EMPLOYMENT AGREEMENT RE MULHOLLAND

EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, dated for reference purposes January 26,
1999, is by and between BARRETT BUSINESS SERVICES, INC., a Maryland corporation
("Employer"), and MICHAEL D. MULHOLLAND ("Employee"). Employer desires to
confirm the continued employment of Employee as its Vice President-Finance and
Secretary, to perform the duties set forth in this Agreement; and Employee is
willing to enter into this contract of employment.

NOW, THEREFORE, in consideration of the mutual promises, agreements and
conditions hereinafter set forth, it is agreed as follows:

1. EMPLOYMENT. Employer shall continue to employ Employee, and Employee
agrees to be employed by Employer in accordance with the terms and conditions
hereinafter set forth. Employee represents and warrants that he has the legal
capacity to execute and perform this Agreement, that it is a valid and binding
agreement against him according to its terms, and that its execution and
performance by him does not violate the terms of any existing agreement or
understanding to which Employee is a party. In addition, Employee represents and
warrants that he knows of no reason why he is not physically capable of
performing his obligations under this Agreement in accordance with its terms.

2. TERM. The term of this Agreement will begin on January 26, 1999,
1999 ("Anniversary Date"). Except as otherwise provided under paragraphs 2.1 and
2.2 herein, as of each Anniversary Date, the term of this Agreement shall not be
less than two (2) years.

2.1 Unless either party to this Agreement notifies the other in
writing not later than 30 days prior to an Anniversary Date of an election to
terminate this Agreement on the Anniversary Date in the following year, the term
of this Agreement shall automatically renew each year for an additional one (1)
year, upon the annual Anniversary Date, such that the effective term of this
Agreement shall always be not less than two (2) years as of each Anniversary
Date.

2.2 In the event of a "Change in Control" of the Employer, this
Agreement shall automatically renew for a period of not less than two (2) years
beginning with the day immediately preceding the effective date of the Change in
Control of the Employer. For the purposes of this Agreement, Change in Control
shall be identical to the definition included in the Employer's 1993 Stock
Incentive Plan, as amended; provided, however, the definition of Change in
Control shall not include any form of acquisition, merger or consolidation of
Employer's stock initiated by William W. Sherertz or any entity controlled by
William W. Sherertz which would cause the Employer to become a

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privately owned company and William W. Sherertz continues as President and Chief
Executive Officer.

3. DUTIES. Employee will serve as Vice President-Finance and Secretary
of Employer, with such duties as are customarily associated with such positions,
and such other duties as may be assigned to him from time to time by the Board
of Directors of Employer (the "Board").

4. EXTENT OF SERVICES; RESTRICTIONS. Employee shall devote his entire
working time, attention and energies to the performance of his duties hereunder
and shall not, during the term of this Agreement, be engaged in any other
business activity, whether or not such business activity is pursued for gain,
profit or other pecuniary advantage. Employee shall at all times, faithfully and
to the best of his ability, perform all of the duties that may be required of
him pursuant to this Agreement; provided, however, that nothing in this
Agreement shall preclude Employee from devoting time during reasonable periods
required for:

4.1 serving, in accordance with Employer's policies and with the
prior approval of the Board, as a director or member of a committee of any
company or organization involving no actual or potential conflict of interest
with Employer;

4.2 delivering lectures and fulfilling speaking engagements;

4.3 engaging in charitable and community activities; and

4.4 investing his personal assets in businesses in which his
participation is solely that of an investor; provided, however, that such
activities do not materially affect or interfere with the performance of
Employee's duties and obligations to Employer.

5. SALARY. Employee shall be paid a salary of $155,000 per year, in
accordance with Employer's standard payroll procedures for its executive
management employees. Employee's salary shall be evaluated annually, as provided
in the Employer's Executive Officer Compensation Policy Dated November 30, 1995.
The foregoing salary is in addition to such other forms of compensation such as
stock appreciation rights, options, bonuses, and benefits, as provided for in
the Company's Executive Officer Compensation Policy Dated November 30, 1995, and
as the Board may award to Employee from time to time.

6. BENEFITS; REIMBURSEMENT; STOCK OPTIONS. Employer will furnish
Employee, at Employer's expense, the same employment fringe benefits that are
generally provided from time to time by Employer to its executive management
employees. Employer shall reimburse Employee for reasonable out-of-pocket
expenses that

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Employee incurs in connection with the performance of his duties in accordance
with the same reimbursement policies that generally apply to Employer's
executive management employees.

