures.
+Added: Perception of our practices and services, even if unfounded, as a violation of individual privacy, data protection rights or cybersecurity requirements, may subject us to public criticism, lawsuits, investigations, claims and other proceedings by regulators, industry groups or other third parties, all of which could disrupt or adversely impact our business and reputation and expose us to increased liability, fines and other punitive measures.
Risks Related to Ownership of our Common Stock
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.