10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2013

Commission File No. 0-21886

BARRETT BUSINESS SERVICES, INC.

(Exact name of registrant as specified in its charter)

Maryland	52-0812977
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
8100 NE Parkway Drive, Suite 200 Vancouver, Washington	98662
(Address of principal executive offices)	(Zip Code)

(360) 828-0700

(Registrant’s telephone number, including area code)

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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

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

Number of shares of common stock, $.01 par value, outstanding at October 31, 2013 was 7,165,231 shares.

BARRETT BUSINESS SERVICES, INC.

INDEX

		Page
Part I - Financial Information
Item 1.	Unaudited Interim Consolidated Financial Statements
	Consolidated Balance Sheets – September 30, 2013 and December 31, 2012		3
	Consolidated Statements of Operations - Three Months Ended September 30, 2013 and 2012		4
	Consolidated Statements of Operations - Nine Months Ended September 30, 2013 and 2012		5
	Consolidated Statements of Comprehensive Income - Three Months Ended September 30, 2013 and 2012		6
	Consolidated Statements of Comprehensive Income - Nine Months Ended September 30, 2013 and 2012		6
	Consolidated Statements of Stockholders’ Equity - Nine Months Ended September 30, 2013 and 2012		7
	Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2013 and 2012		8
	Notes to Unaudited Interim Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		27
Item 4.	Controls and Procedures		27
Part II - Other Information
Item 1A.	Risk Factors		28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		28
Item 6.	Exhibits		28
Signatures			29
Exhibit Index			30

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Part I - Financial Information

Item 1. Financial Statements

BARRETT BUSINESS SERVICES, INC.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

	September 30, 2013			December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	34,978		$	45,747
Marketable securities		7,108			16,748
Trade accounts receivable, net		98,717			63,921
Income taxes receivable		2,307			0
Prepaid expenses and other		1,444			4,854
Restricted certificates of deposit		63,944			0
Deferred income taxes		8,172			8,148
Total current assets		216,670			139,418
Marketable securities		5,876			9,899
Property, equipment and software, net		20,383			18,489
Restricted marketable securities and workers’ compensation deposits		10,472			9,726
Other assets		3,132			3,509
Goodwill		47,820			47,820
	$	304,353		$	228,861
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	220		$	220
Line of credit		0			4,532
Accounts payable		2,721			1,995
Accrued payroll, payroll taxes and related benefits		107,060			69,568
Income taxes payable		0			272
Other accrued liabilities		953			306
Workers’ compensation claims liabilities		32,068			24,541
Safety incentives liability		11,947			9,842
Total current liabilities		154,969			111,276
Long-term workers’ compensation claims liabilities		63,912			46,023
Long-term debt		5,108			5,273
Deferred income taxes		10,607			10,607
Customer deposits and other long-term liabilities		1,789			1,786
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value; 500 shares authorized; no shares issued and outstanding		0			0
Common stock, $.01 par value; 20,500 shares authorized, 7,165 and 7,017 shares issued and outstanding		72			70
Additional paid-in capital		5,456			913
Accumulated other comprehensive (loss) income		(16	)		23
Retained earnings		62,456			52,890
		67,968			53,896
	$	304,353		$	228,861

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,
	2013			2012
Revenues:
Professional employer service fees	$	106,244		$	74,874
Staffing services		41,727			36,195
Total revenues		147,971			111,069
Cost of revenues:
Direct payroll costs		31,585			27,158
Payroll taxes and benefits		57,977			42,915
Workers’ compensation		28,223			19,432
Total cost of revenues		117,785			89,505
Gross margin		30,186			21,564
Selling, general and administrative expenses		16,808			12,745
Depreciation and amortization		521			372
Income from operations		12,857			8,447
Other income (expense):
Investment income, net		154			172
Interest expense		(48	)		(10	)
Other		3			(6	)
Other income		109			156
Income before income taxes		12,966			8,603
Provision for income taxes		3,972			2,791
Net Income	$	8,994		$	5,812
Basic earnings per common share	$	1.26		$	.83
Weighted average number of basic common shares outstanding		7,150			7,007
Diluted earnings per common share	$	1.21		$	.81
Weighted average number of diluted common shares outstanding		7,425			7,184
Cash dividends per common share	$	.13		$	.11

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

	Nine Months Ended September 30,
	2013			2012
Revenues:
Professional employer service fees	$	281,556		$	196,198
Staffing services		106,764			92,793
Total revenues		388,320			288,991
Cost of revenues:
Direct payroll costs		80,492			69,653
Payroll taxes and benefits		170,583			125,239
Workers’ compensation		75,022			49,637
Total cost of revenues		326,097			244,529
Gross margin		62,223			44,462
Selling, general and administrative expenses		43,113			33,058
Depreciation and amortization		1,487			1,076
Income from operations		17,623			10,328
Other income (expense):
Investment income, net		499			613
Interest expense		(191	)		(23	)
Other		(2	)		(22	)
Other income		306			568
Income before income taxes		17,929			10,896
Provision for income taxes		5,598			3,554
Net Income	$	12,331		$	7,342
Basic earnings per common share	$	1.74		$	.92
Weighted average number of basic common shares outstanding		7,085			7,959
Diluted earnings per common share	$	1.67		$	.91
Weighted average number of diluted common shares outstanding		7,371			8,069
Cash dividends per common share	$	.39		$	.33

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)

	Three Months Ended September 30,
	2013		2012
Net income	$	8,994	$	5,812
Unrealized gains (losses) on marketable securities, net of tax of $5 and $(12) in 2013 and 2012, respectively		7		(19	)
Comprehensive income	$	9,001	$	5,793

	Nine Months Ended September 30,
	2013			2012
Net income	$	12,331		$	7,342
Unrealized (losses) gains on marketable securities, net of tax of $(25) and $15 in 2013 and 2012, respectively		(39	)		24
Comprehensive income	$	12,292		$	7,366

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Consolidated Statements of Stockholders’ Equity

Nine Months Ended September 30, 2013 and 2012

(Unaudited)

(In thousands)

							Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total
	Common Stock
	Shares			Amount
Balance, December 31, 2011		9,871		$	99		$	20,943		$	(34	)	$	80,647		$	101,655
Common stock issued on exercise of options		128			1			1,767			0			0			1,768
Stock option compensation expense, net of tax		0			0			490			0			0			490
Tax benefit of stock option exercises		0			0			259			0			0			259
Repurchase of common stock		(2,986	)		(30	)		(22,864	)		0			(37,338	)		(60,232	)
Cash dividends on common stock		0			0			0			0			(2,639	)		(2,639	)
Unrealized holding gains on marketable securities, net of tax		0			0			0			24			0			24
Net income		0			0			0			0			7,342			7,342
Balance, September 30, 2012		7,013		$	70		$	595		$	(10	)	$	48,012		$	48,667
Balance, December 31, 2012		7,017			70			913			23			52,890			53,896
Common stock issued on exercise of options		148			2			1,858			0			0			1,860
Stock option compensation expense, net of tax		0			0			602			0			0			602
Excess tax benefits from share-based compensation		0			0			2,083			0			0			2,083
Cash dividends on common stock		0			0			0			0			(2,765	)		(2,765	)
Unrealized holding losses on marketable securities, net of tax		0			0			0			(39	)		0			(39	)
Net income		0			0			0			0			12,331			12,331
Balance, September 30, 2013		7,165		$	72		$	5,456		$	(16	)	$	62,456		$	67,968

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2013			2012
Cash flows from operating activities:
Net Income	$	12,331		$	7,342
Reconciliations of net income to net cash provided by operating activities:
Depreciation and amortization		1,487			1,076
Gains recognized on marketable securities		(1	)		(1	)
Gain recognized on sale and leaseback		(61	)		(92	)
Deferred income taxes		(48	)		30
Share-based compensation		602			490
Changes in certain assets and liabilities:
Trade accounts receivable, net		(34,796	)		(24,498	)
Income taxes receivable		(2,307	)		701
Prepaid expenses and other		3,410			4,361
Accounts payable		726			496
Accrued payroll, payroll taxes and related benefits		37,492			25,193
Other accrued liabilities		647			55
Income taxes payable		(272	)		2,969
Workers’ compensation claims liabilities		25,416			11,835
Safety incentives liability		2,105			2,357
Customer deposits, long-term liabilities and other assets, net		441			133
Net cash provided by operating activities		47,172			32,447
Cash flows from investing activities:
Purchase of property and equipment		(3,381	)		(2,666	)
Proceeds from sales and maturities of marketable securities		58,740			32,676
Purchase of marketable securities		(45,091	)		(28,959	)
Purchase of restricted certificates of deposit		(63,944	)		0
Proceeds from maturities of restricted marketable securities		6,429			6,495
Purchase of restricted marketable securities		(7,175	)		(6,539	)
Net cash used in investing activities		(54,422	)		1,007
Cash flows from financing activities:
Proceeds from credit-line borrowings		132,664			12,186
Payments on credit-line borrowings		(137,196	)		(12,186	)
Redemption of mandatorily redeemable preferred stock		0			(34,800	)
Payments on long-term debt		(165	)		0
Repurchase of common stock		0			(25,432	)
Dividends paid		(2,765	)		(2,639	)
Proceeds from exercise of stock options		1,860			1,768
Excess tax benefits from share-based compensation		2,083			259
Net cash used in financing activities		(3,519	)		(60,844	)
Net decrease in cash and cash equivalents		(10,769	)		(27,390	)
Cash and cash equivalents, beginning of period		45,747			49,571
Cash and cash equivalents, end of period	$	34,978		$	22,181
Supplemental schedule of noncash financing activities:
Issuance of mandatorily redeemable preferred stock	$	0		$	34,800

The accompanying notes are an integral part of these financial statements

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited)

Note 1 - Basis of Presentation of Interim Period Statements

The accompanying consolidated financial statements are unaudited and have been prepared by Barrett Business Services, Inc. (“Barrett”, “BBSI”, the “Company”, “our” or “we”), pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures typically included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from such estimates and assumptions. The consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2012 Annual Report on Form 10-K at pages F1 – F29. The results of operations for an interim period are not necessarily indicative of the results of operations for a full year.

