What changed in this filing

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Item 1A. Risk Factors

2023-02-10 compared with 2022-02-14 · 87 added, 104 removed, 133 unchanged (59% of the section changed)

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Any reduction in global economic activity may harm the Company’s business and financial condition.

The demand for the Company’s services, in particular its staffing services, is highly dependent upon the state of the economy and upon the staffing needs of the Company’s clients.

In the recent past, certain of the Company’s markets experienced economic uncertainty characterized by increasing unemployment, limited availability of credit and decreased consumer and business spending.

In addition, certain geopolitical events, including the spread of COVID-19 and the United Kingdom’s withdrawal from the European Union (“Brexit”), have caused significant economic, market, political and regulatory uncertainty in some of the Company’s markets.

The demand for the Company’s services, in particular its talent solutions services, is highly dependent upon the state of the economy and upon the staffing needs of the Company’s clients.

In the recent past, certain of the Company’s markets experienced economic uncertainty characterized by increasing unemployment, limited availability of credit, significant inflation and decreased consumer and business spending.

In addition, certain geopolitical events, including the spread of COVID-19 and Russia’s invasion of Ukraine, have caused significant economic, market, political or regulatory uncertainty in some of the Company’s markets.

Any decline in the economic condition or employment levels of the U.S.

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The Company’s business depends on a strong reputation and anything that harms its reputation will likely harm its results.

As a provider of temporary and permanent staffing solutions as well as consultant services, the Company’s reputation is dependent upon the performance of the employees it places with its clients and the services rendered by its consultants.

As a provider of contract and permanent talent solutions as well as consulting services, the Company’s reputation is dependent upon the performance of the employees it places with its clients and the services rendered by its consultants.

The Company depends on its reputation and name recognition to secure engagements and to hire qualified employees and consultants.

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The Company depends on operations in international markets for a significant portion of its business.

These international operations are subject to a number of risks, including general political and economic conditions in those foreign countries, the burden of complying with various foreign laws and technical standards and unpredictable changes in foreign regulations, U.S.

These international operations are subject to a number of risks, including general political and economic conditions in those foreign countries, international hostilities and responses to those hostilities, the burden of complying with various potentially conflicting foreign laws, technical standards, unpredictable changes in foreign regulations, U.S.

legal requirements governing U.S.

companies operating in foreign

countries, legal and cultural differences in the conduct of business, potential adverse tax consequences and difficulty in staffing and managing international operations.

companies operating in foreign countries, legal and cultural differences in the conduct of business, potential adverse tax consequences, and difficulty in staffing and managing international operations.

These factors may have a material adverse effect on the performance of the Company’s business.

In addition, the Company’s business may be affected by foreign currency exchange fluctuations.

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dollar strengthens relative to other currencies, the Company’s reported income from these operations could decrease.

The value of the U.S.

dollar has recently weakened against a number of major foreign currencies, but an increase in strength relative to these other currencies could adversely impact the Company’s reported income from its international markets and cause its revenue in such markets, when translated into U.S.

dollars, to decline.

Significant U.K.

or European developments stemming from the U.K.’s decision to withdraw from the European Union could have a material adverse effect on the Company.

In the past several years, the European market experienced economic uncertainty, which adversely affected, and the return of which may in the future adversely affect, the Company’s operations in Europe.

In particular, Brexit has contributed to, and may continue to contribute to, European economic, market and regulatory uncertainty and could adversely affect European or worldwide economic, market, regulatory, or political conditions.

To the extent that adverse economic conditions and uncertainty in Europe (related to Brexit or otherwise) worsen, demand for the Company’s services may decline, which could significantly harm its business and results of operations.

The currently evolving situation of the outbreak of a novel coronavirus disease ( “ COVID-19 ”) has impacted demand for the Company’s services, disrupted the Company’s operations and may continue to do so.

For example, in 2022, the Company’s revenues were unfavorably impacted by currency exchange rates as the U.S.

dollar strengthened against the Euro and British pound.

