TriNet Group Stock

TriNet Group, Inc. (TriNet) provides comprehensive and flexible human capital management (HCM) solutions designed to address a wide range of small and medium-size business (SMB) needs as they change over time.

The company’s flexible HCM solutions free SMBs from HR (human resources) complexities and empower SMBs to focus on what matters most - growing their business and enabling their people.

TriNet offers access to human capital expertise, benefits, payroll, risk mitigation and compliance, all enabled by industry leading technology capabilities. TriNet's suite of products also includes services and software-based solutions to help streamline workflows by connecting HR, benefits, payroll, time and attendance, and employee engagement. Clients can use the company’s industry tailored PEO services and technology platform to receive the full benefit of the company’s HCM services enabling their WSEs to participate in its TriNet-sponsored employee benefit plans. Clients can alternatively choose to use the company’s self-directed, cloud-based HRIS software solution and add HR services, such as payroll and access to benefits management as needed. By providing PEO and HRIS services, the company can support a wider range of SMBs and create a pipeline of HRIS clients that may be able to benefit from and transition to TriNet’s higher-touch PEO services at future points in their business lifecycle. In order to better serve TriNet’s customers throughout their business lifecycle, the company is investing in its technology platform so that it can accommodate both PEO and HRIS customers.

The company owns registered trademarks in the United States, Australia, Canada, the United Kingdom, and the European Union covering the company’s name and other trademarks and logos that are materially important to its operations.

Service Models

The company delivers a comprehensive suite of HCM services that help its clients administer and manage various HR-related needs and functions, such as compensation, benefits, payroll processing, tax credit support, employee data, health insurance, workers' compensation, EPLI (employment practices liability insurance) and other employment risk mitigation programs, employee performance management and training, on-boarding and off-boarding, and other transactional HR needs using the company’s PEO (professional employer organization) and HRIS (human resources information system) technology platforms and the company’s HCM, benefits and compliance expertise.

The company delivers its services through two primary models, higher-touch PEO services and the company’s more self-directed HRIS services.

PEO Services

TriNet has historically focused almost exclusively on the PEO business and PEO services remain the company’s core business. The company’s PEO services offer clients its most complete HCM solution generally, including all of the services described below. The company leverages its scale and industry HR experience to deliver its PEO service offerings tailored for SMBs in specific industry verticals. The company’s vertical approach is a key differentiator for the company and creates additional value for its clients by addressing their industry-specific HR needs. The company offers six industry-tailored vertical PEO services: TriNet Financial Services, TriNet Life Sciences, TriNet Main Street, TriNet Nonprofit, TriNet Professional Services, and TriNet Technology.

HRIS Services

The company’s HRIS services primarily consists of its self-directed, cloud-based HRIS software solution which allows clients to manage their HR needs and the option to add tools, such as payroll processing and benefits management to provide HCM solutions that flex dynamically over time based on the needs of the company’s clients. The company’s HRIS services do not include access to its co-employment services, or access to the company’s TriNet sponsored health benefit plans. However, these services can also include tax credit support via the company’s TriNet Clarus R+D team, additional cloud-based software integrations and incremental administrative services.

Services

The company’s comprehensive HR solutions include the following capabilities:

HR Expertise

The company uses the collective knowledge and experience of its teams of HR, benefits, payroll, risk management and compliance professionals to help its PEO and HRIS clients manage many of the administrative, regulatory and practical requirements associated with being employers. The company does this by incorporating its knowledge and experience into the company’s services and its technology platforms and by making the company’s professionals available to consult with clients on a variety of HR needs, including talent management, retention and terminations, benefits enrollment, immigration and visas, payroll tax credits, employment compliance and regulatory developments and many other industry-specific and general HR topics. Depending on their needs, the company’s clients, WSEs and HRIS Users have access to varying levels of service and support from the company’s professionals, ranging from call center support to pooled HR resources. The company’s professionals also provide additional specialized HR consulting services upon request.