Revenue recognition

We recognize revenue as services are rendered by our workforce. Professional employer services are normally used by organizations to satisfy ongoing human resource management needs and typically involve contracts with a minimum term of one year, which cover all employees at a particular work site. Our client services agreements are renewable on an annual basis and typically require 30 days’ written notice to cancel or terminate the contract by either party. Our client services agreements provide for immediate termination upon any default of the client regardless of when notice is given. We report professional employer services revenues on a net basis because we are not the primary obligor for the services provided by our co-employed clients to their customers pursuant to our client services agreements. Consequently, our professional employer service revenues represent the gross margin generated from our professional employer services after deducting the amounts invoiced to clients for direct payroll expenses such as salaries and wages and safety incentives. These amounts are also excluded from cost of revenues. Professional employer service revenues also include amounts invoiced to our clients for employer payroll-related taxes and workers’ compensation coverage. Staffing services are engaged by customers to meet short-term and long-term personnel needs.

Marketable securities

As of September 30, 2013, the Company’s marketable securities consisted of certificates of deposit, tax-exempt municipal securities and corporate bonds. The Company classifies certificates of deposit, municipal securities and certain of its corporate bonds as available for sale; they are reported at fair value with unrealized gains and losses, net of taxes, shown as a component of accumulated other comprehensive income (loss) in stockholders’ equity. In the event a loss is determined to be other-than-temporary, the loss will be recognized in the statement of operations.

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 1 - Basis of Presentation of Interim Period Statements (Continued)

Allowance for doubtful accounts

The Company had an allowance for doubtful accounts of $427,000 and $381,000 at September 30, 2013 and December 31, 2012, respectively. The Company must make estimates of the collectability of accounts receivable. Management analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic conditions and changes in customers’ payment trends when evaluating the adequacy of the allowance for doubtful accounts. The Company deems an account balance uncollectible only after it has pursued all available assets of the customer and, where applicable, the assets of the personal guarantor.

Workers’ compensation claims

The Company is a self-insured employer with respect to workers’ compensation coverage for all of its employees (including employees co-employed through our client service agreements) working in California, Oregon, Maryland, Delaware and Colorado. In the state of Washington, state law allows only the Company’s staffing services and internal management employees to be covered under the Company’s self-insured workers’ compensation program. Additionally, the Company operates a wholly-owned fully licensed insurance company, Ecole Insurance Company (“Ecole”), in Arizona to provide workers’ compensation coverage to our employees in Arizona.

To manage our financial exposure, in the event of catastrophic injuries or fatalities, the Company maintains excess workers’ compensation insurance through our wholly owned captive insurance company, Associated Insurance Company for Excess (“AICE”), with a per occurrence retention of $5.0 million, except in Maryland and Colorado, where our per occurrence retention is $1.0 million and $500,000, respectively. AICE maintains excess workers’ compensation insurance coverage with ACE American Insurance Company (“ACE”), between $5.0 million and $15.0 million per occurrence, except in Maryland, where coverage with ACE is between $1.0 million and $25.0 million per occurrence, and in Colorado, where the coverage with ACE is between $500,000 and statutory limits per occurrence. The Company continues to evaluate the financial capacity of its insurers to assess the recoverability of the related insurer receivables.

The Company has provided a total of $96.0 million and $70.6 million at September 30, 2013 and December 31, 2012, respectively, as an estimated future liability for unsettled workers’ compensation claims liabilities. The estimated liability for unsettled workers’ compensation claims represents management’s best estimate based upon an actuarial valuation provided by a third party actuary. Included in the claims liabilities are case reserve estimates for reported losses, plus additional amounts based on projections for incurred but not reported claims and anticipated increases in case reserve estimates. Also included in these estimates are amounts for unallocated loss adjustment expenses, including legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 1 - Basis of Presentation of Interim Period Statements (Continued)

Safety incentives liability

Safety incentives represent cash incentives paid to certain client companies under client service agreements for maintaining safe-work practices in order to minimize workplace injuries, thereby meeting agreed-upon loss objectives. The Company has provided $11.9 million at September 30, 2013 and $9.8 million at December 31, 2012 as an estimate of the liability for unpaid safety incentives. The incentive is based on a percentage of annual payroll and is paid annually to customers who meet predetermined workers’ compensation claims cost objectives. Safety incentive payments are made only after closure of all workers’ compensation claims incurred during the customer’s contract period. The liability is estimated and accrued each month based upon the incentive earned less the then-current amount of the customer’s estimated workers’ compensation claims reserves as established by the Company’s internal and third-party claims administrators, and the expected payout as determined by historical incentive payment trends. Safety incentive expense is netted against professional employer services revenue in our consolidated statements of operations.

Statements of cash flows

Interest paid during the nine months ended September 30, 2013 and 2012 did not materially differ from interest expense. Income taxes paid by the Company during the nine months ended September 30, 2013 and 2012 totaled $6.1 million and $246,000, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform with the 2013 presentation. Such reclassifications had no impact on the Company’s financial condition, operating results, cash flows, working capital or stockholders’ equity.

Note 2 – Stock Repurchase

Effective March 28, 2012, the Company repurchased 2,485,929 shares of the Company’s common stock held by the Estate of William W. Sherertz and 500,000 common shares held by Nancy Sherertz. Mr. Sherertz, a founder and former president and CEO of the Company, died January 20, 2011. Nancy Sherertz is also a founder of the Company. The common shares were repurchased at a price of $20 per share, representing total consideration of $59.7 million. The Company used a combination of $24.9 million in cash and issued 34,800 shares of Series A Nonconvertible, Non-Voting Redeemable Preferred Stock with a liquidation preference of $1,000 per share. Additionally, the Company incurred professional and legal fees totaling $514,000 related to the transaction.

Effective September 21, 2012, the Company redeemed all of the outstanding shares of its Series A Nonconvertible, Non-Voting Redeemable Preferred Stock for $34.8 million using a combination of cash on hand and availability under a new revolving credit facility provided by its principal bank. By redeeming the preferred stock within six months of issuance, the Company was not required to pay a semi-annual dividend of approximately $870,000 due September 28, 2012.

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 3 – Revolving Credit Facility

The Company maintains a credit agreement (the “Agreement”) with its principal bank, Wells Fargo Bank, National Association (the “Bank”). The Agreement, which expires October 1, 2017, provides for a revolving credit facility with initial borrowing capacity of up to $24.0 million. The Company had no outstanding borrowings on the revolving credit facility, which had a maximum capacity of $21.5 million, at September 30, 2013. The Agreement also provides for the continuance of existing standby letters of credit in connection with various surety deposit requirements for workers’ compensation purposes, as to which the amount outstanding totaled approximately $70.6 million at September 30, 2013. As part of the letter of credit related to California workers’ compensation, the Company posted $63.9 million of certificates of deposit with the Bank as collateral. These certificates of deposit are classified as restricted within current assets on the Company’s Consolidated Balance Sheet.

Advances under the revolving credit facility bear interest, at the Company’s option, at either (a) a fixed rate for a term selected by the Company from time-to-time or (b) a fluctuating rate. In each case, the rate is calculated based on LIBOR plus 1.75%. The Agreement also provides for an unused commitment fee of 0.25% per annum on the average daily unused amount of the revolving credit facility.

The credit facility is collateralized by the Company’s accounts receivable and other rights to receive payment, general intangibles, inventory and equipment. Under the Agreement, the maximum principal amount available will be reduced by $2.5 million every six months commencing April 1, 2013.

The Agreement, as amended, requires the satisfaction of certain financial covenants as follows:

• Minimum Fixed Charge Coverage ratio of no less than 1.25:1.0, measured quarterly on a rolling four-quarter basis;

• Funded Debt: EBITDA of no more than 2.25:1 through September 30, 2013; 1.75:1 through September 30, 2014; 1.5:1 through September 30, 2015; and 1.25:1 thereafter, measured quarterly on a rolling four-quarter basis;

• Ratio of restricted and unrestricted cash and marketable securities to workers’ compensation and safety incentive liabilities of at least 1.0:1.0, measured quarterly; and

• Prohibition on incurring additional indebtedness without the prior approval of the Bank, other than up to $200,000 per year in purchase money financing.

The Agreement also contains customary events of default. If an event of default under the Agreement occurs and is continuing, the Bank may declare any outstanding obligations under the Agreement to be immediately due and payable. The Company was in compliance with all applicable financial covenants at September 30, 2013.

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 4 - Basic and Diluted Earnings Per Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential effects of the exercise of outstanding stock options and vesting of restricted stock units. Basic and diluted common shares outstanding are summarized as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Weighted average number of basic common shares outstanding		7,149,502		7,007,333		7,084,593		7,959,086
Effect of dilutive securities		275,026		176,180		285,926		109,601
Weighted average number of diluted common shares outstanding		7,424,528		7,183,513		7,370,519		8,068,687

Note 5- Workers’ Compensation

The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Beginning balance
Workers’ compensation claims liabilities	$	84,543	$	55,765	$	70,564	$	51,193
Add: claims expense accrual:
Current period		17,396		9,891		44,825		26,224
Prior periods		5,002		3,835		12,688		6,945
Total expense accrual		22,398		13,726		57,513		33,169
Less: claim payments related to:
Current period		3,124		2,207		5,998		3,790
Prior periods		7,837		5,656		26,099		18,944
Total paid		10,961		7,863		32,097		22,734
Ending balance
Workers’ compensation claims liabilities	$	95,980	$	61,628	$	95,980	$	61,628
Incurred but not reported (IBNR)	$	59,412	$	44,311	$	59,412	$	44,311

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BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 6 - Fair Value Measurement

Marketable securities consist of the following investments (in thousands):

	September 30, 2013							December 31, 2012
	Cost		Gross Unrealized Losses			Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Current:
Available-for-sale:
Certificate of deposits	$	6,860	$	(9	)	$	6,851	$	0	$	0	$	0		2
Municipal bonds		5		0			5		409		1		410		2
Corporate bonds		256		(4	)		252		14,764		16		14,780		2
US treasuries		0		0			0		1,555		3		1,558		1
	$	7,121	$	(13	)	$	7,108	$	16,728	$	20	$	16,748
Long term:
Available-for-sale:
Municipal bonds	$	4,290	$	(12	)	$	4,278	$	292	$	1	$	293		2
Corporate bonds		1,613		(15	)		1,598		9,111		28		9,139		2
Held-to-maturity:
Corporate bonds		0		0			0		467		0		467		2
	$	5,903	$	(27	)	$	5,876	$	9,870	$	29	$	9,899

The Company’s current restricted certificates of deposit are summarized as follows (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis
Restricted certificates of deposit	$	63,944	$	0	$	63,944	$	0	$	0	$	0	2

- 14 -

BARRETT BUSINESS SERVICES, INC.

Notes to Consolidated Financial Statements (Unaudited) (Continued)

Note 6 - Fair Value Measurement (Continued)

The Company’s long term restricted marketable securities component of restricted marketable securities and workers’ compensation deposits consists of the following (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Available-for-sale:
Municipal bonds	$	4,855	$	8	$	4,863	$	4,920	$	17	$	4,937		2
Corporate bonds		2,685		6		2,691		2,035		5		2,040		2
U.S. treasuries		2,472		0		2,472		1,780		0		1,780		1
	$	10,012	$	14	$	10,026	$	8,735	$	22	$	8,757

- 15 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Barrett Business Services, Inc. (“BBSI,” the “Company,” “our” or “we”), was incorporated in the state of Maryland in 1965. We are a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create an operational platform that differentiates us from our competitors. Our integrated platform is grounded in expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, human resource administration, recruiting and permanent placement. BBSI helps small-to medium-sized businesses improve the efficiency of their operations. Our principal services assist our clients in leveraging their investment in human capital. We believe that our combination of business management solutions and expertise in human capital management enables us to provide our clients with a unique blend of services not offered by our competitors.

Our Services

Our passage from an entrepreneurially run company to a professionally managed organization has helped to form our view that all businesses experience the same success factors in their growth, as well as the same potential pitfalls. The insights gained through our own growth, along with the trends we see in working with more than 3,000 companies each day, define our approach to guiding business owners through the challenges associated with being an employer.

Through our client services agreement, the Company enters into a contract to become a co-employer of the client’s existing workforce assuming responsibility for payroll, payroll taxes, workers’ compensation coverage and certain other administrative functions, while the business owner client maintains physical care, custody and control of their workforce, including the authority to hire and terminate employees. Staffing services include on-demand or short-term staffing assignments, and long or indefinite-term contract staffing. The Company’s staffing services also include recruiting, which involves fee-based search efforts for specific employee candidates at the request of co-employed clients, staffing customers or other businesses.

We believe the expert knowledge of our teams combined with tools from the HR outsourcing industry helps our clients more effectively leverage their internal resources. We assist our clients by:

• Delivering expertise to help our clients more effectively leverage their internal resources

• Partnering with the business owner to frame a three-tiered management platform that brings predictability to their organization

• Leveraging our client’s investment in human capital through a unique, high-touch, results-oriented approach

• Enabling business owners to focus on their core business by reducing organizational complexity and maximizing productivity

- 16 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Our Services (Continued)

Prior to entering into a client services agreement, we perform an in-depth analysis of the potential client’s operations, including evaluation of needs and objectives, risk assessment and financial review. Once the client service agreement has been signed, we pair each of our clients with a dedicated, local branch-based business unit comprised of management professionals with expertise in Human Resource Consulting, Risk Consulting, Payroll, Benefits Administration and Recruiting. We believe our hands-on model allows our clients to more quickly adopt processes to develop a more productive workforce, mitigate workplace injury and risk and encourage workplace compliance with a broad range of employment and safety regulations.

The Company serves a growing and diverse client base of small and medium-sized businesses in a wide variety of industries through a network of branch offices in California, Oregon, Washington, Idaho, Arizona, Utah, Colorado, Maryland, Delaware and North Carolina. Barrett also has several smaller recruiting offices in its general market areas, which are under the direction of a branch office.

- 17 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations

The following table sets forth percentages of total revenues represented by selected items in the Company’s Consolidated Statements of Operations for the three and nine months ended September 30, 2013 and 2012.

	Percentage of Total Revenue						Percentage of Total Revenue
	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues:
Professional employer service fees		71.8	%		67.4	%		72.5	%		67.9	%
Staffing services		28.2			32.6			27.5			32.1
Total revenues		100.0			100.0			100.0			100.0
Cost of revenues:
Direct payroll costs		21.3			24.5			20.8			24.1
Payroll taxes and benefits		39.2			38.6			43.9			43.3
Workers’ compensation		19.1			17.5			19.3			17.2
Total cost of revenues		79.6			80.6			84.0			84.6
Gross margin		20.4			19.4			16.0			15.4
Selling, general and administrative expenses		11.4			11.5			11.1			11.4
Depreciation and amortization		0.3			0.3			0.4			0.4
Income from operations		8.7			7.6			4.5			3.6
Other income		0.1			0.1			0.1			0.2
Income before income taxes		8.8			7.7			4.6			3.8
Provision for income taxes		2.7			2.5			1.4			1.3
Net income		6.1	%		5.2	%		3.2	%		2.5	%

We report professional employer services revenues on a net basis because we are not the primary obligor for the services provided by our co-employed clients to their customers pursuant to our client service agreements. The presentation of revenues on a net basis and the relative contributions of staffing and professional employer services revenues can create volatility in our gross margin percentage. The general impact of fluctuations in our revenue mix is described below.

- 18 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations (Continued)

• A relative increase in professional employer services revenue will result in a higher gross margin percentage. Improvement in gross margin percentage occurs because incremental client services revenue dollars are reported as revenue net of all related direct costs.

• A relative increase in staffing revenues will typically result in a lower gross margin percentage. Staffing revenues are presented at gross with the related direct costs reported in cost of sales. While staffing relationships typically have higher margins than co-employment relationships, an increase in staffing revenues and related costs presented at gross dilutes the impact of the net professional employer services revenue on gross margin percentage.

We present for comparison purposes the gross revenues and cost of revenues information set forth in the table below. Although not in accordance with GAAP, management believes this information is more informative as to the level of our business activity and more illustrative of how we manage our operations, including the preparation of our internal operating forecasts, because it presents our professional employer services on a basis comparable to our staffing services.

(in thousands)	Unaudited Three Months Ended September 30,				Unaudited Nine Months Ended September 30,
	2013		2012		2013		2012
Revenues:
Professional employer services	$	722,387	$	521,836	$	1,923,533	$	1,391,357
Staffing services		41,727		36,195		106,764		92,793
Total revenues		764,114		558,031		2,030,297		1,484,150
Cost of revenues:
Direct payroll costs		643,482		470,950		1,711,020		1,256,477
Payroll taxes and benefits		57,977		42,915		170,583		125,239
Workers’ compensation		32,469		22,602		86,471		57,972
Total cost of revenues		733,928		536,467		1,968,074		1,439,688
Gross margin	$	30,186	$	21,564	$	62,223	$	44,462

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations (Continued)

A reconciliation of non-GAAP gross professional employer services revenues to net professional employer services revenues is as follows:

	Unaudited Three Months Ended September 30,
(in thousands)	Gross Revenue Reporting Method				Reclassification						Net Revenue Reporting Method
	2013		2012		2013			2012			2013		2012
Revenues:
Professional employer services	$	722,387	$	521,836	$	(616,143	)	$	(446,962	)	$	106,244	$	74,874
Staffing services		41,727		36,195		0			0			41,727		36,195
Total revenues	$	764,114	$	558,031	$	(616,143	)	$	(446,962	)	$	147,971	$	111,069
Cost of revenues	$	733,928	$	536,467	$	(616,143	)	$	(446,962	)	$	117,785	$	89,505

	Unaudited Nine Months Ended September 30,
(in thousands)	Gross Revenue Reporting Method				Reclassification						Net Revenue Reporting Method
	2013		2012		2013			2012			2013		2012
Revenues:
Professional employer services	$	1,923,533	$	1,391,357	$	(1,641,977	)	$	(1,195,159	)	$	281,556	$	196,198
Staffing services		106,764		92,793		0			0			106,764		92,793
Total revenues	$	2,030,297	$	1,484,150	$	(1,641,977	)	$	(1,195,159	)	$	388,320	$	288,991
Cost of revenues	$	1,968,074	$	1,439,688	$	(1,641,977	)	$	(1,195,159	)	$	326,097	$	244,529

The amount of the reclassification is comprised of direct payroll costs and safety incentives attributable to our co-employed client companies.

Three months ended September 30, 2013 and 2012

Net income for the third quarter of 2013 amounted to $9.0 million, as compared to net income of $5.8 million for the third quarter of 2012. Diluted income per share for the third quarter of 2013 was $1.21 compared to diluted income per share of $.81 for the comparable 2012 period.

- 20 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations (Continued)

Three months ended September 30, 2013 and 2012 (Continued)

Revenues for the third quarter of 2013 totaled $148.0 million, an increase of approximately $36.9 million or 33.2% over the third quarter of 2012, which reflects an increase in the Company’s professional employer service fee revenue of $31.4 million or 41.9%, coupled with an increase in staffing services revenue of $5.5 million or 15.3%. Approximately 74% and 69% respectively, of our revenue during the three months ended September 30, 2013 and 2012 was attributable to our California operations.

Our growth in professional employer service revenues continues to be primarily attributable to new customers, resulting from continued strength in our referral channels and a high retention rate, as business from new customers during the third quarter of 2013 nearly tripled our lost business from former customers. Professional employer service revenues from continuing customers reflected a 13% increase compared to the third quarter of 2012, primarily resulting from increases in employee headcount and hours worked. The increase in staffing revenues was due primarily to an increase in revenue from the addition of new business, as the business from existing customers reflected a small increase.

Gross margin for the third quarter of 2013 totaled approximately $30.2 million or an increase of 40.0% over the third quarter of 2012, primarily due to the 33.2% increase in revenues and a decline in direct payroll costs, as a percentage of revenues, partially offset by higher workers’ compensation expense and payroll taxes and benefits, as a percentage of revenues.

The decrease in direct payroll costs, as a percentage of revenues, from 24.5% for the third quarter of 2012 to 21.3% for the third quarter of 2013 was primarily due to the increase in our mix of professional employer services in the Company’s customer base compared to the third quarter of 2012 and the effect of each customer’s unique mark-up percent.

Payroll taxes and benefits, as a percentage of revenues, for the third quarter of 2013 was 39.2% compared to 38.6% for the third quarter of 2012. The percentage rate increase was largely due to the effect of significant growth in professional employer services, where payroll taxes and benefits are presented at gross cost, whereas the related direct payroll costs are netted against professional employer services revenue. Management expects the trend in payroll taxes and benefits, as a percentage of revenues, to continue to increase as a result of continued growth in professional employer services on a quarter-over-quarter basis.

Workers’ compensation expense, in terms of dollars and as a percentage of revenues, increased from $19.4 million or 17.5% in the third quarter of 2012 to $28.2 million or 19.1% in the third quarter of 2013. The percentage rate increase was primarily due to an increase in the provision for claim costs related to current year claims, increases in estimated costs to close prior year claims, and increased insurance broker commissions resulting from increased workers’ compensation insurance rates.

- 21 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations (Continued)

Three months ended September 30, 2013 and 2012 (Continued)

Selling, general and administrative (“SG&A”) expenses for the third quarter of 2013 totaled approximately $16.8 million, an increase of $4.1 million or 31.9% over the third quarter of 2012. The increase was primarily attributable to higher branch incentive pay based upon increased branch performance and increases in management payroll and other variable expense components within SG&A to support our business growth.

The income tax rate for the 2013 third quarter was 30.6% compared to the 2012 third quarter rate of 32.4%. The lower tax rate for the 2013 third quarter was primarily due to higher employment tax credits. We expect the effective income tax rate for the balance of 2013 to remain at a similar rate to the 2013 third quarter income tax rate.

Nine months ended September 30, 2013 and 2012

Net income for the nine months ended September 30, 2013 amounted to $12.3 million, as compared to net income of $7.3 million for the first nine months of 2012. Diluted income per share for the first nine months of 2013 was $1.67 compared to diluted income per share of $.91 for the comparable 2012 period. The first nine months of 2013 reflected approximately 700,000 fewer diluted common shares outstanding when compared to the comparable period of 2012 primarily due to the Company’s repurchase of approximately 2.5 million shares from the Estate of William W. Sherertz, as well as 500,000 shares from Nancy Sherertz, on March 28, 2012.

Revenues for the nine months ended September 30, 2013 totaled $388.3 million, an increase of approximately $99.3 million or 34.4% over the comparable period in 2012, which reflects an increase in the Company’s professional employer service fee revenue of $85.4 million or 43.5% coupled with an increase in staffing services revenue of $14.0 million or 15.1%. Approximately 74% and 68%, respectively, of our revenue during the nine months ended September 30, 2013 and 2012 was attributable to our California operations.

Our growth in professional employer service revenues continues to be primarily attributable to new customers, resulting from continued strength in our referral channels and a high retention rate, as business from new customers during the first nine months of 2013 tripled our lost business from former customers. Professional employer service revenues from continuing customers reflected a 11% increase compared to the first nine months of 2012, primarily resulting from increases in employee headcount and hours worked. Staffing revenues increased primarily from an increase in revenue due to the addition of new business as well as to an increase in business from existing customers.

Gross margin for the nine months ended September 30, 2013 totaled approximately $62.2 million or an increase of 39.9% over the comparable period of 2012, primarily due to the 34.4% increase in revenues and a decline in direct payroll costs, as a percentage of revenues, partially offset by higher workers’ compensation expense and payroll taxes and benefits, as a percentage of revenues.

- 22 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Results of Operations (Continued)

Nine months ended September 30, 2013 and 2012 (Continued)

The decrease in direct payroll costs, as a percentage of revenues, from 24.1% for the first nine months of 2012 to 20.8% for the first nine months of 2013 was primarily due to the increase in our mix of professional employer services in the Company’s customer base over the third quarter of 2012 and the effect of each customer’s unique mark-up percent.

Payroll taxes and benefits, as a percentage of revenues, for the first nine months of 2013 was 43.9% compared to 43.3% for the comparable period of 2012. The percentage rate increase was largely due to the effect of significant growth in professional employer services, where payroll taxes and benefits are presented at gross cost, whereas the related direct payroll costs are netted against professional employer services revenue, and to slightly higher effective state unemployment tax rates in various states in which the Company operates as compared to the comparable period of 2012.

Workers’ compensation expense, in terms of dollars and as a percentage of revenues, increased from $49.6 million or 17.2% in the first nine months of 2012 to $75.0 million or 19.3% in the first nine months of 2013. The percentage rate increase was primarily due to an increase in the provision for claim costs related to current year claims, increases in estimated costs to close prior year claims, and increased insurance broker commissions resulting from increased workers’ compensation insurance rates.

SG&A expenses for the first nine months of 2013 totaled approximately $43.1 million, an increase of $10.1 million or 30.4% over the first nine months of 2012. The increase was primarily attributable to increases in management payroll, as well as increases in branch incentive pay resulting from increased branch performance and other variable expense components within SG&A to support our business growth.

The income tax rate for the first nine months of 2013 was 31.2% compared to the income tax rate for the first nine months of 2012 of 32.6%. The decline in the 2013 rate was primarily due to higher employment tax credits.

Factors Affecting Quarterly Results

The Company has historically experienced significant fluctuations in its quarterly operating results and expects such fluctuations to continue in the future. The Company’s operating results may fluctuate due to a number of factors such as seasonality, wage limits on statutory payroll taxes, claims experience for workers’ compensation, demand for the Company’s services, competition, and the effect of acquisitions. The Company’s revenue levels may fluctuate from quarter to quarter primarily due to the impact of seasonality on its staffing services business and on certain of its co-employed clients in the agriculture, food processing and construction-related industries. As a result, the Company may have greater revenues and net income in the third quarter of its fiscal year. Revenue levels in the fourth quarter may be affected by many customers’ practice of operating on holiday-shortened schedules. Payroll taxes and benefits fluctuate with the level of direct payroll costs, but tend to represent a smaller percentage of revenues and direct payroll later in the Company’s fiscal year as federal and state

- 23 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Nine months ended September 30, 2013 and 2012 (Continued)

Factors Affecting Quarterly Results (Continued)

statutory wage limits for unemployment and Social Security taxes are exceeded on a per employee basis. Workers’ compensation expense varies with both the frequency and severity of workplace injury claims reported during a quarter and the estimated future costs of such claims. Adverse loss development of prior period claims during a subsequent quarter may also contribute to volatility in the Company’s estimated workers’ compensation expense.

Liquidity and Capital Resources

The Company’s cash position for the nine months ended September 30, 2013 decreased $10.8 million from December 31, 2012, which compares to a decrease of $27.4 million for the comparable period in 2012. The decrease in cash at September 30, 2013 as compared to December 31, 2012, was primarily due to the purchase of restricted certificates of deposit of $63.9 million and an increase in trade accounts receivable of $34.8 million, partially offset by net income of $12.3 million, a $37.5 million increase in accrued payroll and payroll taxes, a $25.4 million increase in workers’ compensation claims liabilities, and net proceeds from the sales and maturities of marketable securities of $13.7 million.

Net cash provided by operating activities for the nine months ended September 30, 2013 amounted to $47.2 million compared to $32.4 million for the comparable 2012 period. For the nine months ended September 30, 2013, cash flow was principally provided by net income of $12.3 million, increases in accrued payroll, payroll taxes and benefits of $37.5 million and a $25.4 million increase in workers’ compensation claims liabilities, partially offset by an increase in trade accounts receivable of $34.8 million.

Net cash used in investing activities for the nine months ended September 30, 2013 was $54.4 million as compared to $1.0 million of net cash provided by investing activities for the comparable 2012 period. For the 2013 period, cash from investing activities was used to purchase restricted certificates of deposit and restricted marketable securities totaling $71.1 million and to purchase marketable securities of $45.1 million, partially offset by the sales and maturities of marketable securities of $58.7 million. The Company presently has no material long-term capital commitments.

Net cash used in financing activities for the nine months ended September 30, 2013 was $3.5 million as compared to $60.8 million used in financing activities for the comparable 2012 period. For the 2013 period, the primary uses of cash for financing activities were the net payments on credit-line borrowings of $4.5 million and the payment of regular quarterly cash dividends totaling $2.8 million to holders of the Company’s common stock, partially offset by excess tax benefits from share-based compensation of $2.1 million coupled with $1.9 million for proceeds from the exercise of stock options.

The Company’s business strategy continues to focus on growth through the expansion of operations at existing offices, together with the selective acquisition of additional personnel-related businesses, both in its existing markets and other strategic geographic markets. The Company periodically evaluates proposals for various acquisition opportunities, but there can be no assurance that any additional transactions will be consummated.

- 24 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Liquidity and Capital Resources (Continued)

As disclosed in Note 3 to the Consolidated Financial Statements in this report, the Company maintains a credit agreement (the “Agreement”) with its principal bank, Wells Fargo Bank, National Association (the “Bank”). The Agreement, which expires October 1, 2017, provides for a revolving credit facility with initial borrowing capacity of up to $24.0 million. The Company had no outstanding borrowings on the revolving credit facility as of September 30, 2013. The Agreement also provides for the continuance of existing standby letters of credit in connection with various surety deposit requirements for workers’ compensation purposes, as to which the amount outstanding totaled approximately $70.6 million as of September 30, 2013.

Effective June 14, 2013, the Company increased its outstanding standby letters of credit by $46.7 million to a total of $70.6 million. This increase resulted from the California self-insured workers’ compensation surety deposit requirement. The total letter of credit related to California workers’ compensation was $63.9 million as of September 30, 2013. As part of the increased letter of credit related to California workers’ compensation, the Company posted $63.9 million of certificates of deposit with the Bank as collateral. These certificates of deposit are classified as restricted within current assets on the Company’s Consolidated Balance Sheet.

Advances under the revolving credit facility bear interest, at the Company’s option, at either (a) a fixed rate for a term selected by the Company from time-to-time or (b) a fluctuating rate. In each case, the rate is calculated based on LIBOR plus 1.75%. The Agreement also provides for an unused commitment fee of 0.25% per annum on the average daily unused amount of the revolving credit facility.

The credit facility is collateralized by the Company’s accounts receivable and other rights to receive payment, general intangibles, inventory and equipment. Under the Agreement, the maximum principal amount available will be reduced by $2.5 million every six months commencing April 1, 2013. The maximum principal amount available at September 30, 2013 was $21.5 million.

The Agreement, as amended, requires the satisfaction of certain financial covenants as follows:

• Minimum Fixed Charge Coverage ratio of no less than 1.25:1.0, measured quarterly on a rolling four-quarter basis;

• Funded Debt: EBITDA of no more than 2.25:1 through September 30, 2013; 1.75:1 through September 30, 2014; 1.5:1 through September 30, 2015; and 1.25:1 thereafter, measured quarterly on a rolling four-quarter basis;

• Ratio of restricted and unrestricted cash and marketable securities to workers’ compensation and safety incentive liabilities of at least 1.0:1.0, measured quarterly; and

• Prohibition on incurring additional indebtedness without the prior approval of the Bank, other than up to $200,000 per year in purchase money financing.