7. TERMINATION.

7.1 FOR CAUSE. Employer, by a vote of a majority of the Board, may
terminate Employee's employment at any time "For Cause" with immediate effect
upon delivering written notice thereof to Employee. For purposes of this
Agreement, For Cause includes:

(a) a significant failure to comply with policies, standards
and regulations of the Employer as established from time to time;

(b) gross negligence in the performance of Employee's duties,
continuing after appropriate notice pursuant to Employer policy;

(c) embezzlement, theft, larceny, material fraud, or other
acts of dishonesty;

(d) significant violation of any of Employee's material
duties or obligations under this Agreement; or

(e) conviction of or entry of a plea of guilty or nolo
contendere to a felony or other crime.

On termination For Cause, Employer shall pay Employee his salary
earned through the date of termination, and Employee shall not be entitled to
any further compensation or benefits under this Agreement after the date of such
termination other than fringe benefits due under Employer's benefit plans or
applicable law.

7.2 WITHOUT CAUSE. In the event of a Change in Control of the
Employer and Employee's employment is terminated other than For Cause, then
Employer shall pay to Employee an amount equal to two (2) times his then-current
annual base salary in a lump sum within three (3) days of the date of
termination of employment, unless the provisions of paragraph 8 are applicable,
wherein such lump sum payment shall then be payable in accordance with paragraph
8. If Employee voluntarily terminates employment with Employer within 90 days of
a "Change in Duties" related to a Change in Control, Employer shall be deemed to
have terminated Employee's employment other than For Cause under this paragraph
7.2, then Employer shall pay to Employee an amount equal to two (2) times his
then-current annual base salary in a lump sum within three (3) days of the date
of termination of employment, unless the provisions of paragraph 8 are
applicable, wherein such lump sum payable shall then be payable in accordance
with paragraph 8. Change in Duties shall mean any one or more of the following:

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(a) a significant change in the nature or scope of Employee's
title, responsibilities, authorities, or duties from those applicable as of the
date of this Agreement;

(b) a significant diminution in Employee's eligibility to
participate in bonus, stock option, incentive awards, and other compensation
plans;

(c) a significant diminution in employee benefits, including,
but not limited to, medical and dental insurance, and perquisites applicable to
Employee, from the employee benefits and perquisites to which he was entitled as
of the date of this Agreement; provided, however, Employer may modify and amend
the group benefit plans offered to its employees including Employee, without
violating the terms of this paragraph 7.2(c);

(d) a change in the location of Employee's principal place of
employment by Employer by more than 30 miles from Portland, Oregon; or

(e) significant violation of any of the Employer's material
duties or obligations under this Agreement.

7.3 DEATH. In the event of Employee's death during the term of
this Agreement, this Agreement will terminate.

7.4 DISABILITY. This Agreement shall terminate upon Employee's
total disability. Employee's total disability means his inability to perform his
regular duties by reason of illness or accident for a period of six (6)
consecutive months, determined by a licensed physician acceptable to Employer
and Employee. On termination by reason of Employee's disability, in addition to
such group disability insurance benefits as Employer may provide from time to
time, Employee and his dependents shall continue to be covered by the group
health insurance provided to executive management employees of Employer for the
remaining term of this Agreement.

7.5 BY EMPLOYEE. In the event Employee voluntarily terminates
employment with Employer during the term of this Agreement (other than as a
result of a Change in Duties as set forth in paragraph 7.2 above), Employer
shall pay Employee his salary through the date of termination and Employee shall
not be entitled to any further compensation or benefits under this Agreement
after the date of termination other than fringe benefits due under Employer's
benefit plans or applicable law.

8. LIMITATIONS ON TERMINATION COMPENSATION.

8.1 In the event that the "Present Value" (as defined herein) of
any termination benefits payable to Employee under this Agreement, and any other
payments otherwise payable to Employee by the Employer on or after a Change in
Control, which are deemed under Section 280G of the Internal Revenue Code of

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1986, as amended (the "Code"), to constitute "Parachute Payments" [as defined in
Section 280G without regard to Section 280G(b)(2)(A)(ii)] equals or exceeds 300
percent of Employee's base amount (as defined herein), the provisions set forth
below will apply, and termination benefits payable to Employee under paragraph 7
of this Agreement will be made only in accordance with this paragraph 8
notwithstanding any provision to the contrary in this Agreement.

