What changed in this filing

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Item 1. Business

2024-02-09 compared with 2023-02-10 · 42 added, 44 removed, 427 unchanged (17% of the section changed)

13 unchanged sentences

Under the CSA, we assume responsibility for personnel administration and assist our clients in complying with employment-related governmental regulations, while the client retains the employees’ services in its business and remains the employer for other purposes.

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

2022 Form 10-K

for the WSEEs of the client.

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.

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.

2023 Form 10-K

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

9 unchanged sentences

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 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.

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 (“Board”) and other documents related to our corporate governance, including our Code of Conduct.

Access to these electronic filings is available free of charge as soon as reasonably practicable after filing or furnishing them to the SEC.

11 unchanged sentences

• 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

2022 Form 10-K

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

2023 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.

25 unchanged sentences

• training and development services

2022 Form 10-K

Our PEO HR Outsourcing Solutions are designed to attract and retain high-quality employees, while relieving client owners and key executives of many employer-related administrative and regulatory burdens.

As a co-employer in the PEO relationship, we assume or share many of the employer-related responsibilities and assist our clients in complying with many employment-related governmental laws and regulations.

Historically, we believe that we have successfully marketed the compliance component of our service offering and that our compliance-related services have increased the value proposition of our service offering.

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

2023 Form 10-K

• Internal Revenue Code (the “Code”) • Occupational Safety and Health Act (OSHA)

11 unchanged sentences

• Genetic Information Nondiscrimination Act of 2008 • Paycheck Protection Program and Healthcare Enhancement Act (PPP)

• Drug-Free Workplace Act

• Drug-Free Workplace Act • SECURE 2.0 Act of 2022, as part of The Consolidated Appropriations Act, 2023

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

10 unchanged sentences

Benefit Plans Administration .

We maintain several benefit plans for eligible WSEEs including the following:

We maintain numerous benefit plans for eligible WSEEs including the following:

• a group health plan

3 unchanged sentences

• an employee well-being program

2022 Form 10-K

• cafeteria plans for group health and health savings account contributions

• short-term and long-term disability insurance

2023 Form 10-K

• an educational assistance program

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• access to view, edit, and change a range of employee profile information

2022 Form 10-K

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

1 unchanged sentence

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

2023 Form 10-K

• e-learning web-based training

24 unchanged sentences

As part of our comprehensive service, we also maintain employment practice liability insurance coverage for ourselves and our clients, monitor developments in HR-related laws and regulations, and notify clients of the potential effect of such changes on employer liability.

2022 Form 10-K

MarketPlace SM provided by Insperity ® .

Through our many alliances with best-of-class providers, Insperity’s MarketPlace is an e-commerce portal that brings a wide range of products and services to our clients, WSEEs and their families.

Through our many alliances with best-in-class providers, Insperity’s MarketPlace is an e-commerce portal that brings a wide range of products and services to our clients, WSEEs and their families.

Through MarketPlace, which is provided through Insperity Premier, our clients also have the opportunity to offer their products and services to other clients and WSEEs.

Middle Market Solutions.

We believe the middle market sector, which we generally define as those companies with employees ranging from approximately 150 to 5,000 WSEEs, has historically been under-served by the PEO industry.

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

We believe the middle market sector, which we generally define as those companies with employee populations ranging from approximately 150 to 5,000 WSEEs, has historically been under-served by the PEO industry.

Currently, we have a dedicated sales management, service personnel and consulting staff who concentrate

2023 Form 10-K

solely on the middle market sector.

Our average number of WSEEs per month in our middle market sector in 2023 increased 10.5% from 2022, and the middle market sector as a percentage of our overall WSEE count also increased over this period, representing approximately 26.1% and 24.9% of our total average paid WSEEs during 2023 and 2022, respectively.

29 unchanged sentences

For most clients, the CSA generally establishes pricing for a period of one year and is subject to termination by Insperity or the client upon 30 days’ written notice or upon shorter notice in the event of default.

CSAs for our middle market clients generally establish pricing for two years and are subject

2022 Form 10-K

to termination by clients upon payment of a termination fee or otherwise by the parties upon an event of default.