- 25 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Liquidity and Capital Resources (Continued)

The Agreement also contains customary events of default. If an event of default under the Agreement occurs and is continuing, the Bank may declare any outstanding obligations under the Agreement to be immediately due and payable. The Company was in compliance with all applicable financial covenants at September 30, 2013.

Management expects that the funds anticipated to be generated from operations and availability under its revolving credit facility will be sufficient in the aggregate to fund the Company’s working capital needs for the next twelve months.

Inflation

Inflation generally has not been a significant factor in the Company’s operations during the periods discussed above. The Company has taken into account the impact of escalating medical and other costs in establishing reserves for future expenses for self-insured workers’ compensation claims.

Forward-Looking Information

Statements in this report which are not historical in nature, including discussion of economic conditions in the Company’s market areas and effect on revenue levels, the potential for and effect of acquisitions, the effect of changes in the Company’s mix of services on gross margin, the adequacy of the Company’s workers’ compensation reserves and the effect of changes in estimate of its claims liabilities, the adequacy of the Company’s allowance for doubtful accounts, the effect of the Company’s formation and operation of two wholly owned, fully licensed captive insurance subsidiaries and becoming self-insured for certain business risks, the availability of alternatives to being self-insured as to workers’ compensation liabilities in California, the financial viability of the Company’s excess insurance carriers, the effectiveness of the Company’s management information systems, payment of future dividends, and the availability of working capital to meet the Company’s funding requirements, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors with respect to the Company include the ability to retain current clients and attract new clients, difficulties associated with integrating acquired businesses and clients into the Company’s operations, economic trends in the Company’s service areas, material deviations from expected future workers’ compensation claims experience, the effect of changes in the workers’ compensation regulatory environment in one or more of the Company’s primary markets, collectability of accounts receivable, the carrying values of deferred income tax assets and goodwill, which may be affected by the Company’s future operating results, the effect of conditions in the global capital markets on the Company’s investment portfolio, and the availability of capital or letters of credit necessary to meet state-mandated surety deposit requirements for maintaining the Company’s status as a qualified self-insured employer for workers’ compensation coverage, among others. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

- 26 -

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk for changes in interest rates primarily relates to its investment portfolio of liquid assets and its outstanding borrowings on its line of credit and long-term debt. As of September 30, 2013, the Company’s investment portfolio consisted principally of approximately $70.8 million in certificates of deposit, $9.1 million in tax-exempt municipal bonds, and approximately $4.5 million in corporate bonds. The Company’s outstanding borrowings on its line of credit and long-term debt totaled approximately $5.3 million at September 30, 2013. Based on the Company’s overall interest exposure at September 30, 2013, a 100 basis point increase in market interest rates would not have a material effect on the fair value of the Company’s investment portfolio of liquid assets, its outstanding borrowings or its results of operations because of the predominantly short maturities of the securities within the investment portfolio and the relative size of the outstanding borrowings.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of September 30, 2013 the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on the evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II – Other Information

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in our 2012 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no common stock repurchases during the quarter ended September 30, 2013. In November 2006, the Board adopted a stock repurchase program and authorized the repurchase of up to 500,000 common shares of the Company’s common stock from time to time in open market purchases. In November 2007, the Board approved an increase in the authorized shares to be repurchased up to 1.0 million common shares. In October 2008, the Board approved a second increase in the authorized common shares to be repurchased up to 3.0 million shares. At September 30, 2013, 1,208,200 shares could be repurchased under the program.

Item 6. Exhibits

The exhibits filed with this report are listed in the Exhibit Index following the signature page of this report.

- 28 -

SIGNATURES

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

	BARRETT BUSINESS SERVICES, INC.
	(Registrant)
Date: November 8, 2013	/s/ James D. Miller
	James D. Miller
	Vice President-Finance, Treasurer and Secretary
	(Principal Financial and Accounting Officer)

- 29 -

EXHIBIT INDEX

Exhibit

31.1	Certification of the Chief Executive Officer under Rule 13a-14(a).
31.2	Certification of the Chief Financial Officer under Rule 13a-14(a).
32	Certification pursuant to 18 U.S.C. Section 1350.
101.	INS XBRL Instance Document
101.	SCH XBRL Taxonomy Extension Schema 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

- 30 -

EX-31.1

Certification of the Chief Executive Officer under Rule 13a-14(a)

EXHIBIT 31.1

I, Michael L. Elich, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Barrett Business Services, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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: November 8, 2013	/s/ Michael L. Elich
	Michael L. Elich
	Chief Executive Officer

EX-31.2

Certification of the Chief Financial Officer under Rule 13a-14(a)

EXHIBIT 31.2

I, James D. Miller, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Barrett Business Services, Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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: November 8, 2013	/s/ James D. Miller
	James D. Miller
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Barrett Business Services, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certify, pursuant to 18 U.S.C. § 1350, 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.

/s/ Michael L. Elich	/s/ James D. Miller
Michael L. Elich	James D. Miller
Chief Executive Officer	Chief Financial Officer
November 8, 2013	November 8, 2013

A signed original of this written statement has been provided to Barrett Business Services, Inc. and will be retained by Barrett Business Services, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Workers' Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Text Block [Abstract]

Summarizes Aggregate Workers' Compensation Reserve Activity

The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Beginning balance
Workers’ compensation claims liabilities	$	84,543	$	55,765	$	70,564	$	51,193
Add: claims expense accrual:
Current period		17,396		9,891		44,825		26,224
Prior periods		5,002		3,835		12,688		6,945
Total expense accrual		22,398		13,726		57,513		33,169
Less: claim payments related to:
Current period		3,124		2,207		5,998		3,790
Prior periods		7,837		5,656		26,099		18,944
Total paid		10,961		7,863		32,097		22,734
Ending balance
Workers’ compensation claims liabilities	$	95,980	$	61,628	$	95,980	$	61,628
Incurred but not reported (IBNR)	$	59,412	$	44,311	$	59,412	$	44,311

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues:
Professional employer service fees	$ 106,244	$ 74,874	$ 281,556	$ 196,198
Staffing services	41,727	36,195	106,764	92,793
Total revenues	147,971	111,069	388,320	288,991
Cost of revenues:
Direct payroll costs	31,585	27,158	80,492	69,653
Payroll taxes and benefits	57,977	42,915	170,583	125,239
Workers' compensation	28,223	19,432	75,022	49,637
Total cost of revenues	117,785	89,505	326,097	244,529
Gross margin	30,186	21,564	62,223	44,462
Selling, general and administrative expenses	16,808	12,745	43,113	33,058
Depreciation and amortization	521	372	1,487	1,076
Income from operations	12,857	8,447	17,623	10,328
Other income (expense):
Investment income, net	154	172	499	613
Interest expense	(48)	(10)	(191)	(23)
Other	3	(6)	(2)	(22)
Other income	109	156	306	568
Income before income taxes	12,966	8,603	17,929	10,896
Provision for income taxes	3,972	2,791	5,598	3,554
Net Income	$ 8,994	$ 5,812	$ 12,331	$ 7,342
Basic earnings per common share	$ 1.26	$ 0.83	$ 1.74	$ 0.92
Weighted average number of basic common shares outstanding	7,150	7,007	7,085	7,959
Diluted earnings per common share	$ 1.21	$ 0.81	$ 1.67	$ 0.91
Weighted average number of diluted common shares outstanding	7,425	7,184	7,371	8,069
Cash dividends per common share	$ 0.13	$ 0.11	$ 0.39	$ 0.33

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Stock Repurchase

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Stock Repurchase

Note 2 – Stock Repurchase

Effective March 28, 2012, the Company repurchased 2,485,929 shares of the Company’s common stock held by the Estate of William W. Sherertz and 500,000 common shares held by Nancy Sherertz. Mr. Sherertz, a founder and former president and CEO of the Company, died January 20, 2011. Nancy Sherertz is also a founder of the Company. The common shares were repurchased at a price of $20 per share, representing total consideration of $59.7 million. The Company used a combination of $24.9 million in cash and issued 34,800 shares of Series A Nonconvertible, Non-Voting Redeemable Preferred Stock with a liquidation preference of $1,000 per share. Additionally, the Company incurred professional and legal fees totaling $514,000 related to the transaction.

Effective September 21, 2012, the Company redeemed all of the outstanding shares of its Series A Nonconvertible, Non-Voting Redeemable Preferred Stock for $34.8 million using a combination of cash on hand and availability under a new revolving credit facility provided by its principal bank. By redeeming the preferred stock within six months of issuance, the Company was not required to pay a semi-annual dividend of approximately $870,000 due September 28, 2012.

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Fair Value Measurement - Summary of Marketable Securities Consist of Investments (Detail) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	$ 5,903,000	$ 9,870,000
Gross Unrealized Gains (Losses)	(27,000)	29,000
Recorded Basis	5,876,000	9,899,000
Recorded Basis	7,108,000	16,748,000
Held-to-maturity [Member] | Corporate bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Held-to-maturity, Cost	0	467,000
Held-to-maturity, Gross Unrealized Gains (Losses)	0	0
Held-to-maturity, Recorded Basis	0	467,000
Fair Value Category		2
Long-term Available-for-Sale [Member] | Corporate bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	1,613,000	9,111,000
Gross Unrealized Gains (Losses)	(15,000)	28,000
Recorded Basis	1,598,000	9,139,000
Fair Value Category		2
Long-term Available-for-Sale [Member] | Municipal bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	4,290,000	292,000
Gross Unrealized Gains (Losses)	(12,000)	1,000
Recorded Basis	4,278,000	293,000
Fair Value Category		2
Current Available-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	7,121,000	16,728,000
Gross Unrealized Gains (Losses)	(13,000)	20,000
Recorded Basis	7,108,000	16,748,000
Current Available-for-Sale [Member] | Corporate bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	256,000	14,764,000
Gross Unrealized Gains (Losses)	(4,000)	16,000
Recorded Basis	252,000	14,780,000
Fair Value Category		2
Current Available-for-Sale [Member] | Municipal bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	5,000	409,000
Gross Unrealized Gains (Losses)	0	1,000
Recorded Basis	5,000	410,000
Fair Value Category		2
Current Available-for-Sale [Member] | Certificate of deposits [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	6,860,000	0
Gross Unrealized Gains (Losses)	(9,000)	0
Recorded Basis	6,851,000	0
Fair Value Category		2
Current Available-for-Sale [Member] | U.S. treasuries [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	0	1,555,000
Gross Unrealized Gains (Losses)	0	3,000
Recorded Basis	$ 0	$ 1,558,000
Fair Value Category		1

