What changed in this filing

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Item 1. Business

2021-02-12 compared with 2020-02-12 · 101 added, 91 removed, 425 unchanged (31% of the section changed)

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Our long-term strategy is to provide the best small and medium-sized businesses in the United States with our specialized human resources service offering and to leverage our buying power and expertise to provide additional valuable services to clients.

Our most comprehensive HR services offerings are provided through our Workforce Optimization ® and Workforce Synchronization TM offerings (together, our “PEO HR Outsourcing solutions”), which encompass a broad range of human resources functions, including payroll and employment administration, employee benefits, workers’ compensation, government compliance, performance management, and training and development services, along with our cloud-based human capital management platform, Insperity Premier TM .

Our most comprehensive HR services offerings are provided through our Workforce Optimization ® and Workforce Synchronization TM solutions (together, our “PEO HR Outsourcing solutions”), which encompass a broad range of human resources functions, including payroll and employment administration, employee benefits, workers’ compensation, government compliance, performance management, and training and development services, along with our cloud-based human capital management platform, Insperity Premier TM .

Workforce Optimization is our most comprehensive HR outsourcing solution and is our primary offering.

Workforce Synchronization, which generally is offered only to our middle market client segment, is a lower cost offering with a typically longer commitment that includes the same compliance and administrative services as Workforce Optimization and allows those clients to select, for an additional fee, from the strategic HR products and services that are included with Workforce Optimization.

In addition to our PEO HR Outsourcing solutions, we offer Workforce Acceleration TM , a comprehensive traditional payroll and human capital management solution.

We also offer a number of other business performance solutions, including Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Expense Management Services, Retirement Services and Insurance Services, many of which are offered as a cloud-based software solution.

In addition to our PEO HR Outsourcing solutions, we offer Workforce Acceleration TM , a comprehensive service that includes traditional payroll and human capital management solutions.

We also offer a number of other business performance solutions, including Comprehensive Traditional Payroll and Human Capital Management, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services and Insurance Services, many of which are offered as a cloud-based software solution.

These other products and services are offered separately or along with our PEO HR Outsourcing solutions or with Workforce Acceleration.

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We charge a comprehensive service fee (“comprehensive service fee” or “gross billing”), which is invoiced concurrently with the processing of payroll for the WSEEs of the client.

2019 Form 10-K

comprehensive service fee consists of the payroll of our WSEEs plus an additional amount reflected as a percentage of the payroll cost of the WSEEs.

The comprehensive service fee consists of the payroll of our WSEEs plus an additional amount reflected as a percentage of the payroll cost of the WSEEs.

We accomplish the objectives of our PEO HR Outsourcing solutions through a “high-touch/high-tech” approach to service delivery.

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Our telephone number at that address is (281) 358-8986, and our website address is www.insperity.com.

Our stock is traded on the New York Stock Exchange under the symbol “NSP.” We file or furnish periodic reports with the Securities and Exchange Commission (“SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.

2020 Form 10-K

quarterly reports on Form 10-Q, current reports on Form 8-K, and if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.

Through the investor relations section of our website, we make available electronic copies of the documents that we file or furnish to the SEC, the charters of the standing committees of our Board of Directors and other documents related to our corporate governance, including our Code of Conduct.

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• the increasing costs associated with health and workers’ compensation insurance coverage, workplace safety programs, employee-related complaints and litigation

complex regulation of employment issues and the related costs of compliance, including the allocation of time and effort to such functions by owners and key executives

• complex regulation of payroll, payroll tax and employment issues and the related costs of compliance, including the allocation of time and effort to such functions by owners and key executives

• the significant costs, time and specialized knowledge required to purchase or develop the technology infrastructure to administer benefits, HR and payroll processing on an integrated basis

A significant factor in the development of the PEO industry has been increasing recognition and acceptance of PEOs and the co-employer relationship by federal and state governmental authorities.

Insperity and other industry leaders, in concert with the National Association of Professional Employer Organizations (“NAPEO”), have worked with the relevant governmental entities for the establishment of a regulatory framework that protects clients and employees, discourages

2019 Form 10-K

unscrupulous and financially unsound PEOs, and promotes further development of the industry.

Currently, 42 states have enacted legislation either recognizing PEOs or requiring licensing, registration, or certification, and several others are considering such regulation.

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The cost of compliance with these regulations is not material to our financial position or results of operations.