The outbreak of a novel coronavirus disease ( “ COVID-19 ”) in 2020 impacted demand for the Company’s services, disrupted the Company’s operations, and may continue to do so.

The COVID-19 outbreak emerged as a serious threat to the health and economic well-being of the Company’s clients, candidates, employees, and the overall economy.

At various times during the outbreak, many counties, states and countries took dramatic action including, without limitation, ordering all nonessential workers to stay home, mandating the closure of schools and nonessential business premises, and imposing isolation measures on large portions of the population.

These measures, while intended to protect human life, had serious adverse impacts on domestic and foreign economies and may do so in the future if they are continued or reintroduced.

The COVID-19 pandemic has created significant uncertainty and volatility in the Company’s business.

Initially it caused a dramatic increase in unemployment in the United States and in certain other regions in which the Company operates, and mandated business closures and slowing economic activity reduced the use of temporary workers and reduced businesses’ recruitment of new employees resulting in less demand for the Company’s services.

During 2021, however, demand for workers and the Company’s services increased significantly as economic activity recovered, worksites reopened, and many business sought to restore or expand workforces that had shrunk during the course of the pandemic.

There can be no assurance, however, that this increased demand for workers and the Company’s services will be sustained.

Furthermore, the emergence of new variants of the coronavirus or of other illnesses may cause a rapid deterioration of economic conditions and the financial and credit markets, which could have a material adverse impact on the Company’s business, financial condition, results of operations and cash flows.

The Company has transitioned a significant number of the Company’s employee population to a remote work environment in an effort to mitigate the spread of COVID-19.

This transition to remote working and the spread of COVID-19 may negatively impact the availability of key personnel necessary to conduct the Company’s business and the business and operations of the Company’s third-party service providers who perform critical services for the Company’s business.

This transition to remote working has also increased the Company’s vulnerability to risks related to the Company’s computer and communications hardware and software systems and exacerbated certain related risks, including risks of phishing and other cybersecurity attacks.

The Company is continuing to monitor the spread of COVID-19, including the emerging variants of the disease, and related risks, including risks related to efforts to mitigate the disease’s spread.

The rapid development and fluidity of the situation, however, precludes any prediction as to its ultimate impact on us.

The emergence of new variants of the coronavirus or of other illnesses may adversely impact global economies and financial markets resulting in an economic downturn that would likely impact demand for the Company’s services.

These measures, while intended to protect human life, had serious adverse impacts on domestic and foreign economies and may do so in the future if they are reintroduced.

The emergence of new variants of the coronavirus or of other illnesses may cause a rapid deterioration of economic conditions and the financial and credit markets, which could have a material adverse impact on the Company’s business, financial condition, results of operations, and cash flows.

While the Company has navigated the COVID-19 pandemic thus far, its continuation or worsening may have a negative impact on the Company’s business.

Any of the above factors, or other cascading effects of the COVID-19 pandemic that are not currently foreseeable, could materially increase the Company’s costs, severely negatively impact the Company’s revenue, net income, and other results of operations, and impact the Company’s liquidity position.

The duration of any such impacts cannot be predicted, and such impacts may also have the effect of heightening many of the other material risks the Company faces.

Natural disasters and unusual weather conditions, pandemic outbreaks, terrorist acts, global political events and other serious catastrophic events could disrupt business and otherwise materially adversely affect the Company ’ s business and financial condition.

With operations in many states and multiple foreign countries, the Company is subject to numerous risks outside of the Company's control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemic outbreaks such as the COVID-19 pandemic and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect the

Company's business and financial performance.

With operations in many states and multiple foreign countries, the Company is subject to numerous risks outside of the Company’s control, including risks arising from natural disasters, such as fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemic outbreaks such as the COVID-19 pandemic and other global health emergencies, terrorist acts or disruptive global political events, or similar disruptions that could materially adversely affect the Company’s business and financial performance.

Historically, the Company’s operations are heavily dependent on the ability of employees and consultants to travel from business to business and from location to location.

Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, coronavirus, or even a particularly virulent flu, could decrease demand for the Company's services and the Company's ability to offer them.

Uncharacteristic or significant weather conditions may increase in frequency or severity due to climate change and can affect travel and the ability of businesses to remain open, which could lead to decreased ability to offer the Company's services and materially adversely affect the Company's short-term results of operations.

Any public health emergencies, including a real or potential global pandemic such as those caused by the avian flu, SARS, Ebola, coronavirus, or even a

particularly virulent flu, could decrease demand for the Company's services and the Company's ability to offer them.

Uncharacteristic or significant weather conditions may increase in frequency or severity due to climate change, which may increase the Company's expenses, exacerbate other risks to the Company, and affect travel and the ability of businesses to remain open, which could lead to a decreased ability to offer the Company's services and materially adversely affect the Company's results of operations.

In addition, these events could result in delays in placing employees and consultants, the temporary disruption in the transport of employees and consultants overseas and domestically, the inability of employees and consultants to reach or have transportation to clients directly affected by such events, and disruption to the Company's information systems.

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Risks Related to the Company’s Operations

The Company may be unable to find sufficient candidates for its staffing business.

The Company’s staffing services business consists of the placement of individuals seeking employment.

The Company may be unable to find sufficient candidates for its talent solutions business.

The Company’s talent solutions services business consists of the placement of individuals seeking employment.

There can be no assurance that candidates for employment will continue to seek employment through the Company.

Candidates generally seek temporary or regular positions through multiple sources, including the Company and its competitors.

Before the COVID-19 pandemic, unemployment in the United States was at historic lows and during the second half of 2021, as the economy recovered, competition for workers in a number of industries became intense.

Candidates generally seek contract or permanent positions through multiple sources, including the Company and its competitors.

Before the COVID-19 pandemic, unemployment in the U.S.

was at historic lows and during the second half of 2021, as the economy recovered, competition for workers in a number of industries became intense.

When unemployment levels are low, finding sufficient eligible candidates to meet employers’ demands is more challenging.

At various times during the pandemic, this challenge has been exacerbated by the withdrawal of some workers from the labor pool, whether due to health concerns, school and daycare closures or other reasons.

Any resurgence of COVID-19 may adversely impact the Company's ability to recruit sufficient candidates for certain industries or regions in which the Company operates.

Although unemployment has risen in some areas in which the Company operates, talent shortages have persisted in a number of disciplines and jurisdictions.

Any shortage of candidates could materially adversely affect the Company.

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The Company may incur potential liability to employees and clients.

The Company’s temporary services business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces.

The Company’s contract talent solutions business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces.

The Company’s ability to control the workplace environment is limited.

As the employer of record of its temporary employees, the Company incurs a risk of liability to its temporary employees for various workplace events, including claims of physical injury, discrimination, harassment or failure to protect confidential personal information.

Furthermore, as the employer of record for some individuals who have been placed in client workplaces where exposure to COVID-19 is possible, the Company may be subject to risk of liability should such employees allege their workplaces failed to adequately mitigate the risk of exposure to COVID-19.

In addition, in order to facilitate remote working arrangements, some of the Company’s temporary workers are accessing client workspaces from their personal devices through cloud-based systems, which could increase cybersecurity risks to the Company’s clients for which they may hold the Company liable.

While such claims have not historically had a material adverse effect upon the Company, there can be no assurance that such claims in the future will not result in adverse publicity or have a material adverse effect upon the Company.

If cybersecurity incidents were to occur in such a way, the Company may face legal and contractual liability, reputational damage, loss of business, and other expenses.

The Company also incurs a risk of liability to its clients resulting from allegations of errors, omissions or theft by its temporary employees, or allegations of misuse of client confidential information.

In some cases, the Company has agreed to indemnify its clients in respect of these types of claims.

The Company maintains insurance with respect to many of such claims.

The Company maintains insurance with respect to many such claims.