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Summary of Marketable Securities Consist of Investments

Marketable securities consist of the following investments (in thousands):

	September 30, 2013							December 31, 2012
	Cost		Gross Unrealized Losses			Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Current:
Available-for-sale:
Certificate of deposits	$	6,860	$	(9	)	$	6,851	$	0	$	0	$	0		2
Municipal bonds		5		0			5		409		1		410		2
Corporate bonds		256		(4	)		252		14,764		16		14,780		2
US treasuries		0		0			0		1,555		3		1,558		1
	$	7,121	$	(13	)	$	7,108	$	16,728	$	20	$	16,748
Long term:
Available-for-sale:
Municipal bonds	$	4,290	$	(12	)	$	4,278	$	292	$	1	$	293		2
Corporate bonds		1,613		(15	)		1,598		9,111		28		9,139		2
Held-to-maturity:
Corporate bonds		0		0			0		467		0		467		2
	$	5,903	$	(27	)	$	5,876	$	9,870	$	29	$	9,899

Summary of Restricted Certificates of Deposit

The Company’s current restricted certificates of deposit are summarized as follows (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis
Restricted certificates of deposit	$	63,944	$	0	$	63,944	$	0	$	0	$	0	2

Summary of Long Term Restricted Marketable Securities Component and Workers' Compensation Deposits

The Company’s long term restricted marketable securities component of restricted marketable securities and workers’ compensation deposits consists of the following (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Available-for-sale:
Municipal bonds	$	4,855	$	8	$	4,863	$	4,920	$	17	$	4,937		2
Corporate bonds		2,685		6		2,691		2,035		5		2,040		2
U.S. treasuries		2,472		0		2,472		1,780		0		1,780		1
	$	10,012	$	14	$	10,026	$	8,735	$	22	$	8,757

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Fair Value Measurement - Summary of Long Term Restricted Marketable Securities Component and Workers' Compensation Deposits (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	$ 5,903	$ 9,870
Available-for-sale Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	10,012	8,735
Gross Unrealized Gains	14	22
Recorded Basis	10,026	8,757
Available-for-sale Securities [Member] | Long-term Available-for-Sale [Member] | Municipal bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	4,855	4,920
Gross Unrealized Gains	8	17
Recorded Basis	4,863	4,937
Fair Value Category		2
Available-for-sale Securities [Member] | Long-term Available-for-Sale [Member] | Corporate bonds [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	2,685	2,035
Gross Unrealized Gains	6	5
Recorded Basis	2,691	2,040
Fair Value Category		2
Available-for-sale Securities [Member] | Long-term Available-for-Sale [Member] | U.S. treasuries [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	2,472	1,780
Gross Unrealized Gains	0	0
Recorded Basis	$ 2,472	$ 1,780
Fair Value Category		1

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Fair Value Measurement - Summary of Restricted Certificates of Deposit (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	$ 5,903	$ 9,870
Recorded Basis	7,108	16,748
Current Available-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	7,121	16,728
Recorded Basis	7,108	16,748
Current Available-for-Sale [Member] | Restricted certificates of deposit [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Cost	63,944	0
Gross Unrealized Gains	0	0
Recorded Basis	$ 63,944	$ 0
Fair Value Category		2

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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Unrealized (losses) gains on marketable securities, tax	$ 5	$ (12)	$ (25)	$ 15

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net Income	$ 12,331	$ 7,342
Reconciliations of net income to net cash provided by operating activities:
Depreciation and amortization	1,487	1,076
Gains recognized on marketable securities	(1)	(1)
Gain recognized on sale and leaseback	(61)	(92)
Deferred income taxes	(48)	30
Share-based compensation	602	490
Changes in certain assets and liabilities:
Trade accounts receivable, net	(34,796)	(24,498)
Income taxes receivable	(2,307)	701
Prepaid expenses and other	3,410	4,361
Accounts payable	726	496
Accrued payroll, payroll taxes and related benefits	37,492	25,193
Other accrued liabilities	647	55
Income taxes payable	(272)	2,969
Workers' compensation claims liabilities	25,416	11,835
Safety incentives liability	2,105	2,357
Customer deposits, long-term liabilities and other assets, net	441	133
Net cash provided by operating activities	47,172	32,447
Cash flows from investing activities:
Purchase of property and equipment	(3,381)	(2,666)
Proceeds from sales and maturities of marketable securities	58,740	32,676
Purchase of marketable securities	(45,091)	(28,959)
Purchase of restricted certificates of deposit	(63,944)	0
Proceeds from maturities of restricted marketable securities	6,429	6,495
Purchase of restricted marketable securities	(7,175)	(6,539)
Net cash used in investing activities	(54,422)	1,007
Cash flows from financing activities:
Proceeds from credit-line borrowings	132,664	12,186
Payments on credit-line borrowings	(137,196)	(12,186)
Redemption of mandatorily redeemable preferred stock	0	(34,800)
Payments on long-term debt	(165)	0
Repurchase of common stock	0	(25,432)
Dividends paid	(2,765)	(2,639)
Proceeds from exercise of stock options	1,860	1,768
Excess tax benefits from share-based compensation	2,083	259
Net cash used in financing activities	(3,519)	(60,844)
Net decrease in cash and cash equivalents	(10,769)	(27,390)
Cash and cash equivalents, beginning of period	45,747	49,571
Cash and cash equivalents, end of period	34,978	22,181
Mandatorily redeemable preferred stock [Member]
Supplemental schedule of noncash financing activities:
Issuance of mandatorily redeemable preferred stock	$ 0	$ 34,800

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Revolving Credit Facility

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Revolving Credit Facility

Note 3 – Revolving Credit Facility

The Company maintains a credit agreement (the “Agreement”) with its principal bank, Wells Fargo Bank, National Association (the “Bank”). The Agreement, which expires October 1, 2017, provides for a revolving credit facility with initial borrowing capacity of up to $24.0 million. The Company had no outstanding borrowings on the revolving credit facility, which had a maximum capacity of $21.5 million, at September 30, 2013. The Agreement also provides for the continuance of existing standby letters of credit in connection with various surety deposit requirements for workers’ compensation purposes, as to which the amount outstanding totaled approximately $70.6 million at September 30, 2013. As part of the letter of credit related to California workers’ compensation, the Company posted $63.9 million of certificates of deposit with the Bank as collateral. These certificates of deposit are classified as restricted within current assets on the Company’s Consolidated Balance Sheet.

Advances under the revolving credit facility bear interest, at the Company’s option, at either (a) a fixed rate for a term selected by the Company from time-to-time or (b) a fluctuating rate. In each case, the rate is calculated based on LIBOR plus 1.75%. The Agreement also provides for an unused commitment fee of 0.25% per annum on the average daily unused amount of the revolving credit facility.

The credit facility is collateralized by the Company’s accounts receivable and other rights to receive payment, general intangibles, inventory and equipment. Under the Agreement, the maximum principal amount available will be reduced by $2.5 million every six months commencing April 1, 2013.

The Agreement, as amended, requires the satisfaction of certain financial covenants as follows:

• Minimum Fixed Charge Coverage ratio of no less than 1.25:1.0, measured quarterly on a rolling four-quarter basis;

• Funded Debt: EBITDA of no more than 2.25:1 through September 30, 2013; 1.75:1 through September 30, 2014; 1.5:1 through September 30, 2015; and 1.25:1 thereafter, measured quarterly on a rolling four-quarter basis;

• Ratio of restricted and unrestricted cash and marketable securities to workers’ compensation and safety incentive liabilities of at least 1.0:1.0, measured quarterly; and

• Prohibition on incurring additional indebtedness without the prior approval of the Bank, other than up to $200,000 per year in purchase money financing.

The Agreement also contains customary events of default. If an event of default under the Agreement occurs and is continuing, the Bank may declare any outstanding obligations under the Agreement to be immediately due and payable. The Company was in compliance with all applicable financial covenants at September 30, 2013.

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Basis of Presentation of Interim Period Statements

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation of Interim Period Statements

Note 1 - Basis of Presentation of Interim Period Statements

The accompanying consolidated financial statements are unaudited and have been prepared by Barrett Business Services, Inc. (“Barrett”, “BBSI”, the “Company”, “our” or “we”), pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures typically included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods presented. The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from such estimates and assumptions. The consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2012 Annual Report on Form 10-K at pages F1 – F29. The results of operations for an interim period are not necessarily indicative of the results of operations for a full year.

Revenue recognition

We recognize revenue as services are rendered by our workforce. Professional employer services are normally used by organizations to satisfy ongoing human resource management needs and typically involve contracts with a minimum term of one year, which cover all employees at a particular work site. Our client services agreements are renewable on an annual basis and typically require 30 days’ written notice to cancel or terminate the contract by either party. Our client services agreements provide for immediate termination upon any default of the client regardless of when notice is given. We report professional employer services revenues on a net basis because we are not the primary obligor for the services provided by our co-employed clients to their customers pursuant to our client services agreements. Consequently, our professional employer service revenues represent the gross margin generated from our professional employer services after deducting the amounts invoiced to clients for direct payroll expenses such as salaries and wages and safety incentives. These amounts are also excluded from cost of revenues. Professional employer service revenues also include amounts invoiced to our clients for employer payroll-related taxes and workers’ compensation coverage. Staffing services are engaged by customers to meet short-term and long-term personnel needs.

Marketable securities

As of September 30, 2013, the Company’s marketable securities consisted of certificates of deposit, tax-exempt municipal securities and corporate bonds. The Company classifies certificates of deposit, municipal securities and certain of its corporate bonds as available for sale; they are reported at fair value with unrealized gains and losses, net of taxes, shown as a component of accumulated other comprehensive income (loss) in stockholders’ equity. In the event a loss is determined to be other-than-temporary, the loss will be recognized in the statement of operations.

Allowance for doubtful accounts

The Company had an allowance for doubtful accounts of $427,000 and $381,000 at September 30, 2013 and December 31, 2012, respectively. The Company must make estimates of the collectability of accounts receivable. Management analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic conditions and changes in customers’ payment trends when evaluating the adequacy of the allowance for doubtful accounts. The Company deems an account balance uncollectible only after it has pursued all available assets of the customer and, where applicable, the assets of the personal guarantor.

Workers’ compensation claims

The Company is a self-insured employer with respect to workers’ compensation coverage for all of its employees (including employees co-employed through our client service agreements) working in California, Oregon, Maryland, Delaware and Colorado. In the state of Washington, state law allows only the Company’s staffing services and internal management employees to be covered under the Company’s self-insured workers’ compensation program. Additionally, the Company operates a wholly-owned fully licensed insurance company, Ecole Insurance Company (“Ecole”), in Arizona to provide workers’ compensation coverage to our employees in Arizona.

