TRINET GROUP INC (Form: 10-Q, Received: 10/29/2018 17:13:21)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36373

TRINET GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)



Delaware		95-3359658
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
One Park Place, Suite 600, Dublin, CA		94568
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (510) 352-5000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o (do not check if a smaller reporting company)	Smaller reporting company	o

Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of Registrant’s Common Stock outstanding as of October 22, 2018 was 70,444,420 .

TRINET GROUP, INC.

Form 10-Q - Quarterly Report

For the Quarterly Period Ended September 30, 2018

TABLE OF CONTENTS



	Form 10-Q Cross Reference	Page
Unaudited Condensed Consolidated Financial Statements	Part I, Item 1.	25
Condensed Consolidated Balance Sheets		25
Condensed Consolidated Statements of Income and Comprehensive Income		26
Condensed Consolidated Statements of Cash Flows		27
Notes to Condensed Consolidated Financial Statements		28
Management’s Discussion and Analysis of Financial Condition and Results of Operations	Part I, Item 2.	4
Quantitative and Qualitative Disclosures About Market Risk	Part I, Item 3.	24
Controls and Procedures	Part I, Item 4.	24
Legal Proceedings	Part II, Item 1.	45
Risk Factors	Part II, Item 1A.	45
Unregistered Sales of Equity Securities and Use of Proceeds	Part II, Item 2.	45
Defaults Upon Senior Securities	Part II, Item 3.	45
Mine Safety Disclosures	Part II, Item 4.	45
Other Information	Part II, Item 5.	45
Exhibits	Part II, Item 6.	46



FORWARD LOOKING STATEMENTS AND OTHER FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements and Other Financial Information

For purposes of this Quarterly Report on Form 10-Q (Form 10-Q), the terms “TriNet,” “the Company,” “we,” “us” and “our” refer to TriNet Group, Inc., and its consolidated subsidiaries. This Form 10-Q contains statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “design,” “estimate,” “expect,” “forecast,” “hope,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements.

Forward-looking statements are not guarantees of future performance, but are based on management’s expectations as of the date of this Form 10-Q and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past results, performance or achievements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements are discussed throughout our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (SEC) on February 27, 2018 (2017 Form 10-K), including those appearing under the heading “Risk Factors” in Item 1A, and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A) in Item 7 of our 2017 Form 10-K, as well as in our other periodic filings with the SEC. Those factors could cause our actual results to differ materially from our anticipated results. The information provided in this Form 10-Q is based upon the facts and circumstances known as of the date of this Form 10-Q, and any forward-looking statements made by us in this Form 10-Q speak only as of the date of this Form 10-Q. We undertake no obligation to revise or update any of the information provided in this Form 10-Q, except as required by law.

The MD&A of this Form 10-Q includes references to our performance measures presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plans. Refer to the Non-GAAP Financial Measures in our Key Financial and Operating Metrics section within our MD&A for definitions and reconciliations from GAAP measures.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Overview

TriNet is a leading provider of human resources (HR) solutions for small to midsize businesses (SMBs). Under our co-employment model, we assume certain of the responsibilities of being an employer and help our clients mitigate employer-related risks and manage many of the complex and burdensome administrative and compliance responsibilities associated with employment.

Our solutions include payroll processing, tax administration, access to employee benefits and an HR technology platform with online and mobile tools that allow our clients and worksite employees (WSEs) to store, view and manage their core HR-related information and efficiently conduct a variety of HR-related transactions anytime and anywhere.

Significant Developments in 2018

Our consolidated results for the nine months ended September 30, 2018 reflect continued progress in marketing and selling our industry-oriented (vertical) products and in our insurance service offerings, combined with higher WSE enrollment growth within our insurance offerings.

We experienced a decline in Average WSEs (defined as average monthly WSEs paid during the period) for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 primarily due to client attrition, including attrition from migrating certain of our clients from our legacy (SOI) platform onto our common TriNet platform, partially offset by growth in our other verticals.

In summary we:


•	Launched TriNet Professional Services and completed the migration of existing clients from our SOI platform onto our common TriNet platform,


•	Continued to invest in our efforts to enhance our clients' experience through operational and process improvements,


•	Improved sales representative retention and launched a marketing and branding campaign in September 2018 to further augment our sales force efforts,


•	Invested corporate funds to generate interest income and refinanced term loans during the second quarter of 2018,


•	Continued to benefit from changes for one of our health insurance carrier contracts, where we converted from a guaranteed-cost to risk-based plan in late 2017,


•	Continued to invest in improving our internal control environment to support our ongoing compliance with the requirements of the Sarbanes-Oxley Act of 2002 (SOX), and


•	Received IRS designation as a Certified Professional Employer Organization on July 1, 2018 for a TriNet subsidiary.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Performance Highlights

Q3 2018

During the third quarter of 2018 , we:


•	Served approximately 16,400 clients and co-employed Average WSEs of approximately 318,000 , a 2% decrease compared to the same period in 2017 and


•	Processed approximately $8.7 billion in payroll and payroll tax payments for our clients, an increase of 8% compared to the same period in 2017 .

Our financial highlights for the third quarter of 2018 , compared to the same period in 2017 , include:


•	Total revenues increased 7% to $875 million and Net Service Revenues increased 11% to $228 million ,


•	Operating income decreased 1% to $62 million ,


•	Our effective income tax rate decreased to 16% ,


•	Net income increased 20% to $51 million , or $0.71 per diluted share and Adjusted Net Income increased 35% to $55 million , and


•	Adjusted EBITDA increased 9% to $88 million .

YTD 2018

During the nine months ended September 30, 2018 , we:


•	Co-employed Average WSEs of approximately 315,500 , a 3% decrease compared to the same period in 2017 and


•	Processed approximately $27.4 billion in payroll and payroll tax payments for our clients, an increase of 6% compared to the same period in 2017 .

Our financial highlights for the nine months ended September 30, 2018 , compared to the same period in 2017 , include:


•	Total revenues increased 7% to $2.6 billion and Net Service Revenues increased 10% to $668 million ,


•	Operating income increased 24% to $209 million ,


•	Our effective income tax rate decreased to 18% ,


•	Net income increased 46% to $163 million , or $2.25 per diluted share and Adjusted Net Income increased 62% to $176 million , and


•	Adjusted EBITDA increased 28% to $277 million .



MANAGEMENT'S DISCUSSION AND ANALYSIS

Key Financial and Operating Metrics

The following key financial and operating metrics should be read in conjunction with our condensed consolidated financial statements and related notes included in this Form 10-Q.



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except per share and WSE data)	2018		2017		% Change		2018		2017		% Change
Income Statement Data:
Total revenues	$	875	$	818	7	%	$	2,586	$	2,427	7	%
Operating income	62		63		(1	)	209		169		24
Net income	51		43		20		163		112		46
Diluted net income per share of common stock	0.71		0.60		18		2.25		1.57		43
Non-GAAP measures ⁽¹⁾ :
Net Service Revenues	228		205		11		668		605		10
Net Insurance Service Revenues	109		93		17		305		264		15
Adjusted EBITDA	88		80		9		277		216		28
Adjusted Net Income	55		41		35		176		109		62

Operating Metrics:
Total WSEs payroll and payroll taxes processed	$	8,669	$	8,061	8	%	$	27,360	$	25,835	6	%
Average WSEs	318,129		324,043		(2	)	315,512		325,347		(3	)


(1)	Refer to Non-GAAP Financial Measures section below for definitions and reconciliations from GAAP measures.



	Nine Months Ended September 30,						%
(in millions, except operating metrics data)	2018			2017			Change
Operating Metrics:
Total WSEs at period end	317,496			325,138			(2	)	%
Cash Flow Data:
Net cash used in operating activities ⁽¹⁾	$	(476	)	$	(141	)	236
Net cash used in investing activities	(169		)	(15		)	1,045
Net cash used in financing activities	(62		)	(65		)	(4	)


(1)	Prior year balance has been retrospectively adjusted for Accounting Standards Update (ASU) 2016-18.



(in millions)	September 30, 2018		December 31, 2017		% Change
Balance Sheet Data:
Cash and cash equivalents	$	237	$	336	(29	)	%
Working capital	226		234		(3	)
Total assets	2,104		2,593		(19	)
Notes payable	418		423		(1	)
Total liabilities	1,754		2,387		(27	)
Total stockholders’ equity	350		206		70

Non-GAAP Financial Measures

In addition to financial measures presented in accordance with GAAP, we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources, and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long-term and provide useful information that we use in order to maintain and grow our business.

The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute, for the directly comparable financial measures prepared in accordance with GAAP.



MANAGEMENT'S DISCUSSION AND ANALYSIS



Non-GAAP Measure	Definition	How We Use The Measure
Net Service Revenues	• Sum of professional service revenues and Net Insurance Service Revenues, or total revenues less insurance costs.	• Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes. • Acts as the basis to allocate resources to different functions and evaluates the effectiveness of our business strategies by each business function. • Provides a measure, among others, used in the determination of incentive compensation for management.
Net Insurance Service Revenues	• Insurance revenues less insurance costs.	• Is a component of Net Service Revenues. • Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes. Promotes an understanding of our insurance services business by evaluating insurance service revenues net of our WSE related costs which are substantially pass-through for the benefit of our WSEs. Under GAAP, insurance service revenues and costs are recorded gross as we have latitude in establishing the price, service and supplier specifications. • We also sometimes refer to Net Insurance Service Margin, which is the ratio of Net Insurance Revenue to Insurance Service Revenue.
Adjusted EBITDA	• Net income, excluding the effects of: - income tax provision, - interest expense, - depreciation, - amortization of intangible assets, and - stock-based compensation expense.	• Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-cash charges such as depreciation and amortization, and stock-based compensation recognized based on the estimated fair values. We believe these charges are not directly resulting from our core operations or indicative of our ongoing operations. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. • Provides a measure, among others, used in the determination of incentive compensation for management. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to Net Service Revenue.
Adjusted Net Income	• Net income, excluding the effects of: - effective income tax rate ⁽¹⁾ , - stock-based compensation, - amortization of intangible assets, - non-cash interest expense ⁽²⁾ , and - the income tax effect (at our effective tax rate ⁽¹⁾ ) of these pre-tax adjustments.	• Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.


(1)	We have adjusted the non-GAAP effective tax rate to 26% for 2018 from 41% for 2017 due primarily to a decrease in the statutory rate from 35% to 21%. These non-GAAP effective tax rates exclude the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.


(2)	Non-cash interest expense represents amortization and write-off of our debt issuance costs.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Reconciliation of GAAP to Non-GAAP Measures

The table below presents a reconciliation of Total revenues to Net Service Revenues:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2018		2017		2018		2017
Total revenues	$	875	$	818	$	2,586	$	2,427
Less: Insurance costs	647		613		1,918		1,822
Net Service Revenues	$	228	$	205	$	668	$	605

The table below presents a reconciliation of Insurance service revenues to Net Insurance Service Revenues:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017
Insurance service revenues	$	756		$	706		$	2,223		$	2,086
Less: Insurance costs	647			613			1,918			1,822
Net Insurance Service Revenues	$	109		$	93		$	305		$	264
Net Insurance Service Revenue Margin	14		%	13		%	14		%	13		%

The table below presents a reconciliation of Net income to Adjusted EBITDA:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017
Net income	$	51		$	43		$	163		$	112
Provision for income taxes	9			15			36			44
Stock-based compensation	12			8			31			21
Interest expense and bank fees	5			5			17			15
Depreciation	10			8			26			20
Amortization of intangible assets	1			1			4			4
Adjusted EBITDA	$	88		$	80		$	277		$	216
Adjusted EBITDA Margin	38		%	39		%	41		%	36		%

The table below presents a reconciliation of Net income to Adjusted Net Income:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017
Net income	$	51		$	43		$	163		$	112
Effective income tax rate adjustment	(6		)	(8		)	(16		)	(19		)
Stock-based compensation	12			8			31			21
Amortization of intangible assets	1			1			4			4
Non-cash interest expense	—			1			4			2
Income tax impact of pre-tax adjustments	(3		)	(4		)	(10		)	(11		)
Adjusted Net Income	$	55		$	41		$	176		$	109



MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations

Operating Metrics

Worksite Employees (WSE)

Average WSE growth is a volume measure we use to monitor the performance of our business. Average WSEs decreased 2% in the third quarter of 2018 and decreased 3% in the nine months ended September 30, 2018 , compared to the same respective periods in 2017. The declines in Average WSEs during the third quarter and nine months ended September 30, 2018 compared to the same periods in 2017 were the result of attrition, including attrition from migrating certain of our clients to our common platform, partially offset by WSE growth due to new sales and hiring within our installed base.

Total WSE, defined as WSEs paid at period end, comparisons have served as an indicator of our success in growing our business and retaining clients. Anticipated revenues for future periods can diverge from Total WSEs due to pricing differences across our HR solutions and insurance service offerings and the degree to which clients and WSEs elect to participate in our solutions.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Revenues and Income

Our revenues consist of professional service revenues (PSR) and insurance service revenues (ISR). PSR represent fees charged to clients for processing payroll-related transactions on behalf of our clients, access to our HR expertise, employment and benefit law compliance services, and other HR-related services. ISR consist of insurance-related billings and administrative fees collected from clients and withheld from WSEs for workers' compensation insurance and health benefit insurance plans provided by third-party insurance carriers.

In addition to focusing on growing our Average WSE and Total WSE counts, we also focus on pricing strategies and product differentiation to expand our revenue opportunities. Monthly total revenues per Average WSE, as a measure to monitor the success of such strategies, increased 9% in the third quarter of 2018 and increased 10% in the nine months ended September 30, 2018 compared to the same periods in 2017 , respectively.

Q3 2018 - Q3 2017 Commentary

Total revenues were $875 million for the third quarter of 2018 , a 7% increase compared to the same period in 2017 .


•	PSR increased 6% compared to the same quarter in 2017 to $119 million due primarily to rate increases.


•	ISR increased 7% compared to the same quarter in 2017 to $756 million due primarily to an increase in WSEs electing to participate in our insurance services.

Operating income was $62 million in the third quarter of 2018, a decrease of $1 million or 1% compared to the third quarter of 2017 , primarily as a result of:


•	an increase of $22 million in other operating expenses (OOE) which includes $10 million of anticipated costs associated with our marketing campaign and additional investment in operational and process improvements,


•	partially offset by an increase of $23 million in total revenues less insurance costs due to:


•	favorable experience from the change in the economic arrangement with one of our carriers from a guaranteed cost contract to a risk-based contract, and


•	favorable experience with other risk-based contracts, including favorable prior period development of $4 million in workers' compensation insurance costs.



MANAGEMENT'S DISCUSSION AND ANALYSIS

YTD 2018 - YTD 2017 Commentary

Total revenues were $2.6 billion for the nine months ended September 30, 2018 , a 7% increase compared to the same period in 2017 .


•	PSR increased 6% compared to the same period in 2017 to $363 million due to rate increases and changes in vertical mix partially offset by a reduction in Average WSEs.


•	ISR increased 7% compared to the same period in 2017 to $2.2 billion due primarily to an increase in WSEs electing to participate in our insurance services.

Operating income was $209 million , in the nine months ended September 30, 2018 , up $40 million or 24% compared to the nine months ended September 30, 2017 , primarily as a result of:


•	An increase of $63 million in total revenues less insurance costs due to:


•	favorable experience from the change in the economic arrangement of one of our health insurance contracts as noted above, and


•	favorable experience with other risk-based contracts, including favorable prior period development of $17 million in workers' compensation insurance costs,


•	partially offset by an increase of $17 million in OOE, which includes $10 million of anticipated costs associated with our marketing campaign and additional investment in operational and process improvements.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Net Service Revenues

Net Service Revenues (total revenues less insurance costs) provide a comparable basis of revenues on a net basis, act as the basis to allocate resources to different functions, and help us evaluate the effectiveness of our business strategies by each business function.

Q3 2018 - Q3 2017 Commentary

Net Service Revenues were $228 million for the third quarter of 2018 , representing an 11% increase compared to the same period in 2017 . This increase is primarily due to an increase in Net Insurance Service Revenues from changes in the composition of our enrolled WSEs within our insurance offerings (ISR mix) partially offset by health plan participation costs (insurance cost mix). Additionally, Monthly Net Service Revenues per Average WSE increased 13% over the same period in 2017 .

YTD 2018 - YTD 2017 Commentary

Net Service Revenues were $668 million for the nine months ended September 30, 2018 , representing a 10% increase compared to the same period in 2017 . This increase is primarily due to an increase in Net Insurance Service Revenues from changes in the composition of our enrolled WSEs within our insurance offerings (ISR mix) partially offset by health plan participation costs (insurance cost mix). Additionally, Monthly Net Service Revenues per Average WSE increased 14% over the same period in 2017 .



MANAGEMENT'S DISCUSSION AND ANALYSIS

Professional Service Revenues (PSR)

Our clients are billed either based on a fee per WSE per month per transaction or on a percentage of the WSEs’ payroll. For those clients that are billed on a percentage of WSEs' payroll, as our clients' payrolls increase, our fees also increase. As such, payroll and payroll taxes processed may also be an indicator of our PSR growth.

Our investment in a vertical approach provides us the flexibility to offer our clients in different industries with varied services at different prices. We believe that this vertical approach will improve our ability to retain our customers, and potentially reduce the value of using WSEs as the only leading indicator of future revenue performance. During the nine months ended September 30, 2018 , we have seen a client base (mix) change with increased attrition in our Main Street vertical, partially offset by new sales in other verticals, primarily our technology and financial services verticals.

We present the percentage changes in PSR using the following measures:


•	Volume - the percentage change in period over period Average WSEs,


•	Rate - the percentage changes in prices for each vertical, and


•	Mix - the change in composition of Average WSEs within our verticals.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Insurance Service Revenues (ISR)

ISR consists of insurance services-related billings and administrative fees collected from clients and withheld from WSE payroll for health benefits and workers' compensation insurance provided by third-party insurance carriers.

We present the percentage changes in ISR using the following measures:


•	Volume - the percentage change in period over period Average WSEs,


•	Rate - the percentage changes in prices associated with each of our insurance service offerings, and


•	Mix - all other changes including the composition of our enrolled WSEs within our insurance service offerings.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Insurance Costs

Insurance costs include insurance premiums for coverage provided by insurance carriers, reimbursement of claims payments made by insurance carriers or third-party administrators, and changes in loss reserves related to contractual obligations with our workers' compensation and health benefit carriers.

We present the percentage changes in insurance costs using the following measures:


•	Volume - the percentage change in period over period Average WSEs,


•	Rate - the percentage changes in cost trend associated with each of our insurance service offerings, and


•	Mix - all other changes including the composition of our enrolled WSEs within our insurance offerings.



MANAGEMENT'S DISCUSSION AND ANALYSIS



MANAGEMENT'S DISCUSSION AND ANALYSIS

Other Operating Expenses (OOE)

Other operating expenses includes cost of providing services (COPS), sales and marketing (S&M), general and administrative (G&A), and systems development and programming (SD&P) expenses. Other operating expenses excludes depreciation and amortization expenses.

We manage and monitor our other operating expenses and allocate resources across different business functions based on OOE as a percentage of Net Service Revenues which increased to 68% in the third quarter of 2018 from 65% in the same period in 2017 and decreased to 64% in the nine months ended September 30, 2018 from 68% in the same period in 2017 .

At September 30, 2018 , we had approximately 2,900 corporate employees in 53 offices across the United States. Our corporate employees' compensation related expenses represent the majority of our operating expenses. Compensation costs for our corporate employees include payroll, payroll taxes, stock-based compensation, bonuses, commissions and other payroll and benefits related costs.

The percentage of compensation related expenses to OOE was 65% and 62% in the third quarters of 2018 and 2017 , respectively, and increased to 66% in the nine months ended September 30, 2018 from 64% in the same period in 2017. The increases for the third quarter of 2018 and the nine months ended September 30, 2018 when compared to the same periods in 2017 are due to increased headcount intended to enhance our clients' experience through operational and process improvements.

OOE for third quarter and year to date 2018 includes approximately $10 million of anticipated costs associated with our marketing campaign and additional investments in operational and process improvements. We expect our OOE to increase in the foreseeable future due to expected growth, our continued strategy to develop new vertical products, and additional costs associated with our continued efforts to improve our systems, processes, and internal controls. These expenses may fluctuate as a percentage of our total revenues from period-to-period depending on the timing of when expenses are incurred.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Q3 2018 - Q3 2017 Commentary

Other operating expenses were $155 million for the third quarter of 2018 , an increase of $22 million compared to the same period in 2017 . Specific costs varied as follows:

Total compensation costs increased $18 million , or 21% , primarily due to:


▪	an increase of $24 million due primarily to increased headcount in various customer service functions and general administrative functions to support process improvement initiatives,


▪	partially offset by a decrease of $6 million in commission expense with the adoption of ASC Topic 606 in the first quarter of 2018. Refer to Note 1 in Item 1 of this Form 10-Q for additional details surrounding the impact of this adoption.

Marketing costs increased $5 million due to the launch of our new marketing and branding campaign.

YTD 2018 - YTD 2017 Commentary

Other operating expenses were $429 million for the nine months ended September 30, 2018 , an increase of $17 million compared to the same period in 2017 . Specific costs varied as follows:

Total compensation costs increased $21 million , or 8% , primarily due to an increase of $42 million resulting from additional headcount, offset by a decrease of $21 million in commission expense.

Other Income (Expense)

Other income (expense) in the third quarter of 2018 and the nine months ended September 30, 2018 decreased $3 million compared to the same periods in 2017. Specific income (expense) items for the third quarter of 2018 and nine months ended September 30, 2018 varied as follows:


•	For the third quarter of 2018, interest and dividend income increased $2 million due to an increase in yields from investing activities we initiated in the second quarter of 2018 in an effort to maximize return on our cash balances.


•	For the nine months ended September 30, 2018, interest and dividend income increased $6 million due to an increase in yields from investing activities, partially offset by $2 million increase in interest expense associated with the write-off of debt issuance costs related to the refinancing of our previous terms loans, as compared to the same period in 2017.

Provision for Income Taxes

Our effective income tax rate was 16% and 26% for the three months ended September 30, 2018 and 2017 , respectively, and 18% and 28% for the nine months ended September 30, 2018 and 2017 , respectively. These decreases are primarily due to a reduction in the federal corporate income tax rate from 35% to 21% under the Tax Cuts and Jobs Act (TCJA), additional tax benefits from a decrease in uncertain tax positions, an increase in tax credits and an increase in excludable income for state tax purposes. These benefits are partially offset by a decrease in excess tax benefits related to stock-based compensation and a one-time qualified production activities deduction for certain software offerings recorded in the prior year.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Liquidity and Capital Resources

Liquidity

We report our liquidity separately between WSE-related assets and liabilities and our corporate assets and liabilities. We believe that we have sufficient liquidity and capital resources to satisfy future requirements and meet our obligations to our clients, creditors and debt holders. Our liquid assets are as follows:



	September 30, 2018						December 31, 2017
(in millions)	Corporate		WSE		Total		Corporate		WSE		Total
Current assets
WSE-related assets	$	—	$	403	$	403	$	—	$	360	$	360
Cash and cash equivalents	237		—		237		336		—		336
Restricted cash, cash equivalents and investments	15		606		621		15		1,265		1,280
All other current assets	76		—		76		15		—		15
Current assets	$	328	$	1,009	$	1,337	$	366	$	1,625	$	1,991

Current liabilities
WSE-related liabilities	$	—	$	1,009	$	1,009	$	—	$	1,618	$	1,618
All other current liabilities	102		—		102		139		—		139
Current liabilities	$	102	$	1,009	$	1,111	$	139	$	1,618	$	1,757

Working capital	$	226	$	—	$	226	$	227	$	7	$	234

Working capital for WSE-related assets and liabilities

We present our WSE-related assets and liabilities separately from our corporate assets and liabilities on our condensed consolidated balance sheets to better distinguish those assets and liabilities held by us to satisfy WSE-related obligations. WSE-related assets and liabilities primarily consist of current assets and current liabilities, respectively, resulting from transactions directly or indirectly associated with WSEs, including payroll and related taxes and withholdings, our sponsored insurance programs, and other benefit programs.

We designate funds to ensure that we have adequate current assets to satisfy our current WSE-related obligations. We manage our WSE payroll and benefits obligations through collections of payments from our clients which generally occurs two to three days in advance of the client's payroll date. We regularly review our short-term WSE-related obligations (such as payroll and related taxes, insurance premium and claim payments) and designate funds required to fulfill these short-term obligations, which we refer to as payroll funds collected (PFC). PFC is included in current assets as restricted cash, cash equivalents and investments in our condensed consolidated financial statements.

We manage our sponsored benefit and workers' compensation insurance obligations by maintaining collateral funds in restricted cash, cash equivalents and investments. These collateral amounts are generally determined at the beginning of each plan year and we may be required by our insurance carriers to adjust the balance when facts and circumstances change. We regularly review our collateral balances with our insurance carriers and anticipate funding further collateral based upon our capital requirements. We classify our restricted cash, cash equivalents and investments as current and noncurrent assets to match against the anticipated payment of claims.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Working capital for corporate purposes

We use the remaining available cash and cash equivalents and cash from operations to satisfy our operational and regulatory requirements and to fund capital expenditures. We believe that our existing corporate cash and cash equivalents and positive working capital will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Corporate working capital as of September 30, 2018 remained flat compared to December 31, 2017 .

Capital Resources

Sources of Funds

We believe that we can meet our present and reasonably foreseeable operating cash needs and future commitments through existing liquid assets, continuing cash flows from operations, our borrowing capacity under our revolving credit facility and the potential issuance of debt or equity securities through our filed shelf registration statement.

Each of our 2018 Term Loan and our 2018 Revolver mature in June 2023 and bear interest, at our option, either at a LIBOR rate, or the prime lending rate, plus an applicable margin subject to change in the future based on our leverage ratio, as set forth in our 2018 Credit Agreement. As of September 30, 2018 , $420 million was outstanding under our 2018 Term Loan and the full amount of our 2018 Revolver, less approximately $16 million representing an undrawn letter of credit, was available.

Cash Flows

In January 2018, we adopted ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash, which significantly impacted our net cash provided by (used in) operating activities as changes in our restricted cash and cash equivalents balances are no longer included within operating cash activities.

The following table presents our cash flow activities for the stated periods:



	Nine Months Ended September 30,
(in millions)	2018									2017
	Corporate			WSE			Total			Corporate			WSE			Total
Net cash provided by (used in):
Operating activities ⁽¹⁾	$	184		$	(660	)	$	(476	)	$	205		$	(346	)	$	(141	)
Investing activities	(169		)	—			(169		)	(15		)	—			(15		)
Financing activities	(62		)	—			(62		)	(65		)	—			(65		)
Net increase (decrease) in cash and cash equivalents, unrestricted and restricted	$	(47	)	$	(660	)	$	(707	)	$	125		$	(346	)	$	(221	)
Cash and cash equivalents, unrestricted and restricted:
Beginning of period	$	476		$	1,262		$	1,738		$	278		$	955		$	1,233
End of period	$	429		$	602		$	1,031		$	403		$	609		$	1,012

Net increase (decrease) in cash and cash equivalents:
Unrestricted	$	(99	)	$	—		$	(99	)	$	80		$	—		$	80
Restricted	52			(660		)	(608		)	45			(346		)	(301		)


(1)	Prior year balances were retrospectively adjusted for Accounting Standards Update (ASU) 2016-18.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Operating Activities

Components of net cash used in operating activities are as follows:



	Nine Months Ended September 30,
(in millions)	2018									2017
	Corporate			WSE			Total			Corporate			WSE			Total
Net income	$	163		$	—		$	163		$	112		$	—		$	112
Depreciation and amortization	36			—			36			26			—			26
Stock-based compensation expense	31			—			31			21			—			21
Payment of interest	(13		)	—			(13		)	(12		)	—			(12		)
Income tax payments, net	(33		)	—			(33		)	—			—			—
Collateral paid to insurance carriers, net	(1		)	—			(1		)	(3		)	—			(3		)
Changes in other operating assets	10			(51		)	(41		)	33			(5		)	28
Changes in other operating liabilities	(9		)	(609		)	(618		)	28			(341		)	(313		)
Net cash provided by (used in) operating activities ⁽¹⁾	$	184		$	(660	)	$	(476	)	$	205		$	(346	)	$	(141	)


(1)	Prior year balances were retrospectively adjusted for Accounting Standards Update (ASU) 2016-18.

Net cash used in operating activities from WSE-related activities was primarily driven by the timing of client payments, payroll amounts, collateral funding and insurance claim activities. Cash used in operating activities for WSE purposes increased by $314 million during the nine months ended September 30, 2018 , compared to the same period in 2017, and was primarily driven by payments of payroll taxes and related liabilities. We expect the changes in restricted cash and cash equivalents to correspond to WSE cash provided by (or used in) operations as we manage our WSE-related obligations through restricted cash.

Cash provided by corporate operating activities decreased $21 million in the first nine months of 2018 compared to the same period in 2017 and was driven by the timing of corporate income tax payments as well as payments to vendors. The overall decrease was partially offset by a 46% increase in our net income.

We expect our tax payments to continue to increase in 2018 due to our inability to defer taxes as a result of new restrictions in the TCJA.

Investing Activities

Net cash used in investing activities in the nine months ended September 30, 2018 and 2017 , respectively, primarily consisted of purchases of investments partially offset by proceeds from the sale and maturity of restricted investments, and cash paid for capital expenditures.



	Nine Months Ended September 30,
(in millions)	2018			2017
Investments:
Purchases of investments	$	223		$	—
Proceeds from sale of investments	(54		)	—
Proceeds from maturity of investments	(33		)	(14		)
Cash used in investments	$	136		$	(14	)

Capital expenditures:
Software and hardware	$	21		$	23
Office furniture, equipment and leasehold improvements	12			6
Cash used in capital expenditures	$	33		$	29



MANAGEMENT'S DISCUSSION AND ANALYSIS

Investments

During the nine months ended September 30, 2018 , we invested a portion of available cash in investment-grade securities with effective maturities less than five years that are classified on our balance sheet as investments. As of September 30, 2018 , we had approximately $168 million in investments.

We also invest funds held as collateral to satisfy our long-term obligation towards workers' compensation liabilities in U.S. long-term treasuries. These investments are classified on our balance sheet included as restricted cash, cash equivalents and investments. We review the amount and the anticipated holding period of these investments regularly in conjunction with our estimated long-term workers' compensation liabilities and anticipated claims payment trend. As of September 30, 2018 , we held approximately $802 million of restricted cash, cash equivalents and investments in noncurrent and current accounts, of which approximately $5 million is in U.S. long-term treasuries.

As of September 30, 2018 , we held approximately $1.2 billion in cash, cash equivalents and investments. Refer to Note 2 in Item 1 in this Form 10-Q for a summary of these funds.

Capital Expenditures

During the nine months ended September 30, 2018 and 2017 , we continued to make investments in software and hardware, enhanced existing products and platforms, and implemented legacy platform migrations. We also incurred expenses related to the build out of our corporate headquarters and our technology and client service centers. We expect capital investments in our software and hardware to continue in the future.

Financing Activities

Net cash used in financing activities in the nine months ended September 30, 2018 and 2017 consisted of our debt and equity related activities.



	Nine Months Ended September 30,
(in millions)	2018			2017
Financing activities
Repurchase of common stock, net of issuance	$	53		$	36
Repayment of borrowings	15			29
Net proceeds from issuance of notes payable	(6		)	—
Cash used in financing activities	$	62		$	65

In the nine months ended September 30, 2018 we refinanced our 2014 Term Loans with our 2018 Term loan as discussed above. For additional information refer to Note 7 in item 1 of this Form 10-Q.

Our board of directors authorizes common stock repurchases through an ongoing program initiated in May 2014, primarily to offset dilution from the issuance of stock under our equity-based incentive plan and employee stock purchase plan. During the nine months ended September 30, 2018 , we repurchased 895,699 shares of our common stock for approximately $47 million through our stock repurchase program. As of September 30, 2018 , approximately $90 million remained available for repurchase under all authorizations by our board of directors.

Covenants

Our 2018 Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of indebtedness (other than our 2018 Term Loan and our 2018 Revolver), dividends, distributions and transactions with affiliates. It also contains financial covenants requiring us to maintain certain minimum interest coverage and maximum total leverage ratios, as set forth in our 2018 Credit Agreement. These covenants took effect on June 30, 2018. We were in compliance with these financial covenants under the credit facilities at September 30, 2018 . For more details on the covenants under our 2018 Credit Agreement, refer to Note 7 in Item 1 of this Form 10-Q.



MANAGEMENT'S DISCUSSION AND ANALYSIS

Contractual Obligations

The following table summarizes our significant contractual obligations associated with our debt refinance at September 30, 2018:



	Payments Due by Period
(in millions)	Total		Less than 1 year		1-3 years		3-5 years
Debt obligations ⁽¹⁾	$	489	$	38	$	74	$	377


(1)	Includes principal and the projected interest payments of our term loans, refer to Note 7 in Item 1 of this Form 10-Q for details.

Off-Balance Sheet Arrangements

There has been no material change in our off-balance sheet arrangements discussed in Item 7 of our 2017 Form 10-K.

Critical Accounting Policies, Estimates and Judgments

During the first quarter of 2018, we adopted ASC Topic 606. Refer to Note 1 in Item 1 of this Form 10-Q for disclosure of the changes related to this adoption. There have been no additional material changes to our critical accounting policies as discussed in our 2017 Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1 in Item 1 of this Form 10-Q.



QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND CONTROLS AND PROCEDURES

Quantitative and Qualitative Disclosures About Market Risk

Our exposure to changes in interest rates relates primarily to our investment portfolio and outstanding floating rate debt. Changes in U.S. interest rates affect the interest earned on the Company’s cash, cash equivalents and investments and the fair value of the investments, as well as interest costs associated with our debt.

In the first quarter of 2018 our board of directors approved a corporate investment policy that defines our investable cash in instruments that meet certain credit quality, liquidity, diversification and other requirements. We believe that our exposure to losses resulting from credit risk is not significant. A sensitivity analysis to determine the impact a change in interest rates would have on the value of the investment portfolio assuming a 100 basis point parallel shift in the yield curve. Based on investment positions as of September 30, 2018 , a hypothetical 100 basis point increase or decrease in interest rates across all maturities would result in a $2 million incremental increase or decrease in the fair market value of the portfolio, respectively. Such losses would only be realized if we sold the investments prior to maturity. The risk of rate changes on investment balances was not significant at September 30, 2018 .

In June 2018, we refinanced our term loans which would have matured in July 2019 and replaced them with a term loan maturing in 2023. At September 30, 2018 , after this refinancing, we had total outstanding indebtedness of $420 million , of which $22 million is due within 12 months. A 100 basis point increase or decrease in market interest rates would cause interest expense on our debt as of September 30, 2018 to increase or decrease by $4 million on an annualized basis, respectively.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have, with the participation of our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2018 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures as of September 30, 2018 , our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were not effective as a result of a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Notwithstanding the material weakness in our internal control over financial reporting, we have concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. Additionally, the material weakness did not result in any restatements of our condensed consolidated financial statements or disclosures for any prior period.

Additional Analyses and Procedures and Remediation Plan

We are taking specific steps to remediate the material weakness identified by management and described in greater detail in our 2017 Form 10-K. Although we intend to complete the remediation process with respect to this material weakness as quickly as possible, we cannot at this time estimate how long it will take, and our remediation plan may not prove to be successful.

Because the reliability of the internal control process requires repeatable execution, the successful remediation of this material weakness will require review and evidence of effectiveness prior to concluding that the controls are effective and there is no assurance that additional remediation steps will not be necessary. As such, as we continue to evaluate and work to improve our internal control over financial reporting, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps already underway. As noted above, although we plan to complete the remediation process as quickly as possible, we cannot at this time estimate how long it will take, and our initiatives may not prove to be successful. Accordingly, until this weakness is remediated, we plan to perform additional analyses and other procedures to ensure that our condensed consolidated financial statements are prepared in accordance with GAAP.

Changes in Internal Control Over Financial Reporting

Other than the material weakness remediation efforts underway, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended September 30, 2018 , that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.



FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)



(in millions, except share and per share data)	September 30, 2018					December 31, 2017
Assets
Current assets:
Cash and cash equivalents			$	237				$	336
Investments			38					—
Restricted cash, cash equivalents and investments			621					1,280
Worksite employee related assets:
Unbilled revenue (net of advance collections of $39 and $12 at September 30, 2018 and December 31, 2017, respectively)	$	306				$	297
Accounts receivable	5					20
Prepaid insurance premiums and other insurance related receivables (net of health benefit loss reserves of $45 and $0 at September 30, 2018 and December 31, 2017, respectively	47					26
Other payroll assets	45					17
Worksite employee related assets			403					360
Prepaid expenses and other current assets			38					15
Total current assets			1,337					1,991
Investments, noncurrent			130					—
Restricted cash, cash equivalents and investments, noncurrent			181					162
Workers' compensation collateral receivable			40					39
Property and equipment, net			78					70
Goodwill and other intangible assets, net			311					315
Other assets			27					16
Total assets			$	2,104				$	2,593
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and other current liabilities			$	43				$	59
Accrued corporate wages			37					40
Notes payable			22					40
Worksite employee related liabilities:
Accrued wages	$	326				$	289
Client deposits	35					52
Payroll tax liabilities and other payroll withholdings	419					1,034
Health benefits loss reserves (net of prepayments of $0 and $19 at September 30, 2018 and December 31, 2017, respectively)	144					151
Workers' compensation loss reserves (net of collateral paid of $4 and $6 at September 30, 2018 and December 31, 2017, respectively)	68					67
Insurance premiums and other payables	17					25
Worksite employee related liabilities			1,009					1,618
Total current liabilities			1,111					1,757
Notes payable, noncurrent			396					383
Workers' compensation loss reserves (net of collateral paid of $14 and $17 at September 30, 2018 and December 31, 2017, respectively)			159					165
Deferred income taxes			72					68
Other liabilities			16					14
Total liabilities			1,754					2,387
Commitments and contingencies (see Note 10)
Stockholders’ equity:
Preferred stock ($0.000025 par value per share; 20,000,000 shares authorized; no shares issued and outstanding at September 30, 2018 and December 31, 2017)			—					—
Common stock and additional paid-in capital ($0.000025 par value per share; 750,000,000 shares authorized; 70,508,389 and 69,818,392 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively)			623					583
Accumulated deficit			(273		)			(377		)
Total stockholders’ equity			350					206
Total liabilities and stockholders’ equity			$	2,104				$	2,593

See accompanying notes.



FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions, except share and per share data)	2018			2017			2018			2017
Professional service revenues	$	119		$	112		$	363		$	341
Insurance service revenues	756			706			2,223			2,086
Total revenues	875			818			2,586			2,427
Insurance costs	647			613			1,918			1,822
Cost of providing services (exclusive of depreciation and amortization of intangible assets)	58			50			166			157
Sales and marketing	52			44			132			139
General and administrative	33			28			95			82
Systems development and programming	12			11			36			34
Depreciation	10			8			26			20
Amortization of intangible assets	1			1			4			4
Total costs and operating expenses	813			755			2,377			2,258
Operating income	62			63			209			169
Other income (expense):
Interest expense, bank fees and other, net	(2		)	(5		)	(10		)	(13		)
Income before provision for income taxes	60			58			199			156
Income tax expense	9			15			36			44
Net income	$	51		$	43		$	163		$	112
Comprehensive income	$	51		$	43		$	163		$	112

Net income per share:
Basic	$	0.73		$	0.62		$	2.32		$	1.62
Diluted	$	0.71		$	0.60		$	2.25		$	1.57
Weighted average shares:
Basic	70,556,877			69,498,218			70,353,597			69,016,054
Diluted	72,599,944			71,499,591			72,388,598			71,138,743

See accompanying notes.



FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



	Nine Months Ended September 30,
(in millions)	2018			2017
Operating activities
Net income	$	163		$	112
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36			26
Stock-based compensation	31			21
Changes in operating assets and liabilities:
Prepaid income taxes	1			42
Prepaid expenses and other current assets	(24		)	(1		)
Workers' compensation collateral receivable and other noncurrent assets	(10		)	(7		)
Accounts payable and other current liabilities	(9		)	7
Accrued corporate wages	(4		)	1
Workers' compensation loss reserves and other noncurrent liabilities	—			4
Worksite employee related assets	(51		)	(5		)
Worksite employee related liabilities	(609		)	(341		)
Net cash used in operating activities	(476		)	(141		)
Investing activities
Purchases of marketable securities	(223		)	—
Proceeds from sale of marketable securities	54			—
Proceeds from maturity of marketable securities	33			14
Acquisitions of property and equipment	(33		)	(29		)
Net cash used in investing activities	(169		)	(15		)
Financing activities
Repurchase of common stock	(47		)	(39		)
Proceeds from issuance of common stock on exercised options	6			9
Proceeds from issuance of common stock on employee stock purchase plan	3			2
Awards effectively repurchased for required employee withholding taxes	(15		)	(8		)
Proceeds from issuance of notes payable, net	210			—
Payments for extinguishment of debt	(204		)	—
Repayment of notes payable	(15		)	(29		)
Net cash used in financing activities	(62		)	(65		)
Net decrease in cash and cash equivalents, unrestricted and restricted	(707		)	(221		)
Cash and cash equivalents, unrestricted and restricted:
Beginning of period	1,738			1,233
End of period	$	1,031		$	1,012

Supplemental disclosures of cash flow information
Interest paid	$	13		$	12
Income taxes paid, net	33			—
Supplemental schedule of noncash investing and financing activities
Payable for purchase of property and equipment	$	2		$	2
Supplemental schedule of cash and cash equivalents
Net increase (decrease) in unrestricted cash and cash equivalents	$	(99	)	$	80
Net decrease in restricted cash and cash equivalents	(608		)	(301		)

See accompanying notes.



FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business

TriNet Group, Inc. (TriNet, or the Company, we, our and us), a professional employer organization (PEO) founded in 1988, provides comprehensive human resources (HR) solutions for small to midsize businesses (SMBs) under a co-employment model. These HR solutions include bundled services, such as multi-state payroll processing and tax administration, employee benefits programs, including health insurance and retirement plans, workers' compensation insurance and claims management, employment and benefit law compliance, and other services. Through the co-employment relationship, we are the employer of record for most administrative and regulatory purposes, including:


•	compensation through wages and salaries,


•	employer payroll-related tax payments,


•	employee payroll-related tax withholdings and payments,


•	employee benefit programs including health and life insurance, and others, and


•	workers' compensation coverage.

Our clients are responsible for the day-to-day job responsibilities of the worksite employees (WSEs).

We operate in one reportable segment. All of our service revenues are generated from external clients. Less than 1% of our revenue is generated outside of the U.S.

Basis of Presentation

These unaudited condensed consolidated financial statements (Financial Statements) and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the Rules and Regulations of the Securities and Exchange Commission (SEC). Certain information and note disclosures included in our annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, that are normal and recurring in nature, necessary for fair financial statement presentation. The results of operations for the three and the nine months ended September 30, 2018 are not necessarily indicative of the operating results anticipated for the full year. These Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017 ( 2017 Form 10-K).

Reclassifications

Certain prior year amounts have been reclassified to conform to current period presentation. These reclassifications include short-term restricted cash, cash equivalents and investments previously classified as WSE-related assets and now presented within restricted cash, cash equivalents and investments. Refer to the accounting policy below for a description of amounts currently included in restricted cash, cash equivalents, and investments.



FINANCIAL STATEMENTS

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect certain reported amounts and related disclosures. Significant estimates include:


•	liability for unpaid losses and loss adjustment expenses (loss reserves) related to workers' compensation and workers' compensation collateral receivable,


•	health insurance loss reserves,


•	liability for insurance premiums payable,


•	impairments of goodwill and other intangible assets,


•	income tax assets and liabilities, and


•	liability for legal contingencies.

These estimates are based on historical experience and on various other assumptions that we believe to be reasonable from the facts available to us. Some of the assumptions are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our consolidated financial statements could be materially affected.

Revenue Recognition

On January 1, 2018, we adopted Accounting Standards Codification Topic 606 (ASC Topic 606) using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC Topic 606, while the comparative prior period amounts are not restated and continue to be reported in accordance with statements previously accounted for under Accounting Standards Codification Topic 605.

Upon adoption of ASC Topic 606, we recorded a $1 million cumulative effect adjustment to opening retained earnings as of January 1, 2018. Impacts from adoption of the new standard on our revenue recognition include:


•	Our annual service contracts with our clients that are cancellable with 30 days' notice are initially considered 30-day contracts under the new standard;


•	Professional service revenues are recognized on an output basis which results in recognition at the time payroll is processed;


•	Our non-refundable set up fees are no longer deferred but accounted for as part of our transaction price and are allocated among professional service revenues and insurance services revenues; and


•	The majority of sales commissions related to onboarding new clients that were previously expensed are capitalized as contract assets and amortized over the estimated customer life.

Revenues are recognized when control of the promised services are transferred to our clients, in an amount that reflects the consideration that we expect to receive in exchange for services. We generate all of our revenue from contracts with customers. We disaggregate revenues into professional services revenues and insurance services revenues as reported on the condensed consolidated statements of operations and comprehensive income. Generally, both the client and the Company may terminate the contract without penalty by providing a 30-day notice.



FINANCIAL STATEMENTS

Performance Obligations

At contract inception, we assess the services promised in our contracts with customers and identify a performance obligation for each distinct promise to transfer to the customer a service or bundle of services. We determined that the following distinct services represent separate performance obligations:


•	Payroll and payroll tax processing,


•	Health benefits services, and


•	Workers’ compensation services.

Payroll and payroll tax processing performance obligations include services to process payroll and payroll tax-related transactions on behalf of our clients. Revenues associated with this performance obligation are reported as professional service revenues and recognized using an output method in which the control of the promised services is considered transferred when a client's payroll is processed by us and its WSEs are paid. Professional service revenues are stated net of the gross payroll and payroll tax amounts funded by our clients. Although we assume the responsibilities to process and remit the payroll and payroll related obligations, we do not assume employment-related responsibilities such as determining the amount of the payroll and related payroll obligations. As a result, we are the agent in this arrangement for revenue recognition purposes.

Health benefits and workers' compensation services include performance obligations to provide TriNet-sponsored health benefits and workers' compensation insurance coverage through insurance policies provided by third-party insurance carriers and settle high deductible amounts on those policies. Revenues associated with these performance obligations are reported as insurance services revenues and are recognized using the output method over the period of time that the client and WSEs are covered under TriNet-sponsored insurance policies.

We control the selection of health benefits and workers' compensation coverage made available, insurance services revenues are reported gross as we are the principal in this arrangement for revenue recognition purposes. See Item 8 Note 1 in our 2017 Form 10-K for further discussion on our accounting policy for insurance costs.

We generally charge new customers a nominal upfront non-refundable fee to recover our costs to set up the client on our TriNet platform for payroll processing and other administrative services, such as benefit enrollments. These fees are accounted for as part of our transaction price and are allocated among the performance obligations based on their relative standalone selling price.

Variable Consideration and Pricing Allocation

Our contracts with customers generally do not include any variable consideration. However, from time to time, we may offer incentive credits to our clients considered to be variable consideration including incentive credits issued related to contract renewals. Incentive credits are recorded as a reduction to revenue as part of the transaction price at contract inception when there is a basis to reasonably estimate the amount of the incentive credit and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. These incentive credits are allocated among the performance obligations based on their relative standalone selling price.

We allocate the total transaction price to each performance obligation based on the estimated relative standalone selling prices of the promised services underlying each performance obligation. The transaction price for payroll and payroll tax processing performance obligations are determined upon establishment of the contract that contains the final terms of the sale, including the description and price of each service purchased. The estimated service fee is calculated based on observable inputs and include the following key assumptions: target profit margin, pricing strategies including the mix of services purchased and competitive factors, and customer and industry specifics.

The transaction price for health benefits insurance and worker’s compensation insurance performance obligations is determined during the new client on-boarding and enrollment processes based on the types of benefits coverage the clients and WSEs have elected and the applicable risk profile of the client. We estimate our service fees based on actuarial forecasts of our expected insurance premiums and claim costs, and to amounts to cover our costs to administer these programs.

We require our clients to prefund payroll and related taxes and other withholding liabilities before payroll is processed or due for payment. Under the provision of our contracts with customers, we generally will process the payment of a client’s payroll only when the client successfully funds the amount required. As a result, there is no financing arrangement



FINANCIAL STATEMENTS

for the contracts, however, certain contracts to provide payroll and payroll tax processing services permit the client to pay certain payroll tax components ratably over a 12-month period rather than as payroll tax is determined on wages paid, which may be considered a significant financing arrangement under ASC Topic 606. However, as the period between our performing the service under the contract and when the client pays for the service is less than one year, we have elected as a practical expedient, not to adjust the transaction price.

Contract Costs

We recognize as deferred commission expense the incremental cost to obtain a contract with a client for certain components under our commission plans for sales representatives and channel partners that are directly related to new customers onboarded as we expect to recover these costs through future service fees. Such assets will be amortized over the estimated average client tenure. These commissions are earned on the basis of the revenue generated from payroll and payroll tax processing performance obligations. When the commission on a renewal contract is not commensurate with the commission on the initial contract, such commission will be capitalized and amortized over the estimated average client tenure. If the commission for both initial contract and renewal contracts are commensurate, such commissions are expensed in the contract period. When the amortization period is less than one year, we apply practical expedient to expense sales commissions in sales and marketing expenses in the period incurred. The below table summarizes the amounts capitalized and amortized during the three and nine months ended September 30, 2018 :



	Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
(in millions)	Capitalized		Amortized		Capitalized		Amortized
Deferred commission costs	$	8	$	2	$	24	$	3

Certain commission plans will pay a commission on estimated professional service revenues over the first 12 months of the contract with customers. The portion of commission paid in excess of the actual commission earned in that period is recorded as prepaid commission. When the prepaid commission is considered earned, it is classified as a deferred commission expense and subject to amortization.

We do not have material contract assets and contract liabilities as of September 30, 2018 . We require our clients to prefund payroll and related liabilities before payroll is processed or due for payment. If a client fails to fund payroll or misses the funding cut-off, at our sole discretion, we may pay the payroll and the resulting unfunded payroll is recognized as accounts receivable on the accompanying consolidated balance sheets. When client payment is received in advance of our performance under the contract, such amount is recorded as client deposits.

Restricted Cash, Cash Equivalents and Investments

Restricted cash, cash equivalents and investments presented on our condensed consolidated balance sheets include:


•	corporate cash and cash equivalents in trust accounts functioning as security deposits for our insurance carriers,


•	payroll funds collected represents cash collected in advance from clients which we designate as restricted for the purpose of funding WSE payroll and payroll taxes and other payroll related liabilities, and


•	amounts held in trust for current and future premium and claim obligations with our insurance carriers, which amounts are held in trust according to the terms of the relevant insurance policies and by the local insurance regulations of the jurisdictions in which the policies are in force.

Investments

Our investments are classified as available-for-sale and are carried at estimated fair value.

Unrealized gains and losses are reported as a component of accumulated other comprehensive income (loss), net of deferred income taxes. The amortized cost of debt investments is adjusted for amortization of premiums and accretion of discounts from the date of purchase to maturity or sale. Such amortization is included in interest income as an addition to or deduction from the coupon interest earned on the investments. We use the specific identification method to determine the realized gains and losses on the sale of available-for-sale securities. Realized gains and losses are included in other income in the accompanying consolidated statements of income and comprehensive income.



FINANCIAL STATEMENTS

We assess our investments for an other-than-temporary impairment loss due to a decline in fair value or other market conditions. We review several factors to determine whether a loss is other than temporary, such as the length and extent of the fair value decline, the financial condition and near-term prospects of the issuer and whether we have the intent to sell or will more likely than not be required to sell before the securities' anticipated recovery, which may be at maturity. If management determines that a security is impaired under these circumstances, the impairment recognized in earnings is measured as the entire difference between the amortized cost and the then-current fair value.

We have investments within our unrestricted and our restricted accounts. Unrestricted investments are recorded on the balance sheet as current or noncurrent based upon the remaining time to maturity, and investments subject to WSE restrictions are classified as current or noncurrent based on the expected payout of the related liability.

Concentrations of Credit Risk

Financial instruments subject to concentrations of credit risk include cash, cash equivalents and investments (unrestricted and restricted), accounts receivable, and amounts due from insurance carriers. We maintain these financial assets principally in domestic financial institutions. We perform periodic evaluations of the relative credit standing of these institutions. Our exposure to credit risk in the event of default by the financial institutions holding these funds is limited to amounts currently held by the institution in excess of insured amounts.

Recent Accounting Pronouncements

Recently adopted accounting guidance

Revenue Recognition - In May 2014, the FASB issued ASU 2014-09-Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance under GAAP. The core principle of the guidance is that an entity should recognize revenue for the transfer of promised goods or services to customers that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard provides a five-step analysis of transactions to determine when and how revenue is recognized.

We have adopted the new standard effective January 1, 2018 using the modified retrospective method. For further discussion of our adoption of ASC Topic 606, including our operating results under the new standard, see Revenue Recognition section above.

The impact from the adoption of ASC Topic 606 to our condensed consolidated income statements and balance sheets is as follows:



	Three Months Ended September 30, 2018							Nine Months Ended September 30, 2018
(in millions, except per share data)	As Reported		Balance Using Previous Standard		Increase (Decrease)			As Reported		Balance Using Previous Standard		Increase (Decrease)
Income statement
Revenue
Professional service revenues	$	119	$	120	$	(1	)	$	363	$	362	$	1
Total revenues	875		876		(1		)	2,586		2,585		1
Expense
Sales and marketing expense
Commissions expense	6		13		(7		)	17		38		(21		)
Total expense	813		819		(6		)	2,377		2,398		(21		)
Income before provision for income taxes	60		55		5			199		177		22
Income tax expense	9		8		1			36		31		5
Net income	51		47		4			163		146		17
Basic earnings per share	0.73		0.68		0.05			2.32		2.09		0.23
Diluted earnings per share	$	0.71	$	0.66	$	0.05		$	2.25	$	2.03	$	0.22



FINANCIAL STATEMENTS



	September 30, 2018
(in millions)	As reported			Balance Using Previous Standard			Increase (Decrease)
Balance sheet
Assets
Cash and cash equivalents	$	237		$	245		$	(8	)
Restricted cash, cash equivalents and investments	621			613			8
Unbilled revenue (net of advance collections)	306			314			(8		)
Prepaid expenses and other current assets	38			29			9
Other assets	27			16			11
Liabilities
Accounts payable and other current liabilities	43			46			(3		)
Deferred income taxes	72			70			2
Other liabilities	16			20			(4		)
Equity
Retained earnings	$	(273	)	$	(290	)	$	17

Statement of Cash Flows - In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . ASU 2016-18 addresses diversity in practice from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities or as a combination of those activities in the statement of cash flows. The ASU requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers between such categories are no longer be presented in the Statement of Cash Flows. We adopted ASU 2016-18 on January 1, 2018 using the retrospective method.

Recently issued accounting pronouncements

Lease arrangements - In February 2016, the FASB issued ASU 2016-02- Leases (ASC 842) and subsequent amendments to the initial guidance under ASU 2017-13, ASU 2018-10 and ASU 2018-11 (collectively, Topic 842) to supersede existing guidance on accounting for leases in ASC 840, Leases (ASC 840). Topic 842 requires us to recognize on our balance sheet a lease liability representing the present value of future lease payments and a right-of-use asset representing the lessee's right to use, or control the use of a specified asset for the lease term for any operating lease with a term greater than one year. This standard is effective for annual and interim reporting periods beginning after December 15, 2018.

We will adopt the new standard effective January 1, 2019 using the alternative transition method, under which we will recognize the cumulative effects of initially applying the standard as an adjustment to the opening balance of retained earnings on January 1, 2019 with unchanged comparative periods.

Additionally, we plan to elect the practical expedient approach and we will not reassess whether any contracts that existed prior to adoption have or contain leases. We will continue to classify initial indirect costs of existing leases as part of our existing leases.

Based on our evaluation to-date, we are not a lessor and have no capitalized leases. Our leases primarily consist of leases for office space. Our process is still in progress but we anticipate that we will have changes to the way we recognize, present and disclose our operating leases in our consolidated financial statements.

We are still in the process of quantifying the impact at this time, but anticipate this standard will have a material impact on our condensed consolidated balance sheet with material increases in long-term and current assets and long-term and current lease liabilities associated with our property leases representing our nationwide office locations. We do not anticipate a material impact on our condensed consolidated statements of operations, as the majority of our leases will remain operating leases for which the right-of-use assets amortization will be similar to previously required straight-line expense treatment for operating leases. The adoption of Topic 842 will not have an impact on the financial covenants set forth in our credit agreement.



FINANCIAL STATEMENTS

NOTE 2. CASH, CASH EQUIVALENTS AND INVESTMENTS

Under the terms of the agreements with certain of our workers' compensation and health benefit insurance carriers, we are required to maintain collateral in trust accounts for the benefit of specified insurance carriers and to reimburse the carriers’ claim payments within our deductible layer. We invest a portion of the collateral amounts in marketable securities. We report the current and noncurrent portions of these trust accounts as restricted cash, cash equivalents and investments on the consolidated balance sheets.

We require our clients to prefund their payroll and related taxes and other withholding liabilities before payroll is processed or due for payment. This prefund is included in restricted cash, cash equivalents and investments as payroll funds collected, which is designated to pay pending payrolls and other WSE-related liabilities.

Our total cash, cash equivalents and investments are summarized below:



	September 30, 2018								December 31, 2017
(in millions)	Cash and cash equivalents		Available-for-sale marketable securities		Certificate of deposits		Total		Cash and cash equivalents		Available-for-sale marketable securities		Certificate of deposits		Total
Cash and cash equivalents	$	237	$	—	$	—	$	237	$	336	$	—	$	—	$	336
Investments	—		38		—		38		—		—		—		—
Restricted cash, cash equivalents and investments
Insurance carriers security deposits	15		—		—		15		15		—		—		15
Payroll funds collected	441		—		—		441		1,095		—		—		1,095
Collateral for health benefits claims	75		—		—		75		69		—		—		69
Collateral for workers' compensation claims	87		1		—		88		98		1		—		99
Collateral to secure standby letter of credit	—		—		2		2		—		—		2		2
Total restricted cash, cash equivalents and investments	618		1		2		621		1,277		1		2		1,280
Investments, noncurrent	—		130		—		130		—		—		—		—
Restricted cash, cash equivalents and investments, noncurrent
Collateral for workers' compensation claims	176		5		—		181		125		37		—		162
Total	$	1,031	$	174	$	2	$	1,207	$	1,738	$	38	$	2	$	1,778



FINANCIAL STATEMENTS

NOTE 3. INVESTMENTS

All of our investment securities that have a contractual maturity date greater than three months are classified as available-for-sale (AFS). The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of our investments as of September 30, 2018 and December 31, 2017 are presented below:



	September 30, 2018
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Asset-backed securities	$	35	$	—	$	—	$	35
Corporate bonds	86		—		—		86
U.S. government agencies and government- sponsored agencies	8		—		—		8
U.S. treasuries	34		—		—		34
Exchange traded fund	1		—		—		1
Other debt securities	10		—		—		10
Total	$	174	$	—	$	—	$	174



	December 31, 2017
(in millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. treasuries	$	37	$	—	$	—	$	37
Exchange traded fund	1		—		—		1
Total	$	38	$	—	$	—	$	38

Investments in a continuous unrealized loss position for less than 12 months and 12 months or more as of September 30, 2018 and December 31, 2017 are presented below.



	September 30, 2018
	Less than 12 months				12 months or more				Total
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Asset-backed securities	$	26	$	—	$	—	$	—	$	26	$	—
Corporate bonds	72		—		—		—		72		—
U.S. government agencies and government-sponsored agencies	7		—		—		—		7		—
U.S. treasuries	31		—		—		—		31		—
Exchange Traded Fund	1		—		—		—		1		—
Other debt securities	8		—		—		—		8		—
Total	$	145	$	—	$	—	$	—	$	145	$	—



	December 31, 2017
	Less than 12 months				12 months or more				Total
(in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasuries	$	5	$	—	$	24	$	—	$	29	$	—
Total	$	5	$	—	$	24	$	—	$	29	$	—



FINANCIAL STATEMENTS

Unrealized losses on fixed income securities are principally caused by changes in interest rates and the financial condition of the issuer. In analyzing an issuer's financial condition, we consider whether the securities are issued by the federal government or its agencies, whether downgrades by credit rating agencies have occurred, and industry analysts' reports. As we have the ability to hold these investments until maturity, or for the foreseeable future, no decline was deemed to be other-than-temporary.

The fair value of debt investments by contractual maturity (actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties) are shown below.



	September 30, 2018
(in millions)	One year or less		Over One Year Through Five Years		Over Five Years Through Ten Years		Over Ten Years		Fair Value
Asset-backed securities	$	3	$	29	$	3	$	—	$	35
Corporate bonds	32		54		—		—		86
U.S. government agencies and government-sponsored agencies	1		2		—		5		8
U.S. treasuries	7		27		—		—		34
Other debt securities	—		1		—		9		10
Total	$	43	$	113	$	3	$	14	$	173



	December 31, 2017
(in millions)	One year or less		Over One Year Through Five Years		Over Five Years Through Ten Years		Over Ten Years		Fair Value
U.S. treasuries	$	—	$	37	$	—	$	—	$	37
Total	$	—	$	37	$	—	$	—	$	37

We had immaterial gross realized gains and losses from sales of investments for the three and nine months periods ended September 30, 2018 and 2017 .

Our asset-backed securities include auto loan/lease, credit card, and equipment leases with investment-grade ratings.

Our corporate bonds include investment-grade debt securities from a wide variety of issuers, industries, and sectors.

Our U.S. government agencies and government-sponsored agencies securities primarily include commercial mortgage-backed securities and mortgage backed securities consisting of Federal Home Loan Mortgage Corporation and Federal National Mortgage Association securities with investment-grade ratings.

Our other debt securities primarily include mortgage-backed securities with investment-grade ratings issued by institutions without federal backing.



FINANCIAL STATEMENTS

NOTE 4. WORKERS' COMPENSATION LOSS RESERVES

The following table summarizes the workers’ compensation loss reserve activity for the three and nine months ended September 30, 2018 and 2017 :



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions)	2018			2017			2018			2017
Total loss reserves, beginning of period	$	244		$	255		$	255		$	255
Incurred
Current year	20			22			59			70
Prior years	(4		)	(4		)	(17		)	(3		)
Total incurred	16			18			42			67
Paid
Current year	(6		)	(4		)	(8		)	(9		)
Prior years	(9		)	(20		)	(44		)	(64		)
Total paid	(15		)	(24		)	(52		)	(73		)
Total loss reserves, end of period	$	245		$	249		$	245		$	249

The following summarizes workers' compensation liabilities on the condensed consolidated balance sheets:



(in millions)	September 30, 2018			December 31, 2017
Total loss reserves, end of period	$	245		$	255
Collateral paid to carriers and offset against loss reserves	(18		)	(23		)
Total loss reserves, net of carrier collateral offset	$	227		$	232

Payable in less than 1 year (net of collateral paid to carriers of $4 and $6 at September 30, 2018 and December 31, 2017, respectively)	$	68		$	67
Payable in more than 1 year (net of collateral paid to carriers of $14 and $17 at September 30, 2018 and December 31, 2017, respectively)	159			165
Total loss reserves, net of carrier collateral offset	$	227		$	232

Incurred claims related to prior years represent changes in estimates for ultimate losses on workers' compensation claims. For the three months ended September 30, 2018 , there were no material changes from the same period in 2017. For the nine months ended September 30, 2018 , the favorable development was primarily due to lower than expected severity of reported claims associated with office and non-office worker WSEs in recent accident years.

We had $63 million of collateral held by insurance carriers as of September 30, 2018 and December 31, 2017 , of which $18 million and $23 million , respectively, was offset against workers' compensation loss reserves as the agreements permit and are net settled of insurance obligations against collateral held. Collateral paid to each carrier for a policy year in excess of our loss reserves is recorded as workers' compensation collateral receivable.



FINANCIAL STATEMENTS

NOTE 5. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Fair Value of Financial Instruments

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

Our financial assets recorded at fair value on a recurring basis comprise of cash equivalents, available-for-sale marketable securities and certificates of deposits. We measure certain financial assets at fair value for disclosure purposes, as well as on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. Our other current financial assets and our other current financial liabilities, including cash and cash equivalents, restricted cash and cash equivalents, WSE related assets and liabilities excluding insurance loss reserves, line of credit and accrued corporate wages, have fair values that approximate their carrying value due to their short-term nature.

Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market to measure fair value, summarized as follows:


•	Level 1—observable inputs for identical assets or liabilities, such as quoted prices in active markets,


•	Level 2—inputs other than the quoted prices in active markets that are observable either directly or indirectly,


•	Level 3—unobservable inputs in which there is little or no market data, which requires that we develop our own assumptions.

The fair value hierarchy requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We classify our cash equivalents, debt securities and notes payable in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety.

We use an independent pricing source to determine the fair value of our available-for-sale securities included as Level 2. For purposes of valuing our securities, the independent pricing source utilizes the following market approach by investment class:


•	Money market funds are valued on a spread or discount rate basis,


•	Asset-backed securities are valued using historical and projected prepayments speed and loss scenarios and spreads obtained from the new issue market, dealer quotes and trade prices,


•	U.S. treasuries, corporate bonds, and other debt securities are priced based on dealer quotes from multiple sources, and


•	U.S. government agencies and government sponsored agencies are priced using LIBOR/swap curves, credit spreads and interest rate volatilities.

We have not adjusted the prices obtained from the independent pricing service and we believe the prices received from the independent pricing service are representative of the prices that would be received to sell the assets at the measurement date (exit price).

We did not have any Level 3 financial instruments as of September 30, 2018 and December 31, 2017 . There were no transfers between levels as of September 30, 2018 and December 31, 2017 .



FINANCIAL STATEMENTS

Fair Value Measurements on a Recurring Basis

The following table summarizes our financial instruments by significant categories and fair value measurement on a recurring basis as of September 30, 2018 and December 31, 2017 .



(in millions)	Level 1		Level 2		Total
September 30, 2018
Cash equivalents:
Money market funds	$	3	$	—	$	3
Total cash equivalents	3		—		3
Investments:
Asset-backed securities	—		35		35
Corporate bonds	—		86		86
U.S. government agencies and government-sponsored agencies	—		8		8
U.S. treasuries	—		29		29
Other debt securities	—		10		10
Total investments	—		168		168
Restricted cash equivalents:
Money market mutual funds	241		—		241
Commercial paper	20		—		20
Total restricted cash equivalents	261		—		261
Restricted investments:
U.S. treasuries	—		5		5
Exchange traded fund	1		—		1
Certificate of deposit	—		2		2
Total restricted investments	1		7		8
Total investments and restricted cash equivalents and investments	$	265	$	175	$	440

December 31, 2017
Restricted cash equivalents:
Money market mutual funds	$	199	$	—	$	199
Commercial paper	21		—		21
Total restricted cash equivalents	220		—		220
Restricted investments:
U.S. treasuries	37		—		37
Exchange traded fund	1		—		1
Certificate of deposit	—		2		2
Total restricted investments	38		2		40
Total restricted cash equivalents and investments	$	258	$	2	$	260



FINANCIAL STATEMENTS

Fair Value of Financial Instruments Disclosure

Notes Payable

The carrying value of our notes payable at September 30, 2018 and December 31, 2017 was $420 million and $425 million , respectively. The estimated fair values of our notes payable at September 30, 2018 and December 31, 2017 were $419 million and $428 million , respectively. On September 30, 2018 we changed our methodology of estimating the fair values of our notes payable to a discounted cash flow, which incorporates credit spreads and market interest rates to estimate the fair value and is considered Level 3 in the hierarchy for fair value measurement. The valuation at December 31, 2017 is considered Level 2 in the hierarchy for fair value measurement and is based on quoted market prices.

NOTE 6. STOCKHOLDERS’ EQUITY

Equity-Based Incentive Plans

Our 2009 Equity Incentive Plan (2009 Plan) provides for the grant of stock awards, including stock options, restricted stock units (time-based and performance-based), restricted stock awards (time-based and performance-based) and other equity awards. The number of shares available for grant under this 2009 Plan as of September 30, 2018 was approximately 12 million .

The following table summarizes stock option activity under our 2009 Plan for the nine months ended September 30, 2018 :



	Number of Shares
Balance at December 31, 2017	1,296,863
Exercised	(540,292	)
Forfeited	(17,846	)
Balance at September 30, 2018	738,725
Exercisable at September 30, 2018	710,467

The aggregate intrinsic value of stock options outstanding was $32 million and $41 million as of September 30, 2018 and December 31, 2017 , respectively.

In March 2018, the Equity Award Committee of the Compensation Committee granted awards of time-based restricted stock (RSAs) and performance-based restricted stock (PRSAs) to the Company's named executive officers. A recipient of RSAs owns the underlying shares of common stock upon grant and some of the benefits of ownership, such as voting and dividend rights, but the recipient may not sell those shares and realize any value on a sale, until all time-based and performance-based restrictions have been satisfied or lapsed.

For non-new hire equity awards our RSAs and restricted stock units (RSUs) are eligible to vest in equal installments on a quarterly basis over four years , subject to continued employment through the applicable vesting dates. The PRSAs are earned based on the extent to which we meet or exceed certain annual growth rate percentages. Our PRSAs granted in 2018 are designed with a single-year performance period subject to subsequent multi-year vesting requirements. Fifty percent of the shares earned (if any) during performance period (January 1, 2018 to December 31, 2018) will vest on December 31, 2019 and the remaining shares earned (if any) will vest on December 31, 2020. The following tables summarize RSU, performance-based restricted stock unit (PSU), RSA, and PRSA activity under our 2009 Plan for the nine months ended September 30, 2018 :



FINANCIAL STATEMENTS



	RSUs				PSUs
	Number of Units		Weighted-Average Grant Date Fair Value		Number of Units		Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2017	2,249,661		$	24.83	453,674		$	30.72
Granted	608,582		47.66		23,842		47.61
Vested	(800,560	)	25.79		(82,066	)	33.51
Forfeited	(254,459	)	27.25		(65,557	)	31.60
Nonvested at September 30, 2018	1,803,224		$	31.77	329,893		$	31.08



	RSAs				PRSAs
	Number of Units		Weighted-Average Grant Date Fair Value		Number of Units	Weighted-Average Grant Date Fair Value
Nonvested at December 31, 2017	—		$	—	—	$	—
Granted	116,559		49.12		256,224	48.98
Vested	(9,122	)	47.61		—	—
Nonvested at September 30, 2018	107,437		$	49.25	256,224	$	48.98

Stock-Based Compensation

Stock-based compensation expense is measured based on the fair value of the stock option on the grant date and recognized over the requisite service period for each separately vesting portion of the stock option award. Stock-based compensation expense and other disclosures for stock-based awards made to our employees pursuant to the equity plans was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2018		2017		2018		2017
Cost of providing services	$	3	$	2	$	7	$	6
Sales and marketing	2		2		6		4
General and administrative	6		3		15		8
Systems development and programming costs	1		1		3		3
Total stock-based compensation expense	$	12	$	8	$	31	$	21
Income tax benefit related to stock-based compensation expense	$	3	$	3	$	8	$	8
Tax benefit realized from stock options exercised and similar awards	$	3	$	6	$	16	$	22

Stock Repurchases

The board of directors authorizes common stock repurchases through an ongoing program initiated in May 2014. During the nine months ended September 30, 2018 , we repurchased 895,699 shares of common stock for approximately $47 million . As of September 30, 2018 , approximately $90 million remained available for further repurchases of our common stock under our ongoing stock repurchase program under all authorizations from our board of directors.



FINANCIAL STATEMENTS

NOTE 7. NOTES PAYABLE

As of September 30, 2018 and December 31, 2017 , notes payable consisted of the following:



(in millions)	September 30, 2018			December 31, 2017			Contractual Interest Rate			Effective Interest Rate		Maturity Date
Term Loan A	$	—		$	303							July 2019
Term Loan A-2	—			122								July 2019
2018 Term Loan A	420			—			3.92	%	⁽¹⁾	4.02	%	June 2023
Total term loans	420			425
Deferred loan costs	(2		)	(2		)
Less: current portion	(22		)	(40		)
Notes payable, noncurrent	$	396		$	383


(1)	Bears interest at LIBOR plus 1.625% or the prime rate plus 0.625% at our option in the first full fiscal quarter of the term loan, thereafter subject to certain rate adjustments based on our total leverage ratio. As of September 30, 2018, the interest rate was based on LIBOR plus 1.625% .

In June 2018 we refinanced approximately $415 million of, and repaid in full, our outstanding A and A-2 term loans (together, our 2014 Term Loans) under our previous credit agreement (our 2014 Credit Agreement). Our 2014 Term Loans were replaced with a $425 million term loan A (our 2018 Term Loan) under our new credit agreement (our 2018 Credit Agreement). We also replaced our previous $75 million revolving credit facility established under our 2014 Credit Agreement with a $250 million revolving credit facility under our 2018 Credit Agreement (our 2018 Revolver), which will be used solely for working capital and other general corporate purposes. As part of this approximately $415 million refinancing transaction, $204 million was recorded as an extinguishment, and $211 million was rolled over into the 2018 Term Loan and was treated as a debt modification. As of September 30, 2018, $420 million was outstanding under our 2018 Term Loan and the full amount of our 2018 Revolver, less approximately $16 million representing an undrawn letter of credit, was available.

We incurred approximately $4 million in fees and acquisition costs related to our June 2018 refinancing, of which we capitalized approximately $3 million allocated proportionally between our 2018 Term Loan and 2018 Revolver. As a result of this modification, we expensed approximately $2 million in new and existing fees.

Interest on our 2018 Term Loan is payable quarterly. We are required to pay a quarterly commitment fee on the daily unused amount of the commitments under our 2018 Revolver, as well as fronting fees and other customary fees for letters of credit issued under our 2018 Revolver, which is subject to adjustments based on our total leverage ratio.

Borrowings under our 2018 Term Loan and 2018 Revolver are secured by substantially all of our assets, other than excluded assets as defined in our 2018 Credit Agreement, which includes certain customary assets, assets held in trusts as collateral and WSE related assets.

We are permitted to make voluntary prepayments at any time without payment of a premium. We are required to make mandatory prepayments of term loans (without payment of a premium) with (i) net cash proceeds from issuances of debt (other than certain permitted debt), and (ii) net cash proceeds from certain non-ordinary course asset sales and casualty and condemnation proceeds (subject to reinvestment rights and other exceptions).

The remaining balance of our 2018 Term Loan will be repaid in quarterly installments in aggregate annual amounts as follows (in millions):



	Year ending December 31,
	2018		2019		2020		2021		2022		Thereafter
Term loan repayments	$	6	$	22	$	22	$	22	$	22	$	326

Our 2018 Credit Agreement contains customary representations and warranties, and customary affirmative and negative covenants applicable to us, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of indebtedness (other than our 2018 Term Loan and our 2018 Revolver), dividends, distributions and transactions with affiliates.



FINANCIAL STATEMENTS

Our 2018 Credit Agreement restricts our ability to make certain types of payments including dividends and stock repurchases and other similar distributions, though such payments may generally be made as long as our total leverage ratio remains below 3.00 to 1.00 after the effect of these payments and there exists no default under the New Credit Agreement.

The financial covenants under our 2018 Credit Agreement require us to maintain a minimum consolidated interest coverage ratio of at least 3.50 to 1.00 at each quarter end and a maximum total leverage ratio of 3.50 to 1.00 . In the event of an acquisition the maximum ratio can be raised to 4.00 to 1.00 for four consecutive quarters. We were in compliance with these financial covenants under the credit facilities at September 30, 2018 .

NOTE 8. EARNINGS PER SHAR E (EPS)

The following table presents the computation of our basic and diluted EPS attributable to our common stock:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except per share data)	2018		2017		2018		2017
Net income	$	51	$	43	$	163	$	112
Weighted average shares of common stock outstanding	71		69		70		69
Basic EPS	$	0.73	$	0.62	$	2.32	$	1.62

Net income	$	51	$	43	$	163	$	112
Weighted average shares of common stock	71		69		70		69
Dilutive effect of stock options and restricted stock units	2		2		2		2
Weighted average shares of common stock outstanding	73		71		72		71
Diluted EPS	$	0.71	$	0.60	$	2.25	$	1.57

Common stock equivalents excluded from income per diluted share because of their anti-dilutive effect	—		—		1		2

NOTE 9. INCOME TAXES

Our effective income tax rate was 16% and 26% for the three months ended September 30, 2018 and 2017 , respectively, and 18% and 28% for the nine months ended September 30, 2018 and 2017 , respectively. These decreases are primarily due to a reduction of the federal corporate income tax rate from 35% to 21% pursuant to the Tax Cuts and Jobs Act (TCJA), tax benefits from a decrease in uncertain tax positions, an increase in tax credits and an increase in excludable income for state tax purposes. These benefits are partially offset by a decrease in excess tax benefits related to stock based compensation and a one-time qualified production activities deduction for certain software offerings recorded in the prior year.

During the nine months ended September 30, 2018, there was a de minimis change in our unrecognized tax benefits. The total amount of gross interest and penalties accrued was immaterial. Our unrecognized tax benefits are expected to change by $1 million during the next 12 months due to lapse of federal and state statute of limitations.

We are subject to tax in U.S. federal and various state and local jurisdictions, as well as Canada. We are not subject to any material income tax examinations in federal or state jurisdictions for tax years prior to January 1, 2012. We previously paid Notices of Proposed Assessments disallowing employment tax credits totaling $11 million , plus interest of $4 million in connection with the IRS examination of Gevity HR, Inc. and its subsidiaries, which was acquired by TriNet in June 2009. This issue is being resolved through the litigation process. TriNet and the IRS filed cross motions for summary judgment in this matter in federal district court on February 27, 2018. On September 17, 2018, the district court granted our motion for summary judgment and denied the government’s motion. We are presently working with the IRS to stipulate to a judgment amount in TriNet’s favor, which we expect will be filed some time in November. The IRS will then have 60 days after entry of the judgment to file a notice of appeal of the district court’s decision, should they choose to do so. We will continue to vigorously defend our position through the litigation process, including the appeal, if necessary. We anticipate our recovery of the refund to likely be less than the total amount in dispute.



FINANCIAL STATEMENTS

NOTE 10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

We lease office facilities, including our headquarters and other facilities, and equipment under non-cancellable operating leases. For detail of these commitments refer to Note 13 in Part II, Item 8 in our 2017 Form 10-K.

During the third quarter of 2018 we modified an existing lease for a total commitment of approximately $15 million over 10 years .

Credit Facilities

We maintain a $250 million revolving credit facility which includes capacity for a $20 million swingline facility. Letters of credit issued pursuant to the revolving credit facility reduce the amount available for borrowing under the revolving credit facility. The total unused portion of the revolving credit facility was $234 million as of September 30, 2018 .