The Small Business Efficiency Act (“SBEA”) created a federal regulatory framework for the payment of wages to WSEEs and the reporting and remittance of federal payroll taxes on those wages paid by PEOs certified under the statute (“CPEOs”).

We actively supported the enactment of this law.

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In addition, the law clarified that clients of a CPEO remain eligible for specified tax credits for which they would have been eligible absent the CPEO relationship.

Following the establishment of the certification program by the Internal Revenue Service of the United States (“IRS”) and Treasury Department, our PEO subsidiary, Insperity PEO Services, L.P., received its designation as a CPEO from the IRS.

Following the establishment of the voluntary certification program by the Internal Revenue Service of the United States (“IRS”) and Treasury Department, our PEO subsidiary, Insperity PEO Services, L.P., received its designation as a CPEO from the IRS.

2020 Form 10-K

Service Offerings

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Among the employment-related laws and regulations that may affect a client are the following:

• Internal Revenue Code (the “Code”) • Genetic Information Nondiscrimination Act of 2008

• Federal Income Contribution Act (FICA) • Drug-Free Workplace Act

• Federal Unemployment Tax Act (FUTA) • Occupational Safety and Health Act (OSHA)

• Fair Labor Standards Act (FLSA) • Worker Adjustment and Retraining Notification Act (WARN)

• Employee Retirement Income Security Act, as amended (ERISA) • Uniformed Services Employment and Reemployment Rights Act (USERRA)

• Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) • State unemployment and employment security laws

• Immigration Reform and Control Act (IRCA) • State workers’ compensation laws

• Title VII (Civil Rights Act of 1964) • Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act”)

• Health Insurance Portability and Accountability Act (HIPAA) • Patient Protection and Affordable Care Act (PPACA)

• Age Discrimination in Employment Act (ADEA) • State and local law equivalents of the foregoing

• Americans with Disabilities Act (ADA) • The Families First Coronavirus Response Act (FFCRA)

• The Family and Medical Leave Act (FMLA) • The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act

2020 Form 10-K

Internal Revenue Code (the “Code”)

The Family and Medical Leave Act (FMLA)

Federal Income Contribution Act (FICA)

Genetic Information Nondiscrimination Act of 2008

Federal Unemployment Tax Act (FUTA)

Drug-Free Workplace Act

Fair Labor Standards Act (FLSA)

Occupational Safety and Health Act (OSHA)

Employee Retirement Income Security Act, as amended (ERISA)

Worker Adjustment and Retraining Notification Act (WARN)

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Uniformed Services Employment and Reemployment Rights Act (USERRA)

Immigration Reform and Control Act (IRCA)

State unemployment and employment security laws

Title VII (Civil Rights Act of 1964)

State workers’ compensation laws

Health Insurance Portability and Accountability Act (HIPAA)

Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act”)

Age Discrimination in Employment Act (ADEA)

Patient Protection and Affordable Care Act (PPACA)

Americans with Disabilities Act (ADA)

State and local law equivalents of the foregoing

These laws and regulations are complex, and in some instances overlapping.

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• paid family leave, where required by law

2019 Form 10-K

The group health plan includes medical, dental, vision and prescription drug coverage, as well as a work-life program.

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It is designed to provide our service providers with insight into client and WSEE HR information to better support their needs.

Insperity Premier provides role-based access to a wide range of human capital management functions, along with personalized content to the managers, owners and WSEEs of our PEO HR Outsourcing solutions clients, including:

Insperity Premier provides role-based access to a wide range of human capital management functions, along with personalized content to the

2020 Form 10-K

managers, owners and WSEEs of our PEO HR Outsourcing solutions clients, including:

For managers and client owners:

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• access to client-specific compliance-related information relevant to many HR areas

reporting and analytics tools to create, view, save and export reports and data about employees and, for our mid-market customers, to do more complex analysis and visualization of their workforce data with the Insperity People Analytics solution

• reporting and analytics tools to create, view, save and export reports and data about employees and to do more complex analysis and visualization of their workforce data with the Insperity People Analytics solution

• ability to manage employee time and attendance information, absences and paid time off

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• online check stubs, pay history, W-2s, update W-4 forms and other state forms

employee-specific benefits content, including summary plan descriptions, enrollment status and tools to assist with benefits selection

access to 401(k) retirement plan information, if offered by client

• employee-specific benefits content, including summary plan descriptions, enrollment status and tools to assist with benefits selection for Insperity-sponsored plans

• access to 401(k) retirement plan information for covered plans

• e-Learning web-based training

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• ability to submit time and attendance information, absences and paid time off requests

2019 Form 10-K

• mobile access to perform a wide range of employee-specific activities such as reporting time and attendance and paid time off, view pay stubs, insurance coverage and ID cards, view 401(k) balances and other commonly accessed data

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• performing prospective employee screening and background investigations

2020 Form 10-K

• designing performance appraisal processes and forms

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Currently, we have a dedicated sales management, service personnel and consulting staff who concentrate solely on the middle market sector.

Our average number of WSEEs per month in our middle market sector increased 18.0% over 2018 , representing approximately 25.7% of our total paid WSEEs during 2019 .

Our average number of WSEEs per month in our middle market sector decreased 5.6% from 2019, representing approximately 24.4% and 25.7% of our total average paid WSEEs during 2020 and 2019, respectively.

Clients with an average number of WSEEs exceeding 1,000 paid WSEEs represented 4.7% and 5.0% of our total average paid WSEEs during 2020 and 2019, respectively.

Other Product and Services Offerings

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During 2020 and 2019, revenues from our other products and services offerings as a percentage of our total revenues were 0.9% and 1.0%, respectively.

2019 Form 10-K

Following are the key components of our other products and services, which are offered separately or as a bundle:

Traditional Payroll and Human Capital Management.

Comprehensive Traditional Payroll and Human Capital Management Solution.

Our Insperity Workforce Acceleration solution is a comprehensive human capital management and payroll services solution for clients that do not choose our PEO HR Outsourcing solutions.

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In addition, through a strategic partner, Workforce Acceleration clients have access to a national, licensed insurance brokerage that specializes in the insurance needs of small businesses.

2020 Form 10-K

Time and Attendance.

Our Time and Attendance products and services provide small to medium-sized businesses with software, hardware and services to track, allocate, and analyze employee resources and provide inputs into clients’ payroll processing and accounting systems.

The service is primarily delivered as a cloud-based solution or an an on-premise installation.

The service is primarily delivered as a cloud-based solution or an on-premise installation.

For customers utilizing Time and Attendance in conjunction with our PEO HR Outsourcing solutions, we provide access through Insperity Premier.

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and confirmation of extraordinary credentials.

Expense Management.

Our Expense Management product delivers employee expense management solutions that automate employee expense reporting, enforce travel and expense policies, and provide management reporting and analysis.

The service is delivered as a cloud-based solution.

Retirement Services.

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The CSA establishes our comprehensive service fee, which is subject to periodic adjustments to account for changes in the composition of the client’s workforce, employee benefit election changes, and statutory changes that affect our costs.

Under the CSA, clients active in January of any year

2019 Form 10-K

are obligated to pay the estimated payroll tax component of the comprehensive service fee in a manner that reflects the pattern of incurred payroll tax costs.

Under the CSA, clients active in January of any year are obligated to pay the estimated payroll tax component of the comprehensive service fee in a manner that reflects the pattern of incurred payroll tax costs.

This practice aligns clients’ payments to us with our obligations to make payments to tax authorities, which are higher in the earlier part of the year and decrease as limits on wages subject to payroll tax are reached.

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These liabilities are not contingent on the prepayment by the client of the associated comprehensive service fee.

Instead, as a result of our employment relationship with each of our WSEEs, we are liable for payment of salary and wages to the WSEEs as reported by the client and are responsible for providing specified employee benefits to such persons regardless of whether the client pays the associated comprehensive service fee.

2020 Form 10-K

pays the associated comprehensive service fee.

The client retains the employees’ services and remains liable for complying with certain government regulations that require control of the worksite or daily supervisory responsibility or is otherwise beyond our ability to assume.

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• COBRA, HIPAA, PPACA, the Code and ERISA compliance for client-sponsored employee benefit plans

2019 Form 10-K

• For clients electing payroll tax deferrals and tax credits under the FFCRA and CARES Act, the client has sole responsibility for determining eligibility under the programs and for reporting and depositing deferred amounts with the U.S.

Concurrent Responsibilities

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Our incurred costs in excess of annual premiums with respect to this exposure have historically been insignificant to our operating results.

2020 Form 10-K

Because we are a co-employer with the client for some purposes, it is possible that we could incur liability for violations of such laws, even if we are not responsible for the conduct giving rise to such liability.

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Notwithstanding this contractual right to indemnification, it is possible that we could be unable to collect on a claim for indemnification and may therefore be ultimately responsible for satisfying the liability in question.

