<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q
                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

  [X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934

                 For the quarterly period ended June 30, 2001.

                                      or

  [ ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
        Exchange Act of 1934

    For the transition period from ________________ to__________________

                          COMMISSION FILE NO. 0-28148

                              STAFF LEASING, INC.
            (exact name of registrant as specified in its charter)

           Florida                                           65-0735612
 (State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                         Identification No.)

  600 301 Blvd West, Suite 202
        Bradenton, FL                                           34205
(Address of principal executive offices)                      (Zip Code)

(Registrant's Telephone Number, Including Area Code):  (941) 748-4540


   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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.

   Class of common stock                     Outstanding as of June 30, 2001
   ---------------------                     -------------------------------
   Par value $0.01 per share                             20,612,562
<PAGE>

                               TABLE OF CONTENTS


PART I.    FINANCIAL INFORMATION                                           Page
                                                                           ----

   ITEM 1. Financial Statements............................................  3

     Condensed Consolidated Statements of Operations for the
       three and six months ended June 30, 2000 and 2001   (unaudited).....  3

     Condensed Consolidated Balance Sheets as of December 31, 2000
       and June 30, 2001 (unaudited).......................................  4

     Condensed Consolidated Statement of Changes in Shareholders'
       Equity for the six months ended June 30, 2001 (unaudited)...........  5

     Condensed Consolidated Statements of Cash Flows for the
       six months ended June 30, 2000 and 2001 (unaudited).................  6

     Notes to Condensed Consolidated Financial Statