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Risks

• Adverse economic conditions could negatively affect our industry, business, and results of operations.
• The economic impact of the COVID-19 pandemic is adversely affecting our business. The current pandemic may have, and a future outbreak of other highly infectious or contagious diseases could have, a material and adverse impact on our business, results of operations, financial condition and cash flows.
• Geographic market concentration makes our results of operations vulnerable to regional economic factors.
• We assume liability for WSEE payroll, payroll taxes, benefits costs and workers’ compensation costs and are responsible for their payment regardless of the amount billed to or paid by our clients.
• Increases in health insurance costs or our inability to secure replacement health insurance coverage on competitive terms could have a material adverse effect on our business, financial condition or results of operations.
• Health care reform could affect our health insurance plan and could lead to a significant disruption in our business.
• Increases in workers’ compensation costs or inability to secure replacement coverage on competitive terms could lead to a significant disruption to our business.
• Our ability to adjust and collect service fees for increases in unemployment tax rates may be limited.
• Many of our contracts for our PEO HR Outsourcing solutions may be canceled on short notice. Our inability to renew client contracts or attract new clients could materially and adversely affect our financial conditions or results of operations.
• Our loss of insurance coverage, the failure of our insurance carriers or increased insurance costs or deductibles could have a material adverse effect on us.
• A determination that a client is liable for employment taxes not paid by a PEO may discourage clients from contracting with us in the future.
• New and higher federal, state and local taxes could have a material adverse impact on our financial condition and results of operations.
• We may be subject to liabilities for client and employee actions.
• Changes in federal, state and local regulation or our inability to obtain licenses under new regulatory frameworks could have a material adverse effect on our results of operations or financial condition.
• Competition and other developments in the HR services industry may impact our growth and/or profitability.
• Evolving regulations, market trends and client expectations require us to constantly enhance and expand our service and technology offerings.
• Disruptions of our information technology systems could damage our reputation and materially disrupt our business operations.
• We could be subject to reduced revenues, increased costs, liability claims, or harm to our competitive position as a result of data theft, cyberattacks or other security vulnerabilities.
• Failure to comply with privacy, data protection and cybersecurity laws and regulations could have a material adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.
• The failure of third-party providers, such as financial institutions, data centers or cloud-service providers, could have a material adverse effect on us.
• Failure to integrate or realize the expected return on our acquisitions and investments could have a material adverse impact on our financial condition or results of operations.