To manage our financial exposure, in the event of catastrophic injuries or fatalities, the Company maintains excess workers’ compensation insurance through our wholly owned captive insurance company, Associated Insurance Company for Excess (“AICE”), with a per occurrence retention of $5.0 million, except in Maryland and Colorado, where our per occurrence retention is $1.0 million and $500,000, respectively. AICE maintains excess workers’ compensation insurance coverage with ACE American Insurance Company (“ACE”), between $5.0 million and $15.0 million per occurrence, except in Maryland, where coverage with ACE is between $1.0 million and $25.0 million per occurrence, and in Colorado, where the coverage with ACE is between $500,000 and statutory limits per occurrence. The Company continues to evaluate the financial capacity of its insurers to assess the recoverability of the related insurer receivables.

The Company has provided a total of $96.0 million and $70.6 million at September 30, 2013 and December 31, 2012, respectively, as an estimated future liability for unsettled workers’ compensation claims liabilities. The estimated liability for unsettled workers’ compensation claims represents management’s best estimate based upon an actuarial valuation provided by a third party actuary. Included in the claims liabilities are case reserve estimates for reported losses, plus additional amounts based on projections for incurred but not reported claims and anticipated increases in case reserve estimates. Also included in these estimates are amounts for unallocated loss adjustment expenses, including legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

Safety incentives liability

Safety incentives represent cash incentives paid to certain client companies under client service agreements for maintaining safe-work practices in order to minimize workplace injuries, thereby meeting agreed-upon loss objectives. The Company has provided $11.9 million at September 30, 2013 and $9.8 million at December 31, 2012 as an estimate of the liability for unpaid safety incentives. The incentive is based on a percentage of annual payroll and is paid annually to customers who meet predetermined workers’ compensation claims cost objectives. Safety incentive payments are made only after closure of all workers’ compensation claims incurred during the customer’s contract period. The liability is estimated and accrued each month based upon the incentive earned less the then-current amount of the customer’s estimated workers’ compensation claims reserves as established by the Company’s internal and third-party claims administrators, and the expected payout as determined by historical incentive payment trends. Safety incentive expense is netted against professional employer services revenue in our consolidated statements of operations.

Statements of cash flows

Interest paid during the nine months ended September 30, 2013 and 2012 did not materially differ from interest expense. Income taxes paid by the Company during the nine months ended September 30, 2013 and 2012 totaled $6.1 million and $246,000, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform with the 2013 presentation. Such reclassifications had no impact on the Company’s financial condition, operating results, cash flows, working capital or stockholders’ equity.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	500	500
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	20,500	20,500
Common stock, shares issued	7,165	7,017
Common stock, shares outstanding	7,165	7,017

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Fair Value Measurement

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurement

Note 6 - Fair Value Measurement

Marketable securities consist of the following investments (in thousands):

	September 30, 2013							December 31, 2012
	Cost		Gross Unrealized Losses			Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Current:
Available-for-sale:
Certificate of deposits	$	6,860	$	(9	)	$	6,851	$	0	$	0	$	0		2
Municipal bonds		5		0			5		409		1		410		2
Corporate bonds		256		(4	)		252		14,764		16		14,780		2
US treasuries		0		0			0		1,555		3		1,558		1
	$	7,121	$	(13	)	$	7,108	$	16,728	$	20	$	16,748
Long term:
Available-for-sale:
Municipal bonds	$	4,290	$	(12	)	$	4,278	$	292	$	1	$	293		2
Corporate bonds		1,613		(15	)		1,598		9,111		28		9,139		2
Held-to-maturity:
Corporate bonds		0		0			0		467		0		467		2
	$	5,903	$	(27	)	$	5,876	$	9,870	$	29	$	9,899

The Company’s current restricted certificates of deposit are summarized as follows (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis
Restricted certificates of deposit	$	63,944	$	0	$	63,944	$	0	$	0	$	0	2

The Company’s long term restricted marketable securities component of restricted marketable securities and workers’ compensation deposits consists of the following (in thousands):

	September 30, 2013						December 31, 2012
	Cost		Gross Unrealized Gains		Recorded Basis		Cost		Gross Unrealized Gains		Recorded Basis		Fair Value Category
Available-for-sale:
Municipal bonds	$	4,855	$	8	$	4,863	$	4,920	$	17	$	4,937		2
Corporate bonds		2,685		6		2,691		2,035		5		2,040		2
U.S. treasuries		2,472		0		2,472		1,780		0		1,780		1
	$	10,012	$	14	$	10,026	$	8,735	$	22	$	8,757

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 8,994	$ 5,812	$ 12,331	$ 7,342
Unrealized gains (losses) on marketable securities, net of tax	7	(19)	(39)	24
Comprehensive income	$ 9,001	$ 5,793	$ 12,292	$ 7,366

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 34,978	$ 45,747
Marketable securities	7,108	16,748
Trade accounts receivable, net	98,717	63,921
Income taxes receivable	2,307	0
Prepaid expenses and other	1,444	4,854
Restricted certificates of deposit	63,944	0
Deferred income taxes	8,172	8,148
Total current assets	216,670	139,418
Marketable securities	5,876	9,899
Property, equipment and software, net	20,383	18,489
Restricted marketable securities and workers' compensation deposits	10,472	9,726
Other assets	3,132	3,509
Goodwill	47,820	47,820
Total assets	304,353	228,861
Current liabilities:
Current portion of long-term debt	220	220
Line of credit	0	4,532
Accounts payable	2,721	1,995
Accrued payroll, payroll taxes and related benefits	107,060	69,568
Income taxes payable	0	272
Other accrued liabilities	953	306
Workers' compensation claims liabilities	32,068	24,541
Safety incentives liability	11,947	9,842
Total current liabilities	154,969	111,276
Long-term workers' compensation claims liabilities	63,912	46,023
Long-term debt	5,108	5,273
Deferred income taxes	10,607	10,607
Customer deposits and other long-term liabilities	1,789	1,786
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 500 shares authorized; no shares issued and outstanding	0	0
Common stock, $.01 par value; 20,500 shares authorized, 7,165 and 7,017 shares issued and outstanding	72	70
Additional paid-in capital	5,456	913
Accumulated other comprehensive (loss) income	(16)	23
Retained earnings	62,456	52,890
Total stockholders' equity	67,968	53,896
Total liabilities and stockholders' equity	$ 304,353	$ 228,861

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Workers' Compensation - Summarizes Aggregate Workers' Compensation Reserve Activity (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Workers Compensation Reserve [Abstract]
Workers' compensation claims liabilities, Beginning balance	$ 84,543	$ 55,765	$ 70,564	$ 51,193
Add: claims expense accrual:
Current period	17,396	9,891	44,825	26,224
Prior periods	5,002	3,835	12,688	6,945
Total expense accrual	22,398	13,726	57,513	33,169
Less: claim payments related to:
Current period	3,124	2,207	5,998	3,790
Prior periods	7,837	5,656	26,099	18,944
Total paid	10,961	7,863	32,097	22,734
Workers' compensation claims liabilities, Ending balance	95,980	61,628	95,980	61,628
Incurred but not reported (IBNR)	$ 59,412	$ 44,311	$ 59,412	$ 44,311

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Workers' Compensation

9 Months Ended

Sep. 30, 2013

Text Block [Abstract]

Workers' Compensation

Note 5- Workers’ Compensation

The following table summarizes the aggregate workers’ compensation reserve activity (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Beginning balance
Workers’ compensation claims liabilities	$	84,543	$	55,765	$	70,564	$	51,193
Add: claims expense accrual:
Current period		17,396		9,891		44,825		26,224
Prior periods		5,002		3,835		12,688		6,945
Total expense accrual		22,398		13,726		57,513		33,169
Less: claim payments related to:
Current period		3,124		2,207		5,998		3,790
Prior periods		7,837		5,656		26,099		18,944
Total paid		10,961		7,863		32,097		22,734
Ending balance
Workers’ compensation claims liabilities	$	95,980	$	61,628	$	95,980	$	61,628
Incurred but not reported (IBNR)	$	59,412	$	44,311	$	59,412	$	44,311

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Basic and Diluted Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Summary of Basic and Diluted Common Shares Outstanding

Basic and diluted common shares outstanding are summarized as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Weighted average number of basic common shares outstanding		7,149,502		7,007,333		7,084,593		7,959,086
Effect of dilutive securities		275,026		176,180		285,926		109,601
Weighted average number of diluted common shares outstanding		7,424,528		7,183,513		7,370,519		8,068,687

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Basic and Diluted Earnings Per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share

Note 4 - Basic and Diluted Earnings Per Share

Basic earnings per share are computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential effects of the exercise of outstanding stock options and vesting of restricted stock units. Basic and diluted common shares outstanding are summarized as follows:

	Three Months Ended September 30				Nine Months Ended September 30
	2013		2012		2013		2012
Weighted average number of basic common shares outstanding		7,149,502		7,007,333		7,084,593		7,959,086
Effect of dilutive securities		275,026		176,180		285,926		109,601
Weighted average number of diluted common shares outstanding		7,424,528		7,183,513		7,370,519		8,068,687

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings [Member]
Beginning balance at Dec. 31, 2011	$ 101,655	$ 99	$ 20,943	$ (34)	$ 80,647
Beginning balance, shares at Dec. 31, 2011		9,871,000
Common stock issued on exercise of options, shares		128,000
Common stock issued on exercise of options	1,768	1	1,767	0	0
Stock option compensation expense, net of tax, shares		0
Stock option compensation expense, net of tax	490	0	490	0	0
Tax benefit of stock option exercises	259	0	259	0	0
Repurchase of common stock, shares		(2,986,000)
Repurchase of common stock	(60,232)	(30)	(22,864)	0	(37,338)
Cash dividends on common stock	(2,639)	0	0	0	(2,639)
Unrealized holding gains (losses) on marketable securities, net of tax	24	0	0	24	0
Net Income	7,342	0	0	0	7,342
Ending Balance at Sep. 30, 2012	48,667	70	595	(10)	48,012
Ending balance, shares at Sep. 30, 2012		7,013,000
Beginning balance at Dec. 31, 2012	53,896	70	913	23	52,890
Beginning balance, shares at Dec. 31, 2012		7,017,000
Common stock issued on exercise of options, shares		148,000
Common stock issued on exercise of options	1,860	2	1,858	0	0
Stock option compensation expense, net of tax, shares		0
Stock option compensation expense, net of tax	602	0	602	0	0
Excess tax benefits from share-based compensation	2,083	0	2,083	0	0
Cash dividends on common stock	(2,765)	0	0	0	(2,765)
Unrealized holding gains (losses) on marketable securities, net of tax	(39)	0	0	(39)	0
Net Income	12,331	0	0	0	12,331
Ending Balance at Sep. 30, 2013	$ 67,968	$ 72	$ 5,456	$ (16)	$ 62,456
Ending balance, shares at Sep. 30, 2013		7,165,000