While such claims have not historically had a material adverse effect upon the Company, there can be no assurance that the Company will continue to be able to obtain insurance at a cost that does not have a material adverse effect upon the Company or that such claims (whether by reason of the Company not having sufficient insurance or by reason of such claims being outside the scope of the Company’s insurance) will not have a material adverse effect upon the Company.

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The Company is engaged in the services business.

As such, its success or failure is highly dependent upon the performance of its management personnel and employees, rather than upon technology or upon tangible assets (of which the Company has few).

As such, its success or failure is highly dependent upon the performance of its management personnel and employees, rather than upon tangible assets (of which the Company has few).

There can be no assurance that the Company will be able to attract and retain the personnel that are essential to its success.

The Company’s results of operations and ability to grow could be materially negatively affected if it cannot successfully keep pace with technological changes impacting the development and implementation of its services and the evolving needs of

The Company’s success depends on its ability to keep pace with rapid technological changes affecting both the development and implementation of its services and the staffing needs of its clients.

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In addition, the Company’s business relies on a variety of technologies, including those that support hiring and tracking, order management, billing, and client data analytics.

If the Company does not sufficiently invest in new technology and industry developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.

If the Company does not sufficiently invest in new technology and keep pace with industry developments, appropriately implement new technologies, or evolve its business at sufficient speed and scale in

response to such developments, or if it does not make the right strategic investments to respond to these developments, the Company’s services, results of operations, and ability to develop and maintain its business could be negatively affected.

The demand for the Company’s services related to regulatory compliance may decline.

The operations of both the staffing services business and Protiviti include services related to Sarbanes-Oxley, Anti-Money Laundering Act of 2020 reviews ("AML"), and other regulatory compliance services.

The operations of both the staffing services business and Protiviti include services related to Sarbanes-Oxley, Anti-Money Laundering Act of 2020 reviews, and other regulatory compliance services.

There can be no assurance that there will be ongoing demand for these services.

For example, the Jumpstart Our Business Startup (“JOBS”) Act, signed into law in April of 2012, allows most companies going public in the U.S.

For example, the Jumpstart Our Business Startup Act, signed into law in April of 2012, allows most companies going public in the U.S.

to defer implementation of some of the provisions of Sarbanes-Oxley for up to five years after their initial public offering.

Similarly, a number of proposals have been recently or are currently being considered by the U.S.

Similarly, from time-to-time proposals are considered by the U.S.

Congress to further delay or, in some cases, remove the requirements of Sarbanes-Oxley for a number of public companies.

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Demand for the Company’s services from government and public sector clients related to the COVID-19 pandemic may decrease over time.

The Company has reported increased business from services rendered to the public sector during the pandemic due to, among other developments, the volume of unemployment claims and housing assistance claims, as well as the demands faced by public school districts that must meet the technical support requirements of virtual learning models.

Additional business with public sector clients not directly related to the COVID-19 pandemic has been reported in 2021.

The pandemic-related services and other work for public sector clients has contributed to the Company's revenue over the past year.

It is unknown to what extent business with state, local and other public sector clients may decrease as the effects of the pandemic lessen or change over time.

Demand for the Company’s services from government and public sector clients may also fall as clients adapt to the effects of the pandemic and their needs evolve.

The Company will continue to monitor the situation, but the future impact of the pandemic and its effects on the needs of the Company’s clients are impossible to fully predict, and there can be no assurance that the Company’s increased business in the public sector will be sustained.

During 2021 and 2022 the Company reported increased business from services rendered to the public sector during the pandemic due to, among other developments, the volume of unemployment claims and housing assistance claims, as well as the demands faced by public school districts that must meet the technical support requirements of virtual learning models.

With the majority of COVID-19 legal restrictions lifted, many of the COVID-19 related projects have ended and the Company's public sector business has shifted to different projects with public sector clients.

It is unknown whether the shift in projects with state, local and other public sector clients will ultimately maintain the same level of business or to what extent business with the public sector may decrease as the effects of the pandemic lessen or change over time.