Benefit Options

In the company’s PEO business, the company utilizes its scale to provide its WSEs access to a broad range of TriNet-sponsored employee benefit and insurance programs with choice and at costs that most of the company’s clients would be unable to obtain on their own. The company’s TriNet-sponsored programs help its PEO clients compete for talent against larger businesses. The company’s benefit and insurance programs are designed to comply with federal, state and local regulations; and the company’s benefit and insurance service offerings include plan selection and administration, enrollment management, leave management, plan document distribution and WSE and client communications.

Under these benefit and insurance programs, the company pays third-party insurance carriers for WSE insurance benefits and reimburse insurance carriers or third-party administrators for claims payments within the company’s insurance deductible layer, where applicable.

The company sponsors and administers several employee benefit plans for the company’s WSEs through a broad range of carriers, including group health, dental, vision, short- and long-term disability, and life insurance as an employer plan sponsor under Section 3(5) of ERISA. The company also provides for other benefit programs to be made available to WSEs, including flexible spending accounts, health savings accounts, retirement benefits, COBRA benefits, supplemental insurance, commuter benefits, home insurance, critical illness insurance, accident insurance, hospital indemnity, pet insurance, and auto insurance.

The company also offers PEO clients the option to obtain their own client-sponsored benefits through the company’s OMS product family. The company’s OMS clients receive PEO services like HR, payroll, payroll tax, and risk management from TriNet while sponsoring their own health benefits obtained through a broker.

The company’s HRIS clients use its HRIS software solution to manage their own selected group health plans. For the company’s HRIS clients, it provides access to benefit programs for HRIS Users where the company is not an employer plan sponsor under ERISA, such as flexible spending accounts, health savings accounts, retirement benefits, COBRA benefits, supplemental insurance, commuter benefits, critical illness insurance, accident insurance, and hospital indemnity.

Payroll Services

The company helps its PEO and HRIS clients manage their employee compensation by providing multi-state payroll processing, tax administration and tax credit services and other payroll-related services, such as time and attendance management, time off and overtime tracking, and expense management solutions. The company’s clients, WSEs, and HRIS Users can access payroll and tax information using the company’s various online and mobile tools. The company’s payroll tax administration and tax credit services include calculating, withholding, remitting and reporting certain federal, state and local payroll and unemployment taxes on behalf of clients, WSEs, and HRIS Users. While all of the company’s PEO clients receive payroll and payroll tax administration tax services, the company’s HRIS clients can choose whether to manage these services themselves.

Through TriNet Clarus R+D, the company also help SMBs take advantage of federal and state payroll tax credits, particularly PATH Act R&D tax credits, one of the largest payroll tax incentives available to the U.S. businesses. TriNet Clarus R+D uses a proprietary software solution and payroll tax experts to support clients and help them determine their tax credits. SMBs do not need to use TriNet’s PEO or HRIS services to use TriNet Clarus R+D's tax credit services.

Risk Mitigation

The company monitors employment-related legal and regulatory developments at the federal, state, and local levels to help the company’s PEO and HRIS clients comply with employment laws and mitigate many of the risks associated with being an employer. The company provides HR guidance on employment laws and regulations, such as those relating to minimum wage, unemployment insurance, family and medical leave and anti-discrimination. For the company’s PEO clients, the company also ensures that its TriNet-sponsored benefit plans comply with applicable laws and regulations, like the ACA, reducing this compliance burden to its clients.

The company’s PEO services provide fully-insured workers' compensation insurance coverage for its clients and WSEs through insurance policies that the company negotiates with third-party insurance carriers. The company manages the deductible risk that it assumes in connection with these policies by being selective in the types of businesses that the company takes on as new clients, and by monitoring claims data and performance of the company’s carriers and third-party claims management service providers. In addition, the company advises clients on workers’ compensation best practices, including by performing workplace assessment consultations and assisting with client efforts to identify conditions or practices that might lead to employee injuries.

The company also provides EPLI coverage for its PEO clients through an insurance policy that the company obtains from a third-party EPLI carrier. This policy provides coverage for certain claims that arise in the course of the employment relationship, such as discrimination, harassment, and certain other employee claims, with a per-claim retention amount. The retention amount under this policy, which functions like a deductible, is allocated on a pre-determined basis between the client and TriNet. The company’s professionals assist its clients in implementing HR best practices to help avoid and reduce the cost of employment-related liabilities. The company’s preferred outside employment law firms defend covered EPLI claims.