The terms of the credit agreement governing the revolving credit facility require us to maintain certain financial ratios at each quarter end. We were in compliance with these covenants at September 30, 2018 .

We also have a $ 5 million line of credit facility to secure standby letters of credit related to our workers' compensation obligations. At September 30, 2018 , the total unused portion of the credit facility was $ 3 million .

Standby Letters of Credit

We have two standby letters of credit totaling $18 million provided as collateral for our workers’ compensation obligations. At September 30, 2018 , the facilities were not drawn down.

Contingencies

In August 2015, Howard Welgus, a purported stockholder, filed a putative securities class action lawsuit, Welgus v. TriNet Group, Inc., et. al., under the Securities Exchange Act of 1934 in the United States District Court for the Northern District of California. The complaint was later amended in April 2016 and again in March 2017. On December 18, 2017, the district court granted TriNet’s motion to dismiss the amended complaint in its entirety, without leave to amend. Plaintiff filed a notice of appeal of the district court’s order on January 17, 2018. Plaintiff-Appellant filed his opening appeal brief before the Ninth Circuit Court of Appeals on April 27, 2018. TriNet filed a responsive brief on June 28, 2018. Plaintiff-Appellant filed his reply brief on August 20, 2018. We are now waiting for the Ninth Circuit to schedule a hearing date, which could be 15 to 30 months from the date of appeal (a hearing date between April 2019 and July 2020 is likely). We see no basis for a reversal of the district court’s decision. We are unable to reasonably estimate the possible loss or expense, or range of losses and expenses, if any, arising from this litigation.

We are and, from time to time, have been and may in the future become involved in various litigation matters, legal proceedings, and claims arising in the ordinary course of our business, including disputes with our clients or various class action, collective action, representative action, and other proceedings arising from the nature of our co-employment relationship with our clients and WSEs in which we are named as a defendant. In addition, due to the nature of our co-employment relationship with our clients and WSEs, we could be subject to liability for federal and state law violations, even if we do not participate in such violations. While our agreements with our clients contain indemnification provisions related to the conduct of our clients, we may not be able to avail ourselves of such provisions in every instance. We have accrued our current best estimates of probable losses with respect to these matters, which are individually and in aggregate immaterial to our consolidated financial statements.

While the outcome of the matters described above cannot be predicted with certainty, management currently does not believe that any such claims or proceedings or the above mentioned securities class action will have a materially adverse effect on our consolidated financial position, results of operations, or cash flows. However, the unfavorable resolution of any particular matter or our reassessment of our exposure for any of the above matters based on additional information obtained in the future could have a material impact on our consolidated financial position, results of operations, or cash flows.



OTHER INFORMATION

Legal Proceedings

For the information required in this section, refer to Note 10 in the condensed consolidated financial statements and related notes included in this Form 10-Q.

Risk Factors

There have been no material changes in our risk factors disclosed in Part 1, Item 1A, of our 2017 Form 10-K.

Unregistered Sales of Equity Securities and Use of Proceeds

(a) Sales of Unregistered Securities

Not applicable.

(b) Use of Proceeds from Sales of Unregistered Securities

Not applicable.

The following table provides information about our purchases of TriNet common stock during the quarter ended September 30, 2018 :



Period	Total Number of Shares Purchased ⁽¹⁾	Weighted Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans ⁽²⁾	Approximate Dollar Value ($ millions) of Shares that May Yet be Purchased Under the Plans ⁽²⁾
July 1 - July 31, 2018	102,749	$	55.73	94,200	$	101
August 1 - August 31, 2018	193,220	$	57.36	111,700	$	95
September 1 - September 30, 2018	95,195	$	55.43	95,000	$	90
Total	391,164			300,900


(1)	Includes shares surrendered by employees to us to satisfy tax withholding obligations that arose upon vesting of restricted stock units granted pursuant to approved plans.


(2)	We repurchased a total of approximately $17 million of our outstanding common stock during the three months ended September 30, 2018 .

As of September 30, 2018 , we had approximately $90 million remaining for repurchases under our stock repurchase program. Stock repurchases under the program are primarily intended to offset the dilutive effect of share-based employee incentive compensation. The purchases were funded from existing cash and cash equivalents balances.

Our stock repurchases are subject to certain restrictions under the terms of our 2018 Credit Agreement. For more information about our 2018 Credit Agreement and our stock repurchases, refer to Notes 6 and 7 in Part I, Item 1 of this Form 10-Q.

Defaults Upon Senior Securities

Not applicable.

Mine Safety Disclosures

Not applicable.

Other Information

Not applicable.



OTHER INFORMATION

Exhibits

Incorporated herein by reference is a list of the exhibits contained in the Exhibit Index below.

EXHIBIT INDEX

Incorporated by Reference

Exhibit No.

Exhibit

Form

File No.

Exhibit

Filing Date

Filed Herewith

10.1

Transition Agreement, dated as of August 16, 2018 between TriNet Group, Inc. and Brady Mickelsen

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Linkbase Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document




*	Document has been furnished, is deemed not filed and is not to be incorporated by reference into any of TriNet Group, Inc.’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing.



SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	TRINET GROUP, INC.

Date: October 29, 2018		By:	/s/ Burton M. Goldfield
			Burton M. Goldfield
			Chief Executive Officer

Date: October 29, 2018		By:	/s/ Richard Beckert
			Richard Beckert
			Chief Financial Officer

Date: October 29, 2018		By:	/s/ Michael P. Murphy
			Michael P. Murphy
			Chief Accounting Officer

TRANSITION AGREEMENT

THIS TRANSITION AGREEMENT (the “ Agreement ”) is entered into as of August 16, 2018 (the “ Effective Date ”), by and among TriNet Group, Inc., a Delaware corporation (together with its successors and assigns, the “ Company ”), and Brady Mickelsen (the “ Executive ”).

RECITALS

WHEREAS, the Executive is currently serving as the Senior Vice President, Chief Legal Officer & Secretary of the Company;

WHEREAS, the Executive and the Company have mutually agreed to provide for an orderly transition of the Executive’s duties and responsibilities to a new Chief Legal Officer and the Executive desires to assist the Company in realizing such an orderly transition;

WHEREAS, the Executive and the Company mutually desire that the Executive continues in his current role, with the Executive’s current roles and responsibilities, until such time as his successor commences his or her employment with the Company;

WHEREAS, in furtherance of the foregoing, the Executive and the Company have negotiated and reached an agreement with respect to all rights, duties and obligations arising between them, including, but in no way limited to, any rights, duties and obligations that have arisen or might arise out of or are in any way related to the Executive’s continued employment with the Company and the conclusion of that employment.

NOW THEREFORE, in consideration of the covenants and mutual promises recited below, the parties agree as follows:

1. Transition of Duties . During the period beginning on the Effective Date and ending on the first to occur of: (i) the date on which another individual is appointed by the Company to serve as its Chief Legal Officer and such individual commences employment with TriNet (or such later date as is determined by the Company as the effective date of such appointment for the purposes of this Agreement), and (ii) December 31, 2018 (the “ Separation Date ” and the first to occur of the date on which another individual is appointed by the Company to serve as its Chief Legal Officer and the Separation Date, the “ Transition Date ”), the Executive shall continue to serve the Company as its SVP, Chief Legal Officer & Secretary. During the period from the Effective Date until the Transition Date, the Executive shall continue to serve as the Chief Legal Officer of the Company and shall devote his best efforts and substantially all of his business time and attention (except for vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s general employment policies) to the business of the Company in such capacity, consistent with his current role and responsibilities. In addition, if the Transition Date occurs prior to December 31, 2018, the Executive shall continue to serve as a Vice President of the Company until the Separation Date, in order to timely and accurately respond to reasonable requests by the Company to the extent reasonably possible with respect to the transition of his duties following the Transition Date and other matters involving the Company about which the Executive has or may have personal knowledge (other than the Executive’s separation or any other claim the Executive may bring against the Company that is not relea sed under the Releases), including any such matters which may arise after the Transition Date (the period from the Transition Date to the Separation Date, the “ Transition Period ”).

2. Compensation . As compensation for the Executive’s continuing employment and service hereunder, in recognition of the Executive’s contributions to the Company and as consideration for the Releases (as defined below), the Executive’s agreement to the Transition Period, if applicable, and the respective terms and conditions thereof, and the other promises of the Executive contained in this Agreement, which shall be deemed to include the

Executive’s agreement to (A) remain in the employ of the Company as described above through the Transition Date, (B) if the Transition Date occurs prior to December 31, 2018, to continue to serve as a Vice President of the Company until the Separation Date, on such terms and with such responsibilities as shall be mutually agreed by the Executive and his successor, in order to timely and accurately respond to reasonable requests by the Company to the extent reasonably possible with respect to the transition of his duties following the Transition Date and other matters involving the Company about which the Executive has or may have personal knowledge (other than the Executive’s separation or any other claim the Executive may bring against the Company that is not relea sed under the Releases), including any such matters which may arise after the Transition Date , (C) comply with the Company’s Business Ethics and Code of Conduct Policy and other policies relating to conduct, as in effect from time to time and applicable to its executive officers, and (D) subject to Section 6(a) below, comply with all covenants to which the Executive has agreed as part of his employment with the Company, including, but not limited to, those in the Employee Confidential Information and Inventions Assignment Agreement with the Executive (as amended from time to time, the “ Confidentiality Agreement ,” a copy of which is attached hereto as Exhibit A ), (the covenants described in the immediately preceding clauses (A) through (D) of this Section 2 are collectively referred to herein as the “ Covenants ”); and provided, that the Executive timely signs and returns this Agreement, complies with Covenants and complies with Sections 7, 9 and 13 below and does not revoke the Releases, the Company will provide Executive with the following compensation and benefits:

(a) Base Salary and Benefit Plan Participation . During the periods from the Effective Date until the Transition Date and during any Transition Period, the Executive will (i) receive his base salary as in effect on the Effective Date and (ii) participate in the Company’s retirement and welfare benefit plans, perquisite programs, expense reimbursement and vacation policies, as such plans, programs and policies may be in effect from time to time (collectively, the “ Plans ”).

(b) Benefits Upon Separation Date . Subject to the Executive (i) not unilaterally terminating his employment with the Company prior to the Transition Date without mutual consent of the Company, (ii) timely and accurately responding to reasonable requests by the Company to the extent reasonably possible with respect to the transition of his duties following the Transition Date and other matters involving the Company about which the Executive has or may have personal knowledge (other than the Executive’s separation or any other claim the Executive may bring against the Company that is not relea sed under the Releases), including any such matters which may arise after the Transition Date , and (iii) not being terminated by the Company for Cause (as defined in Section 2(c)) below), the Executive shall be entitled to the following benefits:

(i) Lump-Sum Payment. The Company will make a lump sum severance payment to Executive on the 60th day after the Separation Date in an amount equal to twelve (12) months of Executive’s base salary as in effect on the Effective Date, subject to any applicable withholdings and deductions.

(ii) Bonus Payments . If the Separation Date occurs on or after December 31, 2018, the Company shall pay the Executive an annual performance bonus for 2018 (the “2018 Bonus”) at such time as the annual bonuses for 2018 are paid by the Company to its other executive officers, but in no event later than May 1, 2019. The amount of such 2018 Bonus shall be based solely on the actual performance of the Company and the achievement of corporate performance goals. Achievement against corporate performance goals and, therefore, the actual amount of the bonus earned will be determined by the Company, in its sole discretion, subject to the approval of the Compensation Committee of the Board of Directors of the Company. For example, if the general executive bonus pool is funded at 95%, the Executive will be entitled to receive 95% of his entire target 2018 Bonus (which target amount is 70% of the Executive’s base salary).

(iii) Benefits . Upon separation from TriNet, if the Executive timely elects continued health insurance coverage pursuant to by the Consolidated Omnibus Budget Reconciliation Act, Section 4980B of the Internal Revenue Code and any state law of similar effect (“ COBRA ”), the Company will pay the COBRA

premiums for Executive and his eligible dependents for up to the first twelve (12) months of such coverage, or until such earlier date as (A) he or his dependents are no longer eligible for such coverage or (B) he or his dependents become eligible for health insurance coverage from another source. Executive must promptly inform the Company, in writing, if he or his dependents become eligible for health insurance coverage from another source during this period of coverage.

(iv) Equity Awards . On the Separation Date, the vesting of each then outstanding, unvested equity award (including any options, RSUs, RSAs and PSUs) held by Executive will accelerate as to 100% of any then unvested shares that would have otherwise vested during the twelve-month period following such date, which shall, for sake of clarity, include all shares underlying unvested equity awards that would have otherwise vested through and including December 31, 2019. The Executive shall have 30 days following such date to exercise any then-vested options of the Company.

(c) For purposes of this Agreement, “ Cause ” will mean (i) a willful act or omission involving gross misconduct or fraud that results in material injury to the Company, (ii) a willful refusal or failure to follow lawful and reasonable directions of the Board or an individual to whom Executive reports (as appropriate), (iii) a willful and habitual neglect of duties, or (iv) a conviction of a felony which is reasonably likely to inflict or has inflicted material injury on the Company. No act, omission or failure to act by the Executive shall be deemed “willful” unless committed without good faith and without reasonable belief that the act, omission or failure to act was in the Company’s best interests. Notwithstanding the foregoing, in each case, except in the case of gross misconduct (as determined in the sole discretion of the Board), Executive will receive written notice of any finding of Cause and a sixty (60) day cure period thereafter. Whether or not such Cause has been cured will be decided by the Board, in its sole discretion.

3. No Additional Entitlements . The Executive understands and acknowledges that he will have no further entitlements, other than (a) those recited in this Agreement and (b) accrued rights and entitlements that have vested as of the Separation Date under the Plans. The Executive hereby acknowledges that the Executive has no interest in or claim of right to reinstatement, reemployment or employment with the Company, and the Executive forever waives any interest in or claim of right to any future employment by the Company.

4. Withholding . All payments required to be made by the Company hereunder to the Executive shall be subject to withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.

5. Section 409A Compliance . It is intended that any amounts payable under this Agreement and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Internal Revenue Code Section 409A and the treasury regulations and guidance thereunder (“ Section 409A ”) so as not to subject the Executive to the payment of interest and tax penalty which may be imposed under Section 409A. Notwithstanding anything contained herein to the contrary, if, at the Executive’s separation from service, (a) the Executive is a specified employee as defined in Section 409A and (b) any of the payments or benefits provided hereunder constitute deferred compensation under Section 409A, then, and only to the extent required by such provisions, the date of payment of such payments or benefits otherwise provided shall be delayed for a period of six months following the separation from service, and any amounts so delayed shall be paid during the seventh month following separation from service. Any reimbursement amounts payable under this Agreement shall be paid promptly after receipt of a properly documented request for reimbursement from the Executive, provided no amount shall be paid later than December 31 of the year following the year during which the reimbursable amounts were incurred by Executive.

6. Executive Protections; Defend Trade Secrets Act .

(a) Nothing in this Agreement or otherwise limits Executive’s ability to communicate directly with and provide information, including documents, not otherwise protected from disclosure by any applicable law or privilege to the Securities and Exchange Commission (the “ SEC ”), or any other federal, state or local governmental agency or commission or self-regulatory organization (each such agency, commission or organization, a “ Government Agency ”) regarding possible legal violations, without disclosure to the Company. The Company may not retaliate against Executive for any of these activities, and nothing in this Agreement requires Executive to waive any monetary award or other relief that Executive might become entitled to from the SEC or any other Government Agency.

(b) Pursuant to the Defend Trade Secrets Act of 2016, Executive and the Company acknowledge and agree that Executive shall not have criminal or civil liability under any federal or state trade secret law for the disclosure of a trade secret that (i)is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii)is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition and without limiting the preceding sentence, if Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to Executive’s attorney and may use the trade secret information in the court proceeding, if Executive (X) files any document containing the trade secret under seal and (Y) does not disclose the trade secret, except pursuant to court order.