The future impact of the pandemic and its effects on the needs of the Company’s clients are impossible to fully predict, and there can be no assurance that the Company’s increased business in the public sector will be sustained.

Long-term contracts do not comprise a significant portion of the Company’s revenue.

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Protiviti operates in a highly competitive business and faces competitors who are significantly larger and have more established reputations.

Protiviti operates in a highly competitive business.

As with the Company’s staffing services business, the barriers to entry are quite low.

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The business of Protiviti consists of providing business consulting and internal audit services.

Liability could be incurred, or litigation could be instituted against the Company or Protiviti for claims related to these activities or to prior transactions or activities.

Liability could be incurred, or litigation could be, and from time-to-time has been, instituted against the Company or Protiviti for claims related to these activities or to prior transactions or activities.

There can be no assurance that such liability or litigation will not have a material adverse impact on Protiviti or the Company.

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The Company and certain subsidiaries are defendants in several lawsuits that could cause the Company to incur substantial liabilities .

The Company and certain subsidiaries are defendants in several actual or asserted class and representative action lawsuits brought by or on behalf of the Company’s current and former employees alleging violations of federal and state law with respect to certain wage and hour related matters, as well as claims challenging the Company’s compliance with the

Fair Credit Reporting Act.

The various claims made in one or more of such lawsuits include, among other things, the misclassification of certain employees as exempt employees under applicable law, failure to comply with wage statement requirements, failure to compensate certain employees for time spent performing activities related to the interviewing process, and other related wage and hour violations.

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However, these lawsuits may consume substantial amounts of the Company’s financial and managerial resources and might result in adverse publicity, regardless of the ultimate outcome of the lawsuits.

In addition, the Company and its subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business.

In addition, the Company and its

subsidiaries may become subject to similar lawsuits in the same or other jurisdictions, or to various other claims, disputes, and legal or regulatory proceedings that arise in the ordinary course of business.

An unfavorable outcome with respect to these lawsuits and any future lawsuits or regulatory proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities or impact its operations in such a way that may have a material adverse effect upon the Company’s business, financial condition or results of operations.

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In addition, an unfavorable outcome in one or more of these cases could cause the Company to change its compensation plans for its employees, which could have a material adverse effect upon the Company’s business.

Government imposed vaccine mandates could have a material adverse impact on our business and results of operations .

In September 2021, President Biden announced two executive orders related to vaccine mandates that would impact the Company's operations in the United States.

The first executive order-- the OSHA Vaccination and Testing Emergency Temporary Standard (“ETS”) — was blocked by a stay of enforcement by the United States Supreme Court on January 13, 2022.

On January 25, 2022, the Department of Labor withdrew the ETS;

however, OSHA could still pursue a vaccine mandate through the regular federal rulemaking process.

A second Executive Order on Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (“EO 14042”) would apply to the Company as a federal contractor and subcontractor.

EO 14042 is also subject to legal challenges and is currently subject to a nationwide injunction during the pendency of federal court proceedings.

At this time, it is unclear, among other things, if or when any federal vaccine mandates may go into effect.

Further, state and local governments in the United States and in international jurisdictions where we operate may implement vaccine mandates (currently New York City has a mandate) and it is not clear if such mandates will go into effect, or stay in effect;

whether any will apply to all employees or only to employees who work in the office;

and how compliance will be documented.

Should such mandates apply to us, we may be required to implement a requirement that all of our employees get vaccinated, subject to limited exceptions.

At this time, Protiviti has implemented a vaccine requirement for its operations;

however, the Company’s staffing operations do not have a vaccine requirement.

Currently, it is not possible to predict the impact that a federal vaccine mandate, any other vaccine mandate, or a vaccine requirement should we elect to adopt one, will have on us or on our workforce.

Any vaccine requirement or vaccine mandate, if implemented, may result in employee attrition;

however, any failure to implement a vaccine requirement or mandate may also result in employee attrition or resistance to returning to onsite work, either of which could materially and adversely affect our business and results of operations.