Technology Platform

The company uses separate technology platforms for its PEO and HRIS clients. The company’s PEO technology platform includes online and mobile tools that allow the company’s clients and WSEs to store, view, and manage HR information and administer a variety of HR transactions, such as payroll processing, tax administration, tax credits, employee onboarding and termination, employee performance, time and attendance, compensation reporting, expense management, and benefits enrollment and administration. The company’s online tools also incorporate workforce analytics, allowing PEO clients to generate HR, payroll, total compensation and other custom reports.

The company’s HRIS software allows its HRIS clients to manage most of the same functions as the company’s PEO technology platform and it is optimized to provide HRIS clients with customizable and flexible reporting tools and analytics to fit specific client needs. The company’s TriNet Clarus R+D tax credit services use a proprietary cloud-based software platform to simplify and support various state and federal tax credits for SMBs.

PEO Co-Employment Model

The company’s PEO services operate using a co-employment model, under which employment-related responsibilities are allocated by contract between the company and its PEO clients. The co-employment model allows WSEs to receive the full benefit of the company’s services, including providing WSEs with access to TriNet-sponsored employee benefit plan offerings. Each of the company’s PEO clients enters into a client service agreement with the company that defines the suite of services and benefits to be provided by the company, the fees payable to the company, and the division of responsibilities between the company and its clients as co-employers. WSEs also separately acknowledge the co-employment relationship and the allocation of employment-related responsibilities between TriNet and the client co-employer. The division of responsibilities under the company’s client service agreements is typically as follows:

TriNet Responsibilities

The company generally assumes responsibility for, and manage certain risks associated with:

Payments of salaries, wages and certain other compensation to WSEs from the company’s own bank accounts (based on client reports and payments), including the processing of garnishment and wage deduction orders,

Reporting of wages, withholding and deposit of associated payroll taxes as the employer of record,

Provision and maintenance of workers' compensation insurance and workers' compensation claims processing,

Access to, and administration of, group health, welfare, and retirement benefits to WSEs under TriNet-sponsored benefit plans,

Compliance with applicable law for certain TriNet-sponsored employee benefits offered to WSEs,

Administration of unemployment claims and post-employment COBRA benefits, and

Provision of various HR policies and agreements, including employee handbooks and worksite employee agreements describing the co-employment relationship.

Client Responsibilities

The company’s clients are responsible for employment-related responsibilities that the company does not specifically assume, generally including:

Day-to-day management of their worksites and WSEs,

Compliance with laws associated with the classification of employees as exempt or non-exempt, such as overtime pay and minimum wage law compliance,

Accurate and timely reporting to TriNet of compensation and deduction information, including information relating to hours worked, rates of pay, salaries, wages and other compensation, and work locations,

Accurate and timely reporting to TriNet of information relating to workplace injuries, employee hires and termination, and certain other information relevant to TriNet’s services,

Provision and administration of any employee benefits not provided by TriNet, such as equity incentive plans,

Compliance with all laws and regulations applicable to the clients' workplace and business, including work eligibility laws, laws relating to workplace safety or the environment, laws relating to family and medical leave, laws pertaining to employee organizing efforts and collective bargaining and employee termination notice requirements,

Payment of TriNet invoices, which include salary, wages and other relevant compensation to WSEs and applicable employment taxes and service fees, and

All other matters for which TriNet does not assume responsibility under the client service agreement, such as intellectual property ownership and protection and liability for products produced and services provided by the client company to its own clients.

As a result of co-employment relationships for PEO services, the company is liable for payment of salary, wages and certain other compensation to the WSEs as reported and paid to the company by its client, and the company is responsible for providing specified employee benefits to such persons to the extent provided in each client service agreement and under federal and state law. In most instances, clients are required to remit payment prior to the applicable payroll date by wire transfer or ACH.