7. Execution of Agreement; Release of Claims . Subject to Section 6(a) above, the payments and benefits to the Executive pursuant to this Agreement are contingent upon (a) the Executive executing and delivering to the Company this Agreement and a release of claims in the form attached to this Agreement as Exhibit B (the “ Initial Release ”) by 5:00 p.m. Pacific on August 16, 2018, (b) the Executive executing and delivering to the Company on the first business day following the Separation Date, a release of claims in substantially the same form as the Initial Release, effective as of that date (the “ Second Release ” and together with the Initial Release, the “ Releases ”) and (c) the Executive not revoking either of the Releases.

8. Return of Property . Subject to Section 6(a) hereof, on or prior to the Separation Date, the Executive will return all of the Company’s property. Such property includes, but is not limited to, the original and any copies of any confidential information or trade secrets, keys, pass cards, building identity cards, mobile telephones, tablet devices, laptop computers, corporate credit cards, customer lists, files, brochures, documents or computer disks or printouts, equipment and any other item relating to the Company and its business, provided that it would not be a violation of this Section 9 for the Executive to retain copies of publicly-filed documents. Further, other than in the performance of the Executive’s duties and subject to Section 7(a) hereof, the Executive will not take, procure, or copy any property of the Company before, on, after or in anticipation of the Separation Date. For purposes of this Section 9, “Company” shall include the Company, its subsidiaries and affiliates.

9. Cooperation . Subject to Sec tion 6(a) hereof, in consideration for the promises and payments by the Company pursuant to this Agreement, at the request of the Company, the Executive agrees to timely and accurately respond to reasonable requests by the Company to the extent reasonably possible with respect to the transition of his duties following his termination date and other matters involving the Company about which the Executive has or may have personal knowledge (other than the Executive’s separation or any other claim the Executive may bring against the Company that is not relea sed under the Releases), including any such matters which may arise after the Separation Date, provided that the Company shall reimburse the Executive for any out-of-pocket expenses reasonably related to such requests that are approved by the Company in advance. For purposes of this Section 9, “Company” shall include the Company, its subsidiaries and affiliates.

10. Resignations . Effective as of the Transition Date, unless otherwise requested by the Company in writing, the Executive will, automatically and without further action on the part of the Executive or any other person or

entity, resign from all offices, boards of directors (or similar governing bodies), committees of such boards of directors (or similar governing bodies) and committees of the Company, its subsidiaries and affiliates, other than the office of Vice President of the Company, from which office the Executive will automatically and without further action on the part of the Executive or any other person or entity, resign on the Separation Date. In addition, and without limiting the effectiveness of the resignations in the immediately preceding sentence, on the Transition Date, the Executive will execute and deliver to the Company a written resignation from his position as Chief Legal Officer and Secretary of the Company. The Executive agrees that he shall execute any such further documents and instruments as may be reasonably necessary or appropriate to carry out the intent of this Section 10.

11. Non-Reliance . The Executive represents to the Company and the Company represents to the Executive that in executing this Agreement they do not rely and have not relied upon any representation or statement not set forth herein made by the other or by any of the other’s agents, representatives or attorneys with regard to the subject matter, basis or effect of this Agreement, or otherwise. The Executive (a) has reviewed with his own advisors the tax and legal consequences of entering into and the payments under this Agreement, (b) is relying solely on such advisors and not on any statements or representations of the Company, its agents or advisors, and (c) understands that he (and not the Company) shall be responsible for his own tax liability that may arise as a result of entering into and the payments under this Agreement, other than the Company’s liability with respect to any required tax withholdings thereon.

12. Assignability . The rights and benefits under this Agreement are personal to the Executive and such rights and benefits shall not be subject to assignment, alienation or transfer, except to the extent such rights and benefits are lawfully available to the estate or beneficiaries of the Executive upon death. The Company may assign this Agreement to any parent, affiliate or subsidiary and shall require any entity which at any time becomes a successor whether by merger, purchase, or otherwise acquires all or substantially all of the assets, stock or business of the Company, to expressly assume this Agreement.

13. Confidentiality, Intellectual Property, Non-Solicitation and Non-Disparagement and Non-Competition . Subject to Section 6(a) hereof, the Company and the Executive acknowledge and agree that the provisions of the Confidentiality Agreement, and all other Covenants shall continue to apply to the Executive prior to and after the Separation Date as if fully set forth in this Agreement. In addition, and in consideration of the compensation described in Section 2 hereof, and the Company’s commitments hereunder, the Company and the Executive also agree, subject to Section 6(a) hereof, as follows:

(a) Non-Solicitation . The Executive acknowledges that the provisions of Section 5 of the Confidentiality Agreement relating to non-solicitation of employees shall apply for a period of twelve months following the Separation Date.

(b) Non-Disparagement . At all times prior to and after the Separation Date, the Executive will not disparage, place in a false light or criticize, orally or in writing, the business, products, policies, decisions, directors, officers or employees of the Company to any person. The Company also agrees that at all times prior to and after the Separation Date, none of the CEO, any director or any employee of the Company who reports directly to the CEO will disparage, place in false light or criticize the Executive to any person or entity either orally or in writing.

(c) Injunctive Relief . It is recognized and acknowledged by the Executive that a breach of the covenants contained in this Section 13 will cause irreparable damage to the Company, its subsidiaries and affiliates and their respective goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, the Executive agrees that in the event of a breach of any of the covenants contained in this Section 13, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief. The Executive agrees

not to raise as a defense or objection to the request or granting of such relief that any breach of this Agreement is or would be compensable by an award of money damages, and the Executive agrees to waive any requirements for the securing or posting of any bond in connection with such remedy. The provisions of this Section 13(c) shall apply to the Company with respect to the second sentence of Section 13(b) mutatis mutandis .

For purposes of this Section 13, “Company” shall include the Company, its subsidiaries and affiliates.

14. Entire Agreement . The Executive acknowledges and agrees that this Agreement, together with the Exhibits hereto and the other documents, Company plans and Company policies referred to herein, including, without limitation the Confidentiality Agreement, any equity agreements and all agreements thereunder or related thereto to which Executive is a party) constitute the entire agreement and understanding between the parties and supersedes any prior agreements, written or oral, with respect to the subject matter hereof, including the termination of the Executive’s employment after the Effective Date and all amounts to which the Executive shall be entitled whether during the Transition Period or thereafter, other than as specifically provided in this Agreement. The Executive acknowledges and agrees that this Agreement supersedes the terms regarding the Executive’s termination of employment set forth in that certain letter agreement dated May 8, 2015, as amended, between Executive and the Company.

15. Severability/Reasonable Alteration . In the event that any part or provision of this Agreement shall be held to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable part or provision had not been included therein. Further, in the event that any part or provision hereof shall be declared by a court of competent jurisdiction to exceed the maximum time period, scope or activity restriction that such court deems reasonable and enforceable, then the parties expressly authorize the court to modify such part or provision so that it may be enforced to the maximum extent permitted by law.

16. No Strict Construction . The language used in this Agreement will be deemed to be the language chosen by the Executive and the Company to express their mutual intent, and no rule of strict construction will be applied against the Executive or the Company.

17. Insurance . The Company presently maintains general liability insurance on an occurrence basis which covers the professional activities of employed accountants and other professionals of the Company. The Company will continue to provide such coverage for the past activities of the Executive to the same extent as such coverage is provided with respect to the past activities of other former employed accountants and other professionals of the Company. In addition, the Company presently maintains directors’ and officers’ liability insurance covering its directors and officers. The Company will continue to cover the Executive under such insurance to the same extent the Company maintains such insurance from time to time for its directors and officers.

18. Applicable Law, Venue and Jurisdiction . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of laws principles, rules or statutes of any jurisdiction. The parties irrevocably agree that all actions to enforce an arbitrator’s decision pursuant to Section 20 of this Agreement may be instituted and litigated in federal, state or local courts sitting in Santa Clara County, California and each of such parties hereby consents to the jurisdiction and venue of such court, waives any objection based on forum non conveniens and any right to a jury trial as set forth in Section 19 of this Agreement.

19. Waiver of Jury Trial . EACH OF THE EXECUTIVE AND THE COMPANY HEREBY WAIVES, RELEASES AND RELINQUISHES ANY AND ALL RIGHTS HE/IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM OR ACTION TO REMEDY ANY BREACH OR ALLEGED BREACH HEREOF, TO ENFORCE ANY TERM HEREOF, OR IN

CONNECTION WITH ANY RIGHT, BENEFIT OR OBLIGATION ACCORDED OR IMPOSED BY THIS AGREEMENT.

20. Arbitration . To provide a mechanism for rapid and economical dispute resolution, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to this Agreement (including the Release) or its enforcement, performance, breach, or interpretation, or arising from or relating to Executive’s employment with the Company or the termination of Executive’s employment with the Company, will be resolved, to the fullest extent permitted by law, by final, binding, and confidential arbitration held in Santa Clara County, California and conducted by JAMS, Inc. (“ JAMS ”), under its then applicable JAMS Employment Arbitration Rules and Procedures. By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or by administrative proceeding. Executive will have the right to be represented by legal counsel at any arbitration proceeding at his expense. The arbitrator will: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based. The Company will bear all fees for the arbitration, except for any attorneys’ fees or costs associated with Executive’s personal representation. The arbitrator, and not a court, will also be authorized to determine whether the provisions of this paragraph apply to a dispute, controversy or claim sought to be resolved in accordance with these arbitration procedures. Notwithstanding the provisions of this paragraph, the parties are not prohibited from seeking injunctive relief in a court of appropriate jurisdiction to prevent irreparable harm on any basis, pending the outcome of arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and the state courts of any competent jurisdiction.

21. Counterparts and Facsimiles . This Agreement may be executed in several counterparts, each of which shall be deemed as an original, but all of which together shall constitute one and the same instrument; signed copies of this Agreement may be delivered by .pdf, .jpeg or fax and will be accepted as an original.

22. Expenses . Each of the Company and the Executive shall bear its/his own costs and expenses in connection with the negotiation and documentation of this Agreement.

23. No Reliance Upon Other Statements . This Agreement is entered into without reliance upon any statement or representation of any party hereto or parties hereby released other than the statements and representations contained in writing in this Agreement.

24. Amendment/Waiver . This Agreement may not be modified without the express written consent of the parties hereto. Any failure by any party to enforce any of its rights and privileges under this Agreement shall not be deemed to constitute waiver of any rights and privileges contained herein.

25. Notice . Any notice to be given hereunder shall be in writing and shall be deemed given when mailed by certified mail, return receipt requested, addressed as follows:



To the Executive at

To the most recent address provided by the Executive to the Company

To the Company at:

TriNet Group Inc. One Park Plaza 6 ^th Floor Dublin, California 94568 Attn: Board of Directors

26. Company Subsidiaries, Affiliates and Divisions . For purposes of this Agreement, references to “subsidiaries,” “affiliates” or “divisions” of the Company shall mean and include those entities or persons publicly identified by the Company to a subsidiary, affiliate or division of the Company and such other entities or persons actually known by the Executive to be a subsidiary, affiliate or division of the Company.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Transition Agreement as of the date and year first set forth above.

TRINET GROUP INC.

By: ___/s/ Burton M. Goldfield_________

BURTON M. GOLDFIELD

Its: President and Chief Executive Officer

EXECUTIVE

/s/ Brady Mickelsen

BRADY MICKELSEN

EXHIBIT A

TRINET GROUP, INC.

EMPLOYEE CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT

I understand that, in the course of my employment with TriNet Group, Inc. (the “ Company ”), I have obtained or developed, or may obtain or develop, confidential or proprietary information relating to the present or future business of the Company, its affiliated entities, or their respective directors, officers, employees, members, shareholders, affiliates, vendors, or agents (“ Affiliated Parties ”), the value of which may be destroyed or seriously diminished by unauthorized use or disclosure. I therefore agree to the following as a condition of my employment with the Company and/or the continuation of that employment.

1. MAINTAINING PROPRIETARY INFORMATION

Company Information . I agree at all times during and after my employment relationship with the Company not to use, except for the benefit of the Company, or to disclose to any person or entity, without the written authorization of a duly authorized officer of the Company, any trade secrets, confidential information or data, or other proprietary information of the Company (collectively “ Proprietary Information ”), except as required by law. Such Proprietary Information may include, but is not limited to, the following examples: information with regard to the Company’s or its Affiliated Parties’ business methods, operations, activities, agreements, plans, analyses, strategies, proposals, finances and financial statements, business contacts and partners, customers and prospective customers and clients and prospective clients (including names, addresses, phone numbers, preferences, and all other information), vendors, research and development activities and plans, sales and marketing activities and plans, personnel, technical data, reports, compilations of data, databases or computer programs obtained, developed, modified, or maintained by the Company or its Affiliated Parties; and all information or materials obtained or developed by me in the course of my employment with the Company. Any doubts as to the status of a particular document or piece of information should he resolved in favor of treating the information as Proprietary Information.

Third Party Information . I recognize that the Company and its Affiliated Parties have received and in the future will receive Proprietary Information from business partners, customers and prospective customers, clients and prospective clients, distributors, vendors, and other third parties subject to a duty of the Company and its Affiliated Parties to maintain the confidentiality of such information and, in some cases, to use it only for certain limited purposes. I agree that I owe both the Company, its Affiliated Parties and such third parties, both during the term of my employment with the Company and thereafter, a duty to hold all such information in the strictest confidence and not to use or disclose it except in a manner consistent with the Company’s and its Affiliated Parties’ agreement with the third party, unless expressly authorized to do otherwise by a duly authorized agent of the third party or officer of the Company.

I nformation From Former Employers . I agree that during my employment with the Company, I will not improperly use or disclose any Proprietary Information of any former employer or any other third party to whom I have an obligation of confidentiality. I agree to perform my duties for the Company without breaching any lawful agreement with any former employer or other third party, including but not limited to any agreement to refrain from unauthorized use or disclosure of information obtained or developed by me prior to my employment with the Company; and I represent that I am not subject to any agreement with any third party (e.g., a noncompetition or nonsolicitation agreement) that will restrict my activities with the Company which I have not disclosed to the CEO of the Company.

2. ASSIGNMENT OF INVENTIONS .

I agree that all inventions, improvements, original works of authorship, formulas, processes, computer programs, databases, and trade secrets (“ Inventions ”) that (1) are developed using equipment, supplies, facilities, or trade secrets of the Company, (2) result from work performed by me for the Company, or (3) relate to the business of the Company or the actual or anticipated research, development, or business plan of the Company, will be the sole and exclusive property of and are hereby irrevocably and exclusively assigned to the Company. I understand that the provisions of this paragraph do not apply to any Invention that qualities fully for protection under Section 2870 of the California Labor Code (which is detailed in Exhibit A to this Agreement) or any similar statute in any applicable jurisdiction. Any Invention related to the current or reasonably anticipated lines of business of the Company in which I believe that I have an ownership interest (collectively “ Prior Inventions ”) alone or jointly with others, and that I wish to have excluded from the inventions assignment provisions of this paragraph, is listed with sufficient specificity on Exhibit A hereto. If no Prior Inventions are listed in Exhibit A , I warrant that there are none. I agree that I will not incorporate any Prior Inventions in any Company Inventions without the Company’s prior written consent; and if I should do so, I am thereby granting the Company, with respect to such Prior Invention, a non-exclusive, perpetual, royalty-free, irrevocable, and worldwide license, with right to sublicense, reproduce, make derivative works, and publicly display or sell in any form or medium.