Government regulations may result in prohibition or restriction of certain types of employment services or the imposition of additional licensing or tax requirements that may reduce the Company’s future earnings.

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The Company’s business is subject to regulation or licensing in many states in the U.S.

and in certain foreign

and in certain foreign countries.

While the Company has had no material difficulty complying with regulations in the past, there can be no assurance that the Company will be able to continue to obtain all necessary licenses or approvals or that the cost of compliance will not prove to be material.

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Further, changes to existing regulation or licensing requirements could impose additional costs and other burdens or limitations on the Company’s operations.

In addition, the Company’s temporary services business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces.

In addition, the Company’s contract talent services business entails employing individuals on a temporary basis and placing such individuals in clients’ workplaces.

Increased government regulation of the workplace or of the employer-employee relationship, or judicial or administrative proceedings related to such regulation, could materially adversely affect the Company.

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An unfavorable outcome with respect to such litigation or any future lawsuits or proceedings could, individually or in the aggregate, cause the Company to incur substantial liabilities that may have a material adverse effect upon the Company’s business, financial condition or results of operations.

If the Company fails to comply with Anti-Bribery Laws or economic sanction regulations, it could be subject to substantial fines or other penalties .

If the Company fails to comply with Anti-Bribery Laws, anti-forced labor laws, or economic sanction regulations, it could be subject to substantial fines or other penalties and reputational harm .

In many parts of the world, including countries in which the Company operates and/or seeks to expand, practices in the local business community might not conform to international business standards and could violate the U.S.

Foreign Corrupt Practices Act ("FCPA") and other anti-corruption and anti-bribery laws and regulations (“Anti-Bribery Laws”).

Foreign Corrupt Practices Act (“FCPA”), the U.K.

Bribery Act, and other anti-corruption and anti-bribery laws and regulations (“Anti-Bribery Laws”).

These laws generally prohibit companies, their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector.

In addition, the FCPA’s accounting provisions require the Company to maintain accurate books and records and a system of internal accounting controls.

Any violation of the FCPA or other applicable Anti-Bribery Laws could result in substantial fines, sanctions or civil and/or criminal penalties, debarment from business dealings with certain governments or government agencies or restrictions on the marketing of the Company’s products in certain countries, which could harm the Company’s business, financial condition or results of operations.

In addition, some of these laws have accounting provisions that require the Company to maintain accurate books and records and a system of

internal accounting controls.

Any violation of the FCPA or other applicable Anti-Bribery Laws could result in substantial fines, sanctions or civil and/or criminal penalties, debarment from business dealings with certain governments or government agencies or restrictions on the marketing of the Company’s products in certain countries, and damage to the Company's reputation, which could harm the Company’s business, financial condition or results of operations.

Additionally, the U.S.

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Similar economic sanctions are imposed by the European Union and other jurisdictions.

The Company’s international operations subject it to these laws and regulations, which are complex, restrict the Company’s business dealings with certain countries, governments, entities and individuals, and are constantly changing.

The Company’s international operations subject it to these and other laws and regulations, which are complex, restrict the Company’s business dealings with certain countries, governments, entities and individuals, and are constantly changing.

Penalties for noncompliance with these complex laws and regulations can be significant and include substantial fines, sanctions or civil and/or criminal penalties, and violations can result in adverse publicity, which could harm the Company’s business, financial condition or results of operations.

Although the Company has implemented policies and procedures designed to ensure compliance with Anti-Bribery Laws, economic sanctions, and other laws and regulations, the Company cannot be sure that its employees, agents or other third parties will not violate such policies or applicable laws and regulations.

Although the Company has implemented policies and procedures designed to ensure compliance with Anti-Bribery Laws, economic sanctions, anti-forced labor and other laws and regulations, the Company cannot be sure that its employees, agents or other third parties will not violate such policies or applicable laws and regulations.