For the company’s PEO services, the company also assumes responsibility for payment and liability for the withholding and remittance of federal and state income and employment taxes with respect to salaries, wages and certain other compensation paid to WSEs, although the company reserves the right to seek recourse against the company’s clients for any liabilities arising out of their conduct. The company performs these functions as the statutory employer for federal employment tax purposes, since the company’s clients transfer legal control over these payroll functions to the company. The laws that govern the payment of salaries, wages and related payroll taxes for the company’s WSEs are complex and the various federal, state and local laws that govern such payments can vary significantly. Based on applicable law in any jurisdiction, the company or its client may be held ultimately liable for those obligations if the company fails to remit taxes.

The company’s HRIS services do not involve co-employment, and this reduces the responsibility and liability that the company assumes when providing these services. For example, while the company’s software may facilitate payroll processing for HRIS clients, TriNet is not the employer of record and acts only in a software provider role. HRIS clients generally remain responsible for, among other things, payroll funding, workers’ compensation insurance, obtaining and administering group health, welfare and retirement benefits, administering unemployment claims, and in some cases payroll tax reporting. The higher level of responsibility that the company’s PEOs assume, and risks that its PEOs manage, for the company’s PEO clients is a key differentiator between the company’s PEO and HRIS services.

Technology and Service Development Efforts

The company continued to make significant investments in its PEO and HRIS technology platforms. These investments are intended to provide the company’s clients, WSEs, and HRIS Users with enhanced functionality, ease of use, HR management options, security and an optimized user experience. The company intends to continue making these and other similar investments in 2024 and beyond. The continued investment in improving the company’s technology will improve client retention and satisfaction over the long term.

In 2023, the company began combining its PEO and HRIS technology platform into a single modern cloud-based platform that can support all of the company’s customers with a technology that enables more self-service capabilities. By creating these new cloud-based services the company is able to invest in common services that can benefit both the company’s PEO and HRIS customers. These cloud services are easier to deploy, modify and maintain which will allow the company, over time, to achieve faster time to market. The first services on this next generation cloud-based platform went live in 2023 and as the company continues to bring more innovation to its entire customer base the company expects that its investment and prioritization in this area will increase. This will enable the company to service SMBs throughout a larger portion of their lifecycle. Additionally, the company’s TriNet Clarus R+D cloud-based software platform allows the company to serve its existing SMB clients and to serve SMBs that are not a client of the company’s PEO or HRIS services with tax credit support services. The services the company provides through its HRIS and TriNet Clarus R+D software platforms create a potential pipeline of SMB clients that may benefit from, and transition to, TriNet’s higher-touch PEO services at future points in their lifecycle.

In 2023, TriNet moved all of the company’s applications, computing and storage to the cloud in a multi-cloud strategy which enabled the shutdown of all on-premise data centers. This cloud migration will enable TriNet to deploy solutions quickly and manage costs effectively by taking advantage of the ability to expand or change with the company’s growing needs while allowing its colleagues to focus on high value activities in the support of the company’s customers. This strategy is aligned with the company’s sustainability goals to reduce waste and improve energy consumption.

Clients and Geographies

The company’s clients are distributed across a variety of industries. The company supports these different clients using its suite of HCM offerings. The company’s PEO clients generally execute annual service contracts with the company that automatically renew. The company’s HRIS clients execute contracts with monthly or annual terms and clients can typically cancel these contracts with 30 days’ notice to the company. In some cases, the company’s clients may incur fees associated with early termination.

The company’s top five PEO markets are California, New York, Florida, Texas and Massachusetts, which account for approximately 64% of the company’s total WSEs for the year ended December 31, 2023. Nearly all of the company’s revenues are generated within the United States and its territories and substantially all the company’s long-lived assets are located in the United States.

Sales and Marketing Organizations

The company sells its solutions primarily online and through the company’s direct sales organization. The company has aligned the company’s PEO sales organization by industry vertical with the intention of growing profitable market share in targeted industries. The company’s PEO vertical approach deepens its network of relationships and gives the company an understanding of the unique HR needs facing SMBs in those industries. The company’s sales representatives are supported by marketing, lead generation efforts, and referral sources and networks. The company increasingly uses technology and remote communication tools to engage with customers and prospects virtually.