3. RETURN OF COMPANY PROPERTY

I understand that all documents, correspondence and other work obtained, produced, created or developed in the course of my work with the Company are the Company’s sole property. When my employment with the Company ends, or whenever demanded by the Company, I will deliver to the Company (and will not keep in my possession, recreate in whole or in part. reproduce, copy or deliver to anyone else) all property or materials of the Company in my possession or control, including but not limited to: any and all materials, devices, records, data, notes, notebooks, reports, compilations of data, agreements, proposals, plans, analyses, studies, lists, files, memoranda, correspondence, specifications, drawings, blueprints, sketches, charts, graphs, software, computer-recorded information, equipment (e.g., computer devices, cellular telephones, facsimile machines), keys, entry cards, identification badges, business cards, and other documents or property, and any embodiment of Proprietary Information of the Company or its Affiliated Parties in any form, together with all copies or reproductions thereof (in whole or in part, and in whatever medium recorded). I also agree to make a diligent search at that time to locate all such property and materials wherever they may be located or stored (including but not limited to information stored on any personal computer device, which information shall be returned to the Company and deleted from such device).



4.	INFORMATION SYSTEMS

I understand that the Company has a critical interest in maintaining complete control and access to all of its electronic, computer, communications, security and information systems (collectively, “ Information Systems ”). In view of this interest, I acknowledge that I have no right to privacy as to any information (personal or otherwise) that I receive, review, create, input, or otherwise cause to become a part of the Information Systems. Further, I agree that the Company, or its designee(s), shall be entitled (in the exercise of the Company’s sole discretion) to audit, monitor, review, intercept, access, disclose, print, use, delete, erase, and/or destroy any and all such information on the Information Systems at any time, with or without notice or my consent. I also agree that I will not introduce any unauthorized software, peripherals or equipment to the Information Systems, or their related, component or connected networks at any location of or used by the Company and its Affiliated Parties and/or its their customers, clients and vendors.



5.	ADDITIONAL ACTIVITIES

I agree that during the term of my employment by Company, I will not (a) without Company’s express written consent, engage in any employment or business activity that is competitive with, or would otherwise conflict with my employment by, Company; and (b) for the period of my employment by Company and for one (1) year thereafter, I will not either directly or indirectly, solicit or attempt to solicit any employee, independent contractor, or consultant of Company to terminate his, her or its relationship with Company in order to become an employee, consultant, or independent contractor to or for any other person or entity.



6.	EMPLOYMENT

I agree and understand that nothing in this Agreement shall give me any right to continued employment by Company, and it will not interfere in any way with my right or Company’s right to terminate my employment at any time, with or without cause and with or without advance notice.

This Agreement shall be effective as of the first date of my employment with the Company (including any Company predecessors). It is the final, complete, and exclusive embodiment of the agreement of the parties with respect to the subject matter hereof, and supersedes all prior representations or communications, oral or written. No modification of or amendment to this Agreement, or any waiver of rights under this Agreement, will be effective unless in a writing signed by me and a duly authorized officer of the Company. This Agreement shall survive the termination of my employment and the assignment of this Agreement by Company to any successor or other assignee and shall be binding upon my heirs and legal representatives. I acknowledge and agree that any material breach of this Agreement would cause the Company irreparable harm, any remedy at law for such breach or threatened breach would be inadequate, and the Company shall be entitled to injunctive relief (without having to post a bond) in the event of such breach or threatened breach, in addition to any other available rights and remedies. I further agree that if any provision of this Agreement is held invalid or unenforceable in any respect in any jurisdiction, then no other provision shall be affected thereby, and the invalid and unenforceable provision shall be modified so as to render it valid and enforceable consistent with the general intent of the parties insofar as possible under applicable law. Any ambiguities in this Agreement shall not be construed against either party as the drafter. This Agreement will be governed by and construed according to the laws of the State of California, without reference to conflict of laws principles.



7.	GENERAL

I have read this Agreement carefully, and I understand and agree to its terms.




/s/ Brady Mickelsen
Signature


Brady Mickelsen

EXHIBIT B

RELEASE AGREEMENT

This Release Agreement (this “ Agreement ”) is entered into as of August 16, 2018 by Brady Mickelsen (the “ Executive ”), on the one hand, and TriNet Group, Inc. (the “ Company ”), on the other hand (the Executive and the Company are referred to collectively as the “ Parties ”).

1. Release . In consideration of the compensation payable to the Executive under the terms and conditions of the Transition Agreement dated September 30, 2016, by and between the Executive and the Company (the “ Transition Agreement ”), and for other good and valuable consideration, receipt of which is hereby acknowledged, the Executive, for herself and for his heirs, executors, administrators, trustees and legal representatives, and their respective successors and assigns (collectively, the “ Releasors ”), hereby releases, remises, and acquits the Company and its subsidiaries and affiliates and all of their respective past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, any of their respective assets, employee benefit plans or funds, or past, present or future directors, officers, fiduciaries, agents, trustees, administrators, managers, supervisors, shareholders, investors, employees, legal representatives, agents or counsel, and their respective successors and assigns, whether acting on behalf of the Company or its subsidiaries or affiliates or, in their individual capacities (the “ Released Party ” or “ Released Parties ”), from any and all claims, known or unknown, which the Releasors have or may have against any Released Parties arising on or prior to the date that the Executive executes this Release, and any and all liability which any such Released Party may have to the Releasors, whether denominated claims, demands, causes of action, obligations, damages or liabilities arising from any and all bases, however denominated, including but not limited to (a) any claim under the Age Discrimination in Employment Act of 1967 (including the Older Workers Benefit Protection Act) (the “ ADEA ”), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Civil Rights Act of 1964, the Civil Rights Act of 1991, Section 1981 of the Civil Rights Act of 1866, the Equal Pay Act, the Lilly Ledbetter Fair Pay Act, the Immigration Reform and Control Act of 1986, the Employee Retirement Income Security Act of 1974, (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Company, subject to the terms and conditions of such plan and applicable law), the Uniform Trade Secrets Act, the Sarbanes-Oxley Act of 2002, the Fair Labor Standards Act, the California Fair Employment and Housing Act, the Unruh Civil Rights Act, the California Family Rights Act, and the California Labor, Government, and Business and Professions Codes, all as amended; (b) any and all claims arising from or relating to, as applicable, the Executive’s service as an officer of the Company or any of its subsidiaries or affiliates and the termination or resignation of such officer positions, or the Executive’s employment with the Company or the termination of such employment; (c) all claims related to Executive’s compensation or benefits from the Company or the Released Parties, including salary, bonuses, commissions, vacation pay, leave pay, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership interests in the Company or the Released Parties; (d) all claims for breach of contract, wrongful termination and breach of the implied covenant of good faith and fair dealing; (e) all tort claims, including claims for fraud, defamation, privacy rights, emotional distress, and discharge in violation of public policy and all other claims under common law; and (f) all federal, state and local statutory or constitutional claims, including claims for compensation, discrimination, harassment, whistleblower protection, retaliation, attorneys’ fees, costs, disbursements, or other claims (referred to collectively as the “ Released Claims ”).

The Executive expressly waives all rights afforded by Section 1542 of the Civil Code of the State of California, which states as follows: “ A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. ”

Executive understands the significance of Executive’s release of unknown claims and waiver of statutory protection against a release of unknown claims. Executive expressly assumes the risk of such unknown and unanticipated claims and agrees that this Release applies to all Released Claims, whether known, unknown or unanticipated.

Notwithstanding the foregoing, this Release does not release claims that cannot be released as a matter of law, or the right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission (“ EEOC ”), the Department of Labor, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company. However, by executing this Release, the Executive hereby waives the right to monetary recovery from the Company, no matter how denominated, including, but not limited to, wages, back pay, front pay, compensatory damages or punitive damages, in any proceeding the Executive may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on the Executive’s behalf.

In addition, this Release shall not apply to (a) the Executive’s rights under any written agreement between the Executive and the Company that provides for indemnification, the Executive’s rights, if any, to be covered under any applicable insurance policy with respect to any liability the Executive incurred or might incur as an employee, officer or director of the Company, or the Executive’s rights, if any, to indemnification under the by-laws or articles of incorporation of the Company; (b) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against the Executive as a result of any act or failure to act for which the Executive, on the one hand, and Company or any other Released Party, on the other hand, are jointly liable; (c) the Executive’s right to enforce the Transition Agreement or (d) Executive’s rights, if any, under any equity awards of the Company.

Notwithstanding the foregoing, the Executive understands the significance of the Executive’s release of unknown claims and waiver of statutory protection against a release of unknown claims. The Executive expressly assumes the risk of such unknown and unanticipated claims and agrees that this Release applies to all Released Claims, whether known, unknown or unanticipated, except as otherwise expressly set forth herein.

2. ADEA Waiver . The Executive acknowledges that he is knowingly and voluntarily waiving and releasing any rights the Executive may have under the ADEA, as amended. The Executive also acknowledges that the consideration given for the waiver and release herein is in addition to anything of value to which the Executive was already entitled. The Executive further acknowledges that he has been advised by this writing, as required by the ADEA, that: (a) the Executive’s waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) the Executive has been advised hereby that he has the right to consult with an attorney prior to executing this Agreement; (c) the Executive has up to twenty-one (21) days from the date of this Agreement to execute it (although he may choose to voluntarily execute this Agreement earlier); (d) the Executive has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; and (e) this Agreement will not be effective until the date upon which the revocation period has expired, which will be the eighth day after this Agreement is executed by the Executive, provided that the Company has also executed this Agreement by that date (“Effective Date”); and (f) this Agreement does not affect the Executive’s ability to test the knowing and voluntary nature of this Agreement.

3. No Actions or Claims. Subject to Section 7(a) of the Transition Agreement, Executive represents that he has not filed any charges, complaints, grievances, arbitrations, lawsuits, or claims against the Company, with any local, state or federal agency, union or court from the beginning of time to the date of execution of this Agreement and that the Executive will not do so at any time hereafter, based upon events occurring prior to the date of execution of this Agreement. In the event any agency, union, or court ever assumes jurisdiction of any lawsuit, claim, charge, grievance, arbitration, or complaint, or purports to bring any legal proceeding on behalf of the Executive, the Executive will ask any such agency, union, or court to withdraw from and/or dismiss any such action, grievance, or arbitration, with prejudice.

4. Waiver . In granting the release herein, the Executive understands that this Agreement includes a release of all claims known or unknown. In giving this release, which includes claims which may be unknown to you at present, the Executive acknowledges that he has read and understand Section 1542 of the California Civil Code which reads as follows: " A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. " The Executive hereby expressly waives and relinquishes all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to the release of any unknown or unsuspected claims the Executive may have against the Company.

5. Acknowledgements and Representations . The Executive acknowledges and represents that he has not suffered any discrimination or harassment by any of the Released Parties on account of the Executive’s race, gender, national origin, religion, marital or registered domestic partner status, sexual orientation, age, disability, medical condition or any other characteristic protected by law. The Executive acknowledges and represents that he has not been denied any leave, benefits or rights to which the Executive may have been entitled under the FMLA or any other federal or state law, and that the Executive has not suffered any job-related wrongs or injuries for which the Executive might still be entitled to compensation or relief.

6. Mutual Non-Disparagement . Subject to Section 7(a) of the Transition Agreement, Executive shall not, directly or indirectly, make or cause to be made, any statement that disparages or is likely to harm the reputation of the Company, any of its affiliates, or any of their respective products, services, officers, directors or employees. The Company shall direct its directors and officers not to, directly or indirectly, make or cause to be made, any statement that disparages or is likely to harm the reputation of the Executive. Truthful statements required to be made by law or in response to legal process shall not violate this Section 6. Notwithstanding Section 9 of this Agreement, the Parties shall be entitled to seek injunctive relief in aid of arbitration to enforce the provisions of this Section 6.

7. Miscellaneous .

a. Assigns . The terms of this Agreement are binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns.

b. Governing Law . This Agreement is, and disputes arising under it are, governed by the laws of the State of California without regard to the principles of conflicts of law that would apply the laws of another jurisdiction.

c. Severability . Each provision in this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision is ineffective to the extent of such prohibition or invalidity, without prohibiting or invalidating the remainder of the such provision or the remainder of this Agreement.

d. Entire Agreement; Each Party the Drafter . This Agreement constitutes the entire agreement and complete understanding of the Parties with regard to the matters set forth herein and, except as otherwise set forth in this Agreement, supersedes any and all prior or contemporaneous agreements, understandings, and discussions, whether written or oral, between the parties with regard to such matters. No other promises or agreements are binding unless in writing and signed by each of the parties after the date hereof. Should any provision of this Agreement require interpretation or construction, the entity interpreting or construing this Agreement should not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document.

e. Counterparts . This Agreement may be signed in multiple counterparts, each of which shall be deemed an original. Any executed counterpart returned by facsimile or electronic transmission shall be deemed an original executed counterpart.

8. Notices; Payments . All notices or communications hereunder shall be in writing, and shall be addressed as follows (or to such other address as either Party may have furnished to the other in writing by like notice): (a) To the Company: TriNet Group, Inc., 1100 San Leandro Boulevard, San Leandro, CA 94577, Attn: Chief Legal Officer, (b) To the Executive at the Executive’s home address in the Company’s records. All such notices or communications shall be conclusively deemed to be delivered (i) if sent by hand delivery or by email (to the Company as set forth above), upon receipt, (ii) if sent by overnight courier, one business day after being sent by overnight courier, or (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the fifth day after the day on which such notice or correspondence is mailed.

9. Dispute Resolution . To provide a mechanism for rapid and economical dispute resolution, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to this Agreement (including the Release) or its enforcement, performance, breach, or interpretation, or arising from or relating to Executive’s employment with the Company or the termination of Executive’s employment with the Company, will be resolved, to the fullest extent permitted by law, by final, binding, and confidential arbitration held in San Francisco County, California and conducted by JAMS, Inc. (“ JAMS ”), under its then applicable JAMS Employment Arbitration Rules and Procedures. By agreeing to this arbitration procedure, both Executive and the Company waive the right to resolve any such dispute through a trial by jury or judge or by administrative proceeding. Executive will have the right to be represented by legal counsel at any arbitration proceeding at his expense. The arbitrator will: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based. The Company will bear all fees for the arbitration, except for any attorneys’ fees or costs associated with Executive’s personal representation. The arbitrator, and not a court, will also be authorized to determine whether the provisions of this paragraph apply to a dispute, controversy or claim sought to be resolved in accordance with these arbitration procedures. Notwithstanding the provisions of this paragraph, the parties are not prohibited from seeking injunctive relief in a court of appropriate jurisdiction to prevent irreparable harm on any basis, pending the outcome of arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and the state courts of any competent jurisdiction.

IN WITNESS WHEREOF, the parties have executed this Release Agreement effective as of the Effective Date.

TRINET GROUP, INC.

____ /s/ Burton M. Goldfield __________________

By: BURTON M. GOLDFIELD

Its: President and Chief Executive Officer

EXECUTIVE

____ /s/ Brady Mickelsen _____________________

Brady Mickelsen

REAFFIRMATION PAGE

This page represents your reaffirmation of the commitments set forth in the Release from the date you signed the Release through the date that you sign this reaffirmation, and you hereby agree that the release of claims pursuant to Section ‎1 of the Release will be extended to cover any act, omission or occurrence occurring up to and including the date you sign this reaffirmation. You will have seven (7) days following your execution of this reaffirmation to revoke your signature by notifying, in writing, to the Board of Directors of the Company of this fact within such seven (7) day period.

I ratify and reaffirm the commitments set forth in the Agreement:

__________________________

Brady Mickelsen

___________________________

Date

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Burton M. Goldfield, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2018

/s/ Burton M. Goldfield

Burton M. Goldfield

President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard Beckert, certify that:


1.	I have reviewed this quarterly report on Form 10-Q of TriNet Group, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 29, 2018

/s/ Richard Beckert

Richard Beckert

Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of TriNet Group, Inc., a Delaware corporation (the “Company”), on Form 10-Q for the period ending September 30, 2018 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company does hereby certify, pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002), that:


(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The foregoing certification (i) is given to such officers’ knowledge, based upon such officers’ investigation as such officers reasonably deem appropriate; and (ii) is being furnished solely pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002) and is not being filed as part of the Report or as a separate disclosure document and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.



Date: October 29, 2018	/s/ Burton M. Goldfield
	Burton M. Goldfield
	Chief Executive Officer


Date: October 29, 2018	/s/ Richard Beckert
	Richard Beckert
	Chief Financial Officer