8.2 Not later than ten (10) days from the date of Employee's
termination, the Employer will provide Employee with a schedule indicating by
category the Present Value of all termination benefits payable to Employee under
this Agreement and any other payments otherwise payable to Employee by the
Employer on or after the Change in Control, which, in the Employer's opinion,
constitute Parachute Payments under Section 280G. No payments under paragraph 7
of this Agreement shall be made until after ten (10) days from the receipt of
such schedule by Employee. At any time prior to the expiration of said ten (10)
day period, Employee shall have the right to select from all or part of any
category of payment to be made under this Agreement those payments to be made to
Employee in an amount, the Present Value of which (when combined with the
Present Value of any other payments otherwise payable to Employee by the
Employer that are deemed Parachute Payments) is less than 300 percent of
Employee's base amount. If Employee fails to exercise his right to make a
selection, only a lump sum cash termination payment in the maximum amount that
is less than 300 percent of his base amount (reduced by the Present Value of any
other payments otherwise payable to Employee by the Employer that are deemed
Parachute Payments) shall be made to Employee on the day after the expiration of
the period extending ten (10) days from the receipt by Employee of the schedule
provided for hereunder.

8.3 At any time prior to Employee exercising his right to make a
selection under paragraph 8.2, Employee shall have the right to request that the
Employer obtain a ruling from the Internal Revenue Service ("Service") as to
whether any or all payments listed on the schedule provided hereunder are, in
the view of the Service, Parachute Payments under Section 280G. If a ruling is
sought pursuant to his request, no termination benefit under this Agreement
shall be paid to him until after 15 days from the date of such ruling, and the
period during which Employee may exercise his right to make a selection under
paragraph 8.2 hereof shall be extended to a date 15 days from the date of such
ruling. For purposes of this paragraph 8, Employee and the Employer hereby agree
to be bound by the Service's ruling as to whether payments constitute Parachute
Payments under Section 280G. If the Service declines, for any reason, to provide
the ruling requested, the Employer's determination with respect to what payments
constitute Parachute Payments shall control, and the period during which
Employee may exercise his right to make a selection under paragraph 8.2 hereof
shall be

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extended to a date 15 days from the date of the Service's notice indicating that
no ruling will be forthcoming.

8.4 For purposes of this paragraph 8, "Present Value" means the
value determined in accordance with the principles of Section 1274(d) of the
Code under rules provided in Treasury Regulations under Section 280G, and base
amount means the average annual compensation payable to Employee by the Employer
and includable in his gross income for federal income tax purposes during the
shorter of the period consisting of the most recent five (5) taxable years
ending before the date of any Change in Control of the Employer or the portion
of such period during which Employee was an employee of the Employer.

8.5 Any selection by Employee under this paragraph 8 shall be
invalid, and no such payments will be made, unless, under relevant Treasury
Regulations, such payments can be reduced to Present Value as of the date of
termination or such appropriate date prior thereto as provided in said Treasury
Regulations.

8.6 References to Section 280G herein are specific references to
Section 280G, as amended to date. In the event that Section 280G is amended
further prior to expiration or termination of this Agreement, or replaced by a
successor statute, the limitations imposed by this paragraph 8 upon payments to
be made to Employee under this Agreement shall be deemed modified without
further action of the parties so as to provide only for such limitations that
are consistent with such amendment(s) or successor statute(s), as the case may
be. In the event that Section 280G, or any successor statute, is repealed, this
paragraph 8 shall cease to be effective on the effective date of such repeal.
The parties to this Agreement recognize that final Treasury Regulations under
Section 280G may affect the amounts that may be paid hereunder and agree that,
upon issuance of such final Treasury Regulations, this Agreement may be modified
as in good faith deemed necessary in light of the provisions of such Treasury
Regulations to achieve the purposes hereof, and consent to such modifications
shall not be unreasonably withheld.

9. CONFIDENTIAL INFORMATION AND EMPLOYER MATERIALS. Employee recognizes
and acknowledges that all information pertaining to the affairs, business,
clients, or customers of Employer (any or all of such entities hereinafter
referred to as the "Business"), as such information may exist from time to time,
is confidential information and is a unique and valuable asset of the Business,
access to and knowledge of which are essential to the performance of Employee's
duties under this Agreement. Employee shall not, except to the extent reasonably
necessary in the performance of his duties under this Agreement, divulge to any
person, firm, association, corporation, or governmental agency, any information
concerning the affairs, business, clients, or customers of the Business (except
such information as is required by law to be divulged to a government agency or
pursuant to lawful process), or make use of any such information for

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his own purposes or for the benefit of any person, firm, association or
corporation (except the Business) and shall use his reasonable best efforts to
prevent the disclosure of any such information by others. All records,
memoranda, letters, books, papers, reports, accountings, experience or other
data, and other records and documents relating to the Business, whether made by
Employee or otherwise coming into his possession, are confidential information
and are, shall be, and shall remain the property of Employer. No copies thereof
shall be made which are not retained by Employer, and Employee agrees, on
termination of his employment, or on demand of Employer, to deliver the same to
Employer. Employer's obligation to make payments, deliver shares of stock or
provide for any benefits under this Agreement or any other agreement with
Employee shall cease upon any violation of the preceding provisions of this
paragraph; provided, however, that Employee shall first have the right to appear
before the Board with counsel and that cessation of payments shall require a
vote of a majority of the Board.