In most instances, clients are required to remit their comprehensive service fees no later than one day prior to the applicable payroll date by wire transfer or automated clearinghouse transaction.

In most instances, clients are required to remit their comprehensive service fees no later than the same day as the applicable payroll date by wire transfer or automated clearinghouse transaction.

Although we are ultimately liable, as the employer for payroll purposes, to pay employees for work previously performed, we retain the ability to terminate immediately the CSA and associated WSEEs or to require prepayment, letters of credit, or other collateral upon deterioration in a client’s financial condition or upon non-payment by a client.

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Please read Note 1 “Accounting Policies,” to the Consolidated Financial Statements for additional information related to the change in revenues by region.

2019 Form 10-K

All prospective PEO HR Outsourcing solutions clients are evaluated on the basis of a comprehensive analysis of employer-related risks entailing many factors, including industry and operations, workplace safety and workers’ compensation, unemployment history, operating stability, group medical information, human resources practices and other employer risks.

All prospective PEO HR Outsourcing solutions clients are evaluated on the basis of a comprehensive analysis of employer-related risks entailing many factors, including (where permitted) industry and operations, workplace safety and workers’ compensation, unemployment history, operating stability, group medical information, human resources practices and other employer risks.

As part of our client selection strategy, we strive to minimize offering our PEO HR Outsourcing solutions to businesses falling within certain specified NAICS (North American Industry Classification System) codes for those industries that we believe present a higher employer risk such as employee injury, high turnover or litigation.

2020 Form 10-K

Our PEO HR Outsourcing solutions client base is broadly distributed throughout a wide variety of industries as follows:

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Insperity’s markets and their respective year of entry are as follows:

Sales Offices

Initial Entry Date

Sales Offices

Initial Entry Date

Dallas/Fort Worth

Fort Lauderdale

Market Sales Offices Initial Entry Date Market Sales Offices Initial Entry Date

Houston 6 1986 Raleigh 1 2006

San Antonio 1 1989 Kansas City 1 2007

Austin 2 1989 Columbus 1 2010

Orlando 1 1989 Nashville 1 2011

Dallas/Fort Worth 6 1993 Philadelphia 2 2012

Atlanta 4 1994 Seattle 1 2015

Phoenix 2 1995 Indianapolis 1 2016

Chicago 5 1995 Fort Lauderdale 1 2017

Washington D.C.

Oklahoma City

San Francisco

2 1995 Milwaukee 1 2017

Denver 2 1996 Oklahoma City 1 2018

Los Angeles 7 1997 Pittsburgh 1 2018

Charlotte 1 1997 San Jose 1 2018

Louis 2 1998 Stamford 1 2018

San Francisco 3 1998 Portland 1 2019

New York 5 1999 Tampa 1 2019

Baltimore 2 2000 Las Vegas 1 2019

Newark 3 2000 Sacramento 1 2019

San Diego 2 2001 Providence 1 2019

Boston 3 2001 Salt Lake City 1 2020

Minneapolis 2 2002 Virginia Beach 1 2020

We identify markets using a systematic market evaluation and selection process.

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After selecting a market and developing our marketing mix, but prior to entering the market, we engage in an organized media and public relations campaign to prepare the market for our entry and to begin the process of generating sales leads.

We market our services through various business promotions and a broad range of media outlets, including the Internet, television, radio, newspapers, periodicals and direct mail.

We market our services through various business promotions and a broad range of media outlets, including digital marketing, television, radio, newspapers, periodicals and direct mail.

We employ public relations firms for most of our markets as well as advertising consultants to coordinate and implement our marketing campaigns.

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Due to the differing geographic regions and market segments in which most PEOs operate, and the relatively low level of market penetration by the industry, we consider our primary competition for our PEO HR Outsourcing solutions to be the traditional in-house provision of human resources services.

The PEO industry is highly fragmented, and we believe Insperity is one of the largest PEO service providers in the United States.

The PEO industry is highly fragmented and we have seen competition intensify;

however, we believe Insperity is one of the largest PEO service providers in the United States.

Our largest national competitors include the PEO divisions of large business services companies such as Automatic Data Processing, Inc.

and Paychex, Inc., and other national PEOs, such as TriNet Group, Inc.

In addition, we also face competition from:

In addition, we also face

2020 Form 10-K

competition from:

(1) fee-for-service providers such as payroll processors and human resources consultants;

(2) human resources technology solution companies;

and (3) large regional

2019 Form 10-K

PEOs in certain areas of the country.

and (3) large regional PEOs in certain areas of the country.