CSAs for our middle market clients generally establish pricing for two years and are subject to termination by clients upon payment of a termination fee or otherwise by the parties upon an event of default.

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.

1 unchanged sentence

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.

2023 Form 10-K

The CSA also establishes the division of responsibilities between us and the client as co-employers.

21 unchanged sentences

• Ownership and protection of all client intellectual property rights

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

2022 Form 10-K

• Compliance with the Code, COBRA, PPACA, and ERISA for client-sponsored employee benefit plans

• For clients electing payroll tax deferrals and claiming tax credits under the FFCRA, the CARES Act, PPP, CAA, and ARPA (collectively, the “COVID Relief Programs”), the client has sole responsibility for determining eligibility under the programs and depositing deferred payroll tax amounts with the U.S.

2 unchanged sentences

• Implementation of policies and practices relating to the employee/employer relationship

2023 Form 10-K

• Internal compliance with all federal, state and local employment laws, including Title VII of the Civil Rights Act of 1964, ADEA, Title I of ADA, the Consumer Credit Protection Act and immigration laws and regulations

12 unchanged sentences

We serve clients and WSEEs located throughout the United States.

By region, our revenue distribution for the year ended December 31, 2022, was as follows:

2023 Form 10-K

By region, our revenue distribution for the year ended December 31, 2023, was as follows:

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

1 unchanged sentence

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.

2023 Form 10-K

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

14 unchanged sentences

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

We continue to evaluate a broad range

2022 Form 10-K

of factors in the selection process, using a market selection model that weighs various criteria that, based on our experience, we believe are reliable predictors of successful penetration.

We continue to evaluate a broad range of factors in the selection process, using a market selection model that weighs various criteria that, based on our experience, we believe are reliable predictors of successful penetration.

Among the factors we consider are:

2 unchanged sentences

• existing relationships within a given market, such as vendor or client relationships

2023 Form 10-K

• expansion cost issues, such as advertising and overhead costs

8 unchanged sentences

We routinely seek to develop new marketing approaches and campaigns to capitalize on changes in the competitive landscape for our human resources services and to more successfully reach our target market.

We have an agreement with the Professional Golf Association Champions Tour to be the title sponsor of the annual Insperity Invitational ™ presented by UnitedHealthcare ® professional golf tournament held annually in The Woodlands, Texas (a suburb of Houston).

We have an agreement with the Professional Golf Association Champions Tour to be the title sponsor of the Insperity Invitational ™ presented by UnitedHealthcare ® professional golf tournament held annually in The Woodlands, Texas (a suburb of Houston).

In addition, we have an arrangement with Jim Nantz, a sports commentator, to serve as our national spokesperson.

13 unchanged sentences

This dual channel approach to selling attempts to reduce barriers to a company becoming a client and allows us to offer solutions better tailored to the specific needs of the business, including at renewal.

2022 Form 10-K

We provide a value-added, full-service human resources solution through our PEO HR Outsourcing Solutions, which we believe is most suitable to a specific segment of the small and medium-sized business community.

3 unchanged sentences

During the same three-year period, our gross profit per WSEE and operating income per WSEE exceeded industry averages by 142% and 208%, respectively.

2023 Form 10-K

Competition in the PEO industry revolves primarily around quality of services, scope of services, choice and quality of benefits packages, reputation, and price.

6 unchanged sentences

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.

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

In addition, we also face competition from:

5 unchanged sentences

We consider our contracts with UnitedHealthcare (“United”) and the Chubb Group of Insurance Companies (“Chubb”) to be the most significant elements of our employee benefits package, as they would be the most difficult to replace.

We provide group health insurance coverage to our WSEEs through a national network of carriers including United, UnitedHealthcare of California, Kaiser Permanente, Blue Shield of California, HMSA BlueCross BlueShield of Hawaii and Tufts, all of which provide fully insured policies or service contracts.

We provide group health insurance coverage to our WSEEs through a national network of carriers including United, UnitedHealthcare of California, Kaiser Permanente, Blue Shield of California, HMSA BlueCross BlueShield of Hawaii and Tufts (known as Harvard Pilgrim Health Care (HPHC) beginning in 2024), all of which provide fully insured policies or service contracts.