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Basis of Presentation of Interim Period Statements - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Basis Of Presentation Of Interim Period Statements [Line Items]
Professional employer service contract cancellation and termination period	30 days
Allowance for doubtful accounts	$ 427,000			$ 381,000
Estimated future liability for unsettled workers' compensation	95,980,000	61,628,000	84,543,000	70,564,000	55,765,000	51,193,000
Estimate of liability for unpaid safety incentives	11,900,000			9,800,000
Income taxes paid	6,100,000	246,000
Minimum [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Revenue recognition professional employer services contracts term	1 year
Minimum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	5,000,000
Maximum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	15,000,000
Self-Insured States [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance retention	5,000,000
Maryland [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance retention	1,000,000
Maryland [Member] | Minimum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	1,000,000
Maryland [Member] | Maximum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	25,000,000
Colorado [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance retention	500,000
Colorado [Member] | Minimum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	$ 500,000
Colorado [Member] | Maximum [Member] | AICE [Member]
Basis Of Presentation Of Interim Period Statements [Line Items]
Excess workers' compensation insurance coverage with American Insurance Company	Statutory Limits

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Basis of Presentation of Interim Period Statements (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Revenue recognition

Revenue recognition

We recognize revenue as services are rendered by our workforce. Professional employer services are normally used by organizations to satisfy ongoing human resource management needs and typically involve contracts with a minimum term of one year, which cover all employees at a particular work site. Our client services agreements are renewable on an annual basis and typically require 30 days’ written notice to cancel or terminate the contract by either party. Our client services agreements provide for immediate termination upon any default of the client regardless of when notice is given. We report professional employer services revenues on a net basis because we are not the primary obligor for the services provided by our co-employed clients to their customers pursuant to our client services agreements. Consequently, our professional employer service revenues represent the gross margin generated from our professional employer services after deducting the amounts invoiced to clients for direct payroll expenses such as salaries and wages and safety incentives. These amounts are also excluded from cost of revenues. Professional employer service revenues also include amounts invoiced to our clients for employer payroll-related taxes and workers’ compensation coverage. Staffing services are engaged by customers to meet short-term and long-term personnel needs.

Marketable securities

Marketable securities

As of September 30, 2013, the Company’s marketable securities consisted of certificates of deposit, tax-exempt municipal securities and corporate bonds. The Company classifies certificates of deposit, municipal securities and certain of its corporate bonds as available for sale; they are reported at fair value with unrealized gains and losses, net of taxes, shown as a component of accumulated other comprehensive income (loss) in stockholders’ equity. In the event a loss is determined to be other-than-temporary, the loss will be recognized in the statement of operations.

Allowance for doubtful accounts

Allowance for doubtful accounts

The Company had an allowance for doubtful accounts of $427,000 and $381,000 at September 30, 2013 and December 31, 2012, respectively. The Company must make estimates of the collectability of accounts receivable. Management analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic conditions and changes in customers’ payment trends when evaluating the adequacy of the allowance for doubtful accounts. The Company deems an account balance uncollectible only after it has pursued all available assets of the customer and, where applicable, the assets of the personal guarantor.

Workers' compensation claims

Workers’ compensation claims

The Company is a self-insured employer with respect to workers’ compensation coverage for all of its employees (including employees co-employed through our client service agreements) working in California, Oregon, Maryland, Delaware and Colorado. In the state of Washington, state law allows only the Company’s staffing services and internal management employees to be covered under the Company’s self-insured workers’ compensation program. Additionally, the Company operates a wholly-owned fully licensed insurance company, Ecole Insurance Company (“Ecole”), in Arizona to provide workers’ compensation coverage to our employees in Arizona.

To manage our financial exposure, in the event of catastrophic injuries or fatalities, the Company maintains excess workers’ compensation insurance through our wholly owned captive insurance company, Associated Insurance Company for Excess (“AICE”), with a per occurrence retention of $5.0 million, except in Maryland and Colorado, where our per occurrence retention is $1.0 million and $500,000, respectively. AICE maintains excess workers’ compensation insurance coverage with ACE American Insurance Company (“ACE”), between $5.0 million and $15.0 million per occurrence, except in Maryland, where coverage with ACE is between $1.0 million and $25.0 million per occurrence, and in Colorado, where the coverage with ACE is between $500,000 and statutory limits per occurrence. The Company continues to evaluate the financial capacity of its insurers to assess the recoverability of the related insurer receivables.

The Company has provided a total of $96.0 million and $70.6 million at September 30, 2013 and December 31, 2012, respectively, as an estimated future liability for unsettled workers’ compensation claims liabilities. The estimated liability for unsettled workers’ compensation claims represents management’s best estimate based upon an actuarial valuation provided by a third party actuary. Included in the claims liabilities are case reserve estimates for reported losses, plus additional amounts based on projections for incurred but not reported claims and anticipated increases in case reserve estimates. Also included in these estimates are amounts for unallocated loss adjustment expenses, including legal costs. These estimates are continually reviewed and adjustments to liabilities are reflected in current operating results as they become known.

Safety incentives liability

Safety incentives liability

Safety incentives represent cash incentives paid to certain client companies under client service agreements for maintaining safe-work practices in order to minimize workplace injuries, thereby meeting agreed-upon loss objectives. The Company has provided $11.9 million at September 30, 2013 and $9.8 million at December 31, 2012 as an estimate of the liability for unpaid safety incentives. The incentive is based on a percentage of annual payroll and is paid annually to customers who meet predetermined workers’ compensation claims cost objectives. Safety incentive payments are made only after closure of all workers’ compensation claims incurred during the customer’s contract period. The liability is estimated and accrued each month based upon the incentive earned less the then-current amount of the customer’s estimated workers’ compensation claims reserves as established by the Company’s internal and third-party claims administrators, and the expected payout as determined by historical incentive payment trends. Safety incentive expense is netted against professional employer services revenue in our consolidated statements of operations.

Statements of cash flows

Statements of cash flows

Interest paid during the nine months ended September 30, 2013 and 2012 did not materially differ from interest expense. Income taxes paid by the Company during the nine months ended September 30, 2013 and 2012 totaled $6.1 million and $246,000, respectively.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform with the 2013 presentation. Such reclassifications had no impact on the Company’s financial condition, operating results, cash flows, working capital or stockholders’ equity.

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Basic and Diluted Earnings Per Share - Summary of Basic and Diluted Common Shares Outstanding (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share [Abstract]
Weighted average number of basic common shares outstanding	7,150,000	7,007,000	7,085,000	7,959,000
Effect of dilutive securities	275,026	176,180	285,926	109,601
Weighted average number of diluted common shares outstanding	7,425,000	7,184,000	7,371,000	8,069,000

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Stock Repurchase - Additional Information (Detail) (USD $)	1 Months Ended		9 Months Ended
	Sep. 28, 2012	Mar. 28, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 21, 2012
Equity, Class of Treasury Stock [Line Items]
Repurchase share price per share		$ 20	$ 0.01		$ 0.01
Total consideration		$ 59,700,000
Stock repurchase in cash			0	25,432,000
Stock repurchase from issued shares			0		0
Non-Voting Redeemable Preferred Stock with a liquidation preference			$ 1,000
Professional and legal fees			514,000
Redemption of outstanding shares of Series A Nonconvertible, Non-Voting Redeemable Preferred Stock						34,800,000
Decrease in dividend obligation after redemption of preferred stock	870,000
Preferred stock redemption period			6 months
Series A Nonconvertible Non Voting Redeemable Preferred Stock [Member]
Equity, Class of Treasury Stock [Line Items]
Stock repurchase from issued shares			34,800
Promoter One [Member]
Equity, Class of Treasury Stock [Line Items]
Repurchase common stock held by promoter, one		2,485,929
Promoter Two [Member]
Equity, Class of Treasury Stock [Line Items]
Repurchase common stock held by promoter, one		500,000
Cash [Member]
Equity, Class of Treasury Stock [Line Items]
Stock repurchase in cash			$ 24,900,000

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Entity Registrant Name	BARRETT BUSINESS SERVICES INC
Entity Central Index Key	0000902791
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		7,165,231

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Revolving Credit Facility - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Line of Credit Facility [Line Items]
Line of credit facility expiration date	Oct. 01, 2017
Revolving credit facility borrowing capacity	$ 24,000,000
Letters of credit outstanding amount	70,600,000
Restricted certificates of deposit related to California workers' compensation	63,944,000	0
Interest calculation under revolving credit facility	The Agreement also provides for an unused commitment fee of 0.25% per annum on the average daily unused amount of the revolving credit facility
Ratio of restricted and unrestricted cash and marketable securities to workers' compensation and safety incentive liabilities	1.0
Prohibition on incurring additional indebtedness without the prior approval of the Bank in purchase money financing	200,000
September 30, 2014 [Member]
Line of Credit Facility [Line Items]
Funded debt to EBITDA ratio	1.75
September 30, 2015 [Member]
Line of Credit Facility [Line Items]
Funded debt to EBITDA ratio	1.5
Thereafter [Member]
Line of Credit Facility [Line Items]
Funded debt to EBITDA ratio	1.25
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Outstanding borrowings on the revolving credit facility	0
LIBOR plus rate	1.75%
Unused commitment fee on unused amount	0.25%
Interest calculation under revolving credit facility	The rate is calculated based on LIBOR plus 1.75%
Maximum [Member]
Line of Credit Facility [Line Items]
Reduction in borrowing capacity	2,500,000
Maximum [Member] | September 30, 2013 [Member]
Line of Credit Facility [Line Items]
Funded debt to EBITDA ratio	2.25
Maximum [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Revolving credit facility current borrowing capacity	$ 21,500,000
Minimum [Member]
Line of Credit Facility [Line Items]
Minimum Fixed Charge Coverage Ratio	1.25