10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and personally delivered or sent by
registered or certified mail addressed as follows:

Employer: Barrett Business Services, Inc.
4724 SW Macadam Avenue
Portland OR 97201-4225
Attn: President

With a copy to: Kirkham E. Hay
Brownstein, Rask, Arenz, Sweeney,
Kerr & Grim, LLP
1200 SW Main Building
Portland OR 97205-2040

Employee: Michael D. Mulholland
3061 SW Fairmount Boulevard
Portland OR 97201

Either party may, by notice in writing to the other party as provided
herein, change the address to which notices to that party are to be given.

11. WAIVER. The waiver by Employer of the breach of any provision of
this Agreement by Employee shall not operate or be construed as a waiver of any
subsequent breach by Employee.

12. MODIFICATION. No amendment, modification or discharge of this
Agreement shall be valid unless it is in writing and duly executed by the party
to be charged therewith.

13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oregon without regard to any applicable
conflicts of law rules thereof.

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14. SEVERABILITY. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.

15. BENEFIT. This Agreement shall inure to and be binding upon the
parties, their heirs, personal representatives, successors, and assigns;
provided, however, Employee may not assign this Agreement.

16. ENTIRE AGREEMENT. The entire agreement between the parties is
contained herein and it supersedes and replaces all other agreements pertaining
to Employee's employment by Employer; provided, however, this Agreement does not
supersede or invalidate other agreements and understandings between the parties
relating to fringe benefit plans provided to Employee or noncompetition
agreements. There are no promises or representations made on behalf of Employer
to induce Employee to enter into this Agreement which are not set forth herein.

17. ARBITRATION. Any and all disputes arising from or pertaining to
this Agreement, or the interpretation or enforcement thereof, shall be resolved
by binding arbitration in Portland, Oregon. The arbitration shall be conducted
by an independent and neutral arbiter mutually agreed upon by the parties. If
the parties fail to agree on the selection of the arbiter within 30 days after
either party requests arbitration, the arbiter shall be appointed, on petition
by either party, by the Presiding Judge of the Circuit Court of the State of
Oregon for Multnomah County. The fees and expenses of the arbiter shall be
equally shared by the parties. The decision of the arbiter shall be final and
judgment thereon may be entered in any court of competent jurisdiction. All
parties shall use good faith best efforts to resolve any dispute related to this
Agreement within 90 days from the date of notice by either party of a dispute.
In the event the Employer fails to use good faith best efforts to resolve any
dispute hereunder within 90 days, then the Employer shall forfeit his rights
under this Agreement and the Employee shall be permitted to enter a default
judgment in favor of the Employee, including all fees and expenses incurred by
the Employee in connection with the dispute, in any court of competent
jurisdiction.

18. NO ATTACHMENT. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect; provided, however, that nothing in this
paragraph 18 shall preclude the assumption of such rights by executors,
administrators or other legal representatives of Employee or his estate and
their assigning any rights hereunder to the person or persons entitled thereto.

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19. SOURCE OF PAYMENTS. All payments provided for under this Agreement
shall be paid in cash from the general funds of Employer. Employer shall not be
required to establish a special or separate fund or other segregation of assets
to assure such payments, and, if Employer shall make any investments to aid it
in meeting its obligations hereunder, Employee shall have no right, title or
interest whatsoever in or to any such investments except as may otherwise be
expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Agreement, and no action taken pursuant
to its provisions, shall create or be construed to create a trust of any kind,
or a fiduciary relationship, between Employer and Employee or any other person.
To the extent that any person acquires a right to receive payments from Employer
hereunder, such right shall be no greater than the right of an unsecured
creditor of Employer.

20. CAPTIONS. The paragraph captions are for convenience of the parties
and shall not affect the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first herein written.

Employer: Employee:

Barrett Business Services, Inc.
/s/ Michael D. Mulholland
Michael D. Mulholland
By /s/ William W. Sherertz

Title: President and CEO


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