As Insperity and other large PEOs expand nationally, we expect that competition may intensify.

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The Chubb Program is a fully insured program whereby Chubb has the responsibility to pay all claims incurred under the policies regardless of whether we satisfy our responsibilities.

The current workers’ compensation coverage with Chubb expires on September 30, 2021.

Chubb has committed to extend coverage for two additional policy years (through September 30, 2023) subject to certain terms and conditions related to the division of responsibilities in the program.

In the event we are unable to secure replacement coverage on competitive terms, significant disruption to our business could occur.

For additional discussion of the Chubb Program, which includes terms shifting some of the financial responsibility for claims to us, please read Item 7.

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We administer our employee benefits through a proprietary application designed to process employee eligibility and enrollments, manage carrier relationships and maintain a variety of plan offerings.

Our retirement services operations are conducted utilizing an industry-leading retirement plan administration application in a third-party hosted environment.

Aspects of all of these components are delivered to our PEO HR Outsourcing solutions clients and WSEEs through Insperity Premier.

We utilize commercially available software for other business functions such as finance and accounting, sales force activity management and customer relationship management.

Our retirement services

2020 Form 10-K

operations are conducted utilizing an industry-leading retirement plan administration application in a third-party hosted environment.

Aspects of all of these components are delivered to our PEO HR Outsourcing solutions clients and WSEEs through Insperity Premier.

We utilize commercially available software and cloud-based solutions for other business functions such as finance and accounting, sales force activity management and customer relationship management.

Insperity has hosting facilities located at two separate leased facilities, located in Bryan, Texas and The Woodlands, Texas.

These facilities host the majority of our business applications, telecommunications equipment, information security infrastructure and network equipment.

These facilities host the majority of our business applications, information security infrastructure and network equipment.

Each hosting facility houses a mix of primary production applications, disaster recovery, replication and back-up applications, and pre-production environments, with the Bryan facility acting as our primary data center for all mission-critical applications.

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Because many of these federal and state laws were enacted prior to the development of nontraditional employment relationships, such as PEOs, temporary employment and outsourcing arrangements, many of these laws do not specifically address the obligations and responsibilities of nontraditional employers.

Currently, the federal government and 42 states have passed laws that recognize PEOs or require licensing, registration or certification requirements for PEOs, and several others are considering such regulation.

The SBEA established a certification program and created a federal regulatory framework for the payment of wages to WSEEs and for the reporting and remittance of federal payroll taxes on those wages paid by CPEOs.

Currently, the federal government and 42 states have passed laws that either recognize PEOs, require licensing or registration of PEOs, or provide voluntary certification programs for PEOs, and several others are considering such regulation.

The SBEA established a voluntary certification program and created a federal regulatory framework for the payment of wages to WSEEs and for the reporting and remittance of federal payroll taxes on those wages paid by CPEOs.

Our PEO subsidiary, Insperity PEO Services, L.P., is a CPEO.

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• a health care flexible spending account plan

2020 Form 10-K

• an educational assistance program

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• a commuter benefits program

2019 Form 10-K

Generally, employee benefit plans are subject to provisions of the Code, ERISA, and COBRA.

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A definitive judicial interpretation of “employer” in the context of a PEO or employee leasing arrangement has not been established.

If Insperity were found not to be an employer with respect to WSEEs for ERISA purposes, its plans would not comply with ERISA.

If Insperity were found not to be an employer with respect to WSEEs for ERISA purposes, its plans would not comply with ERISA and/or the Code.

Further, as a result of such finding, Insperity and its plans would not enjoy, with respect to WSEEs, the preemption of state laws provided by ERISA and could be subject to varying state laws and regulations as well as to claims based upon state common laws.

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The PPACA and the Reconciliation Act (collectively the “Act”) entail sweeping health care reforms with original staggered effective dates from 2010 through 2018, some of which were subsequently extended until as late as 2020.

While the Act did not have a material adverse impact on our results of operations in 2019 , the future impact of the following provisions or changes to the provisions, including any changes or a repeal that may be proposed by this Congressional session, is unknown at this time.

While the Act did not have a material adverse impact on our results of operations in 2020, the future impact of the following provisions or changes to the provisions, including any changes or a repeal that may result from a case pending before the U.S.

Supreme Court or future legislative actions, is unknown at this time.