The health insurance contract with United provides approximately 87 % of our participants’ health insurance coverage and expires on December 31, 2026, subject to cancellation by either party upon 180 days’ notice.

4 unchanged sentences

The current workers’ compensation coverage with Chubb expires on September 30, 2024.

Chubb has committed to certain expense and premium terms for one additional policy year (through September 30, 2024) subject to certain customary terms and conditions.

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

3 unchanged sentences

Insperity utilizes a variety of information technology capabilities to provide its PEO HR Outsourcing Solutions and business performance improvement services to its clients and WSEEs and for its own administrative and management information requirements.

2022 Form 10-K

Insperity’s PEO HR Outsourcing Solutions information systems, which include Insperity Premier, are a proprietary mix of applications that includes both internally developed software, licensed software applications and cloud-based services.

4 unchanged sentences

• time and attendance collection and administration

2023 Form 10-K

• payroll processing

7 unchanged sentences

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, one of which serves as our primary facility.

Insperity operates from two separate leased hosting facilities, one of which serves as our primary facility.

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

Each hosting facility houses a mix of primary production applications, disaster recovery, replication and back-up applications, and pre-production environments.

Both hosting facilities have the capacity to run all of our critical business applications and have sufficient capacity to handle all of our operations on a stand-alone basis, if required.

These hosting facilities have the capacity to run all of our critical business applications and have sufficient capacity to handle all of our operations on a stand-alone basis, if required.

We have an active Business Continuity Plan, which includes information technology capabilities and we utilize a variety of measures to ensure our Business Continuity Plan remains effective and available.

7 unchanged sentences

and a variety of measures designed to control access to sensitive and private information.

Industry Regulations

The operations for our PEO HR Outsourcing Solutions are affected by numerous federal, state, and local laws relating to tax, insurance and employment matters.

By entering into a co-employer relationship with our WSEEs, we assume certain obligations and responsibilities of an employer under these federal and state laws.

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.

Industry Laws and Regulations

The operations for our PEO HR Outsourcing Solutions are affected by numerous federal, state, and local laws and regulations relating to tax, insurance and employment matters.

By entering into a co-employer relationship with our WSEEs, we assume certain obligations and responsibilities of an employer under these federal and state laws and regulations.

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

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

2022 Form 10-K

taxes on those wages paid by CPEOs.

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.

7 unchanged sentences

• a group health plan, which includes medical, dental, vision and prescription drug coverage

2023 Form 10-K

• a 401(k) retirement plan

9 unchanged sentences

We believe that additional regulatory burdens placed on employers can increase the demand for our services because small and medium-sized businesses are especially challenged in their efforts to comply with governmental regulations due to limited resources and a lack of expertise.

Employer Status and Employee Benefit Plans.

12 unchanged sentences

All of Insperity’s 401(k) Retirement Plans have received determination letters from the IRS confirming the qualified status of the plans.

2022 Form 10-K

Employment Taxes

6 unchanged sentences

The SBEA provides 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 on remuneration paid by the CPEO rather than the CPEO clients.

2023 Form 10-K

For any client CSA that is not a CPEO contract, Code Section 3401, which applies to federal income tax withholding requirements, contains an exception to the general common law test applied to determine whether an entity is an “employer” for purposes of federal income tax withholding.

6 unchanged sentences

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 to defer the employer portion of social security under the recent CARES Act have sole responsibility for reporting and depositing deferred amounts with the U.S.

Clients who elected to defer the employer portion of social security under the CARES Act have sole responsibility for reporting and depositing deferred amounts with the U.S.

Unemployment Taxes

11 unchanged sentences

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.

2022 Form 10-K

Human Capital

14 unchanged sentences

and employee benevolence programs to provide additional assistance to corporate employees in times of need.

2023 Form 10-K

We monitor and evaluate the effectiveness of our human capital management efforts by seeking formal and informal feedback from our corporate employees, including periodic surveys of our corporate employees to obtain their opinions on key topics.

4 unchanged sentences

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