Any such violations could result in significant fines and penalties, criminal sanctions against the Company, its officers or its employees, prohibitions on the conduct of its business, and materially damage the Company’s reputation, brand, business and operating results.

Further, detecting, investigating and resolving actual or alleged violations is expensive and can consume significant time and attention of the Company’s senior management.

Health care reform could increase the costs of the Company’s temporary staffing operations .

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “PPACA”) was signed into law in the United States.

In 2015, the Company redesigned its employee benefits to offer health insurance coverage to its temporary candidates in order to meet the requirements of the PPACA’s employer mandate.

Congress has made several attempts to repeal or modify the PPACA and in 2020, the United States Supreme Court heard an appeal of a decision from the U.S.

Health care reform could increase the costs of the Company’s contract staffing operations .

In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “PPACA”) was signed into law in the U.S.

In 2015, the Company redesigned its employee benefits to offer health insurance coverage to its contract talent in order to meet the requirements of the PPACA’s employer mandate.

Congress has made several attempts to repeal or modify the PPACA and in 2020, the U.S.

Supreme Court heard an appeal of a decision from the U.S.

Court of Appeals for the Fifth Circuit that invalidated significant portions of the PPACA.

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Risks Related to the Company’s Information Technology, Cybersecurity and Data Protection

The Company’s computer and communications hardware and software systems are vulnerable to damage and interruption.

The Company’s ability to manage its operations successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its computer and communications hardware and software systems, some of which are managed by third-party vendors.

The Company’s primary computer systems and operations are vulnerable to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events and errors in usage by the Company’s employees and those of the Company’s vendors.

The Company’s employees or vendors may have access or exposure to personally identifiable or otherwise confidential information and customer data and systems, the misuse of which could result in legal liability.

Cyberattacks, including attacks motivated by grievances against the business services industry in general or against the Company in particular, may disable or damage its systems.

It is possible that the Company’s security controls or those of its third-party vendors over personal and other data, and other practices it follows, may not prevent the improper access to or disclosure of personally identifiable or otherwise confidential information.

Such disclosure or damage to the Company’s systems could harm its reputation and subject it to government sanctions and liability under its contracts and laws that protect personal data and confidential information, resulting in increased costs or loss of revenue.

The potential risk of security breaches and cyberattacks may increase as the Company introduces new service offerings.

Changes in data privacy and protection laws and regulations in respect of control of personal information could increase the Company’s costs or otherwise adversely impact its operations.

In the ordinary course of business, the Company collects, uses, and retains personal information from its employees, employment candidates, and contractors, including, without limitation, full names, government-issued identification numbers, addresses, birthdates, and payroll-related information.

The possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and evolving domestic and foreign laws and regulations regarding data privacy, protection and security, which, in many cases, apply not only to third-party transactions, but also to transfers of information among the Company and its subsidiaries.

For example, the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposes stringent operational requirements for entities processing personal information, such as strong safeguards for data transfers to countries outside the European Union and strong enforcement authorities and mechanisms.

Complying with the enhanced obligations imposed by the GDPR and other current and future laws and regulations relating to data transfer, residency, privacy and protection has increased and may continue to increase the Company’s operating costs and require significant management time and attention, while any failure by the Company or its subsidiaries to comply with applicable laws could result in governmental enforcement actions, fines, and other penalties that could potentially have an adverse effect on the Company’s operations and reputation.

Company and third-party computer, technology and communications hardware and software systems are vulnerable to damage, unauthorized access, and disruption that could expose the Company to material operational, financial, and reputational damage (including the unauthorized access to, or exposure of, personal and confidential information).

The Company’s ability to manage its operations through the use of these systems successfully is critical to its success and largely depends upon the efficient and uninterrupted operation of its computer, technology and communications systems, some of which are managed by third-party vendors.

The Company’s primary systems (and, as a result its operations) are vulnerable to damage or interruption from power outages, computer, technology and telecommunications failures, computer viruses, security breaches, catastrophic events, and errors in usage by the Company’s or its vendors’ employees and contractors.