2020 Form 10-K

Beginning in 2014, the Act provided for the establishment of state insurance exchanges (“Exchanges”) to make health insurance available to individuals and small employers (initially defined as 100 employees or less).

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The Exchanges provide consumers with educational services and information on available options and offer a variety of health plans.

Small business tax credits and subsidies are available to qualifying businesses and individuals who purchase health insurance through the Exchanges.

As part of the Tax Cuts and Jobs Act enacted in December 2017, the requirements that

2019 Form 10-K

individuals maintain health insurance coverage or pay a penalty, which was known as the individual mandate, was effectively eliminated beginning in 2019.

At this time, the Exchanges, tax credits, and subsidies have not had a material impact on our operations, but the impact of future changes to these provisions is unknown.

Subsidies are available to qualifying individuals who purchase health insurance through the Exchanges.

As part of the Tax Cuts and Jobs Act enacted in December 2017, the requirements that individuals maintain health insurance coverage or pay a federal tax penalty, which was known as the individual mandate, was effectively eliminated beginning in 2019.

A limited number of states have enacted individual mandates.

At this time, the Exchanges, tax credits, individual mandates and subsidies have not had a material impact on our operations, but the impact of future changes to these provisions is unknown.

Additionally, in 2014, the Act ushered in a number of insurance market reforms for the small group and individual markets.

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Transition relief permitted states to delay the effective date of some of these reforms.

At this time, we are unable to determine whether the insurance market reforms will have an adverse impact on our business operations, our ability to attract and retain clients, or our ability to increase service fees to offset any increased costs.

The health insurance industry became subject to additional excise taxes in 2014, and reinsurance taxes were imposed on insurers and third-party administrators for the purpose of helping to offset the cost for insurance covering high-risk individuals.

As the policyholder, all or a portion of these increased costs were passed on to us by our carriers.

At this time, these taxes have not had a material impact on our operations, but the impact of future changes to these provisions is unknown.

At this time, the insurance market reforms have not had a material adverse impact on our business operations, but the impact of future changes on our ability to attract and retain clients, or our ability to increase service fees to offset any increased costs is unknown.

Effective January 1, 2015, “pay or play” requirements applied to large employers with at least 50 full-time and full-time equivalent employees in the prior calendar year (“Applicable Large Employers” or “ALEs”).

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Employment Taxes

As a co-employer, Insperity assumes responsibility and liability for the payment of federal and state employment taxes with respect to wages and salaries paid to our WSEEs.

As a co-employer, Insperity generally assumes responsibility and liability for the payment of federal and state employment taxes with respect to wages and salaries paid to our WSEEs.

There are essentially three types of federal employment tax obligations included in Subtitle C - Employment Taxes of the Code:

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• obligations under FUTA, governed by Code Section 3301, et seq.

Under these Code sections, employers have the obligation to withhold and remit the employer portion and, where applicable, the employee portion of these taxes.

2020 Form 10-K

Under these Code sections, employers have the obligation to withhold and remit the employer portion and, where applicable, the employee portion of these taxes.

The SBEA provides that a CPEO shall be treated as the employer under Subtitle C – Employment Taxes of the Code and shall be responsible for reporting federal employment taxes rather than the CPEO clients.

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These interpretive uncertainties may also impact our ability to report employment taxes on our own account rather than the accounts of our clients.

Clients who elected social security deferrals under the recent CARES Act have sole responsibility for reporting and depositing deferred amounts with the U.S.

Unemployment Taxes

We record our state unemployment (“SUI”) tax expense based on taxable wages and tax rates assigned by each state.

We record our state unemployment insurance (“SUI”) tax expense based on taxable wages and tax rates assigned by each state.

State unemployment tax rates vary by state and are determined, in part, based on Insperity’s prior years’ compensation experience in each state.

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Regardless of whether a state has licensing, registration or certification requirements for PEOs, we must comply with a number of other state and local regulations that could impact our operations.

Corporate Office Employees

Human Capital

We had approximately 3,600 corporate employees as of December 31, 2020.

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None of our corporate employees are covered by a collective bargaining agreement.

The number of BPAs and trained BPAs impacts our ability to grow our customer base.

We refer to BPAs who have been employed for two months and completed initial sales training as “trained BPAs”.

During 2020 and 2019, the average number of BPAs were 645 and 590, respectively, while the average number of trained BPAs were 590 and 528, respectively.

Intellectual Property

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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.

What changed 10-K

Item 1. Business