The company typically sponsors and participates in associations and events around the country to promote the company’s PEO and HRIS services and the company also utilizes these forums to target specific vertical and geographic markets. Events include the company’s 4th TriNet PeopleForce conference, and informational webinars periodically throughout the year on a wide variety of business topics relevant to the company’s SMB prospects and clients. The company also generates sales opportunities, and promotes brand awareness, client retention, and builds the company’s reputation as HCM thought leaders, within key industry verticals, through marketing alliances and other indirect channels, such as accounting firms, venture capital firms, incubators, insurance brokers, and vertical market industry associations. Additionally, the company utilizes digital marketing programs, including digital advertising, search and email marketing, to create awareness and interest in all of the company’s services.

The company’s marketing and corporate communications organization is charged with driving overall brand awareness, managing lead generation, creating and managing the company’s website and other online properties, creating content for all marketing and communication channels including the company’s outbound and inbound marketing efforts, media relations, and managing the company’s sponsorships, major marketing events, and internal and external communications. SMBs are increasingly using digital tools like tele-presence and web engagements and the company works to engage with SMBs in these ways. In 2023, the company continued to use numerous digital channels for engagement, including conversational marketing enhancements on the company’s website. The company’s marketing team also focused on strategic marketing, communications via social media, branding initiatives, and crisis communication plans, in part by augmenting the company’s comprehensive company brand campaign, Incredible Starts Here, with the company’s marketing campaign, People Matter, that included omni-channel initiatives using social media, digital, television, radio and out-of-home media.

Competition

The company’s PEO service competitors include large PEOs such as the TotalSource unit of Automatic Data Processing, Inc., the PEO operations of Paychex, Inc. and Insperity, Inc., as well as numerous specialized and smaller PEOs and similar HR service providers with PEO operations.

The company’s HRIS service competitors include software and HCM service providers such as Rippling, Gusto, Automatic Data Processing, Inc. and Bamboo in addition to smaller national and local providers.

The company’s tax credit services face competition from large CPA firms, such as PwC, Ernst &Young, Moss Adams, and KPMG and smaller software companies and CPA firms, such as alliantgroup, Ardius, Cherry Bekaert and Eide Bailly.

Laws and Regulations

As part of the company’s PEO services, the company sponsors employee benefit plan offerings as the employer of the company’s WSEs under the Internal Revenue Code of 1986, as amended (the ‘Code’), ERISA and applicable state law.

Because TriNet sponsored health plans are covered entities under HIPAA, the company is required to comply with HIPAA's portability, privacy, and security requirements. The company is also subject, among other applicable federal laws, rules and regulations, to the rules and regulations promulgated under the authority of the Federal Trade Commission.

Many of the company’s SMB clients require that the company supports these programs. Examples of these programs include the federal 2015 PATH Act, CARES Act and FFCRA Act.

Seasonality

The company’s business is affected by seasonality in client business activity, hiring and benefit selections, health claims costs and payroll taxes:

PEO clients generally change their payroll service providers at the beginning of the payroll tax and benefits enrollment year; as a result, the company has historically experienced the company’s highest volumes of new clients joining and terminating clients in the month of January. The company’s HRIS clients are generally less affected by these considerations.

WSEs select the company’s TriNet-sponsored benefit plans during their respective open enrollment periods, which occur throughout the year (year ended December 2023). The company generally experiences the largest proportion of WSE benefit changes in the first and second quarters.

Health claims costs tend to increase throughout the year as the utilization of medical services above each WSE's deductible causes the company’s insurance costs to increase. In addition, the overall use of medical services by WSEs, including elective procedures, tends to increase later in the calendar year.

History

The company was founded in 1988. It was incorporated in 1988 as TriNet Employer Group, Inc., a California corporation. The company was reincorporated as TriNet Merger Corporation, a Delaware corporation, in 2000. Further, the company changed its name to TriNet Group, Inc. in 2000.