In addition, the Company’s systems contain personal and confidential information, including information of importance to the Company, and its employees, vendors, contractors, and clients.

Cyberattacks, including attacks motivated by the desire for monetary gain, geopolitics, grievances against the business services industry in general or against the Company in particular, may disable or damage its systems or the systems of its vendors or clients, or allow unauthorized access to, or exposure of, personal or confidential information, including information about employees, vendors, candidates, contractors and clients.

The Company’s security tools, controls and practices, including those relating to identity and access management, credential strength, and the security tools, controls and practices of its vendors and clients, may not prevent access, damage or disruption to Company or third-party systems or the unauthorized access to, exposure of, personal or confidential information.

There are many approaches through which such systems could be damaged or disrupted, or information exposed or accessed, including through system vulnerabilities, improperly obtaining and using user credentials or the misuse of authorized user access.

In the past, the Company and its third-party vendors have experienced other data security incidents resulting from unauthorized access to the Company's systems and other fraudulent activities.

The Company has transitioned a significant number of the Company’s employee population to a remote work environment in an effort to mitigate the spread of COVID-19.

The damage or disruption to Company or third-party systems, or unauthorized access to, or exposure of, personal or confidential information, could harm the Company’s operations, reputation and brand, resulting in a loss of business or revenue.

It could also subject the Company to government sanctions, litigation from candidates, contractors, clients, and employees, and legal liability under its contracts, resulting in increased costs or loss of revenue.

The Company may also incur additional expenses, such as the cost of remediating incidents or improving security measures, the cost of identifying and retaining replacement vendors, increased costs of insurance, or ransomware payments.

Cybersecurity threats continue to increase in frequency and sophistication, thereby increasing the difficulty of detecting and defending against them.

Furthermore, the potential risk of security breaches and cyberattacks may increase as the Company introduces new service offerings.

Any future events impacting the Company or its third-party vendors that damages or interrupts the Company's or its third party vendors’ systems or exposes data or other confidential information could have a material adverse effect on our operations, reputation, and financial results.

Changes in data privacy and protection laws and regulations in respect of control of personal information (and the failure to comply with such laws and regulations) could increase the Company’s costs or otherwise adversely impact its operations, financial results, and reputation.

In the ordinary course of business, the Company collects, uses, and retains personal information from its clients, employees, employment candidates, and contractors, including, without limitation, full names, government-issued identification numbers, addresses, birthdates, and payroll-related information.

The possession and use of personal information in conducting the Company’s business subjects it to a variety of complex and evolving domestic and foreign laws and regulations regarding data privacy, which, in many cases, apply not only to third-party transfers, but also to transfers of information among the Company and its subsidiaries.

For example, the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, imposes specific operational requirements for entities processing personal information, including requirements for data transfers to certain countries outside the European Union, and strong enforcement authorities and mechanisms.

Risks Related to the Company’s Internal Controls and Accounting Policies

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The Company’s processes, corporate culture and general ethical climate may not be sufficient to ensure timely identification and escalation of significant risk issues.

Risks Associated With the Effects of Climate Change

The physical effects of climate change could have a material adverse effect on our operations and business.

To the extent climate change causes changes in weather patterns, certain regions where we operate could experience increases in storm intensity, extreme temperatures, wildfires, rising sea-levels and/or drought.

Over time, these conditions could result in increases in our operating costs or business interruptions.

For example, our headquarters is located in an area of California where the incidence of wildfire has increased over time and may continue to increase.

There can be no assurance that climate change will

not have a material adverse effect on our properties, operations or business.

In addition, we are in the process of establishing certain emissions targets and other environmental goals.

Failure to achieve such goals, or a perception (whether valid or invalid) of our failure to achieve such goals, could result in market, reputational, regulatory or liability risks, client dissatisfaction, reduced revenue and profitability or shareholder lawsuits.

If we are unable to achieve our environmental goals, our business and reputation may be adversely affected.

General Risk Factors

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What changed 10-K

Item 1A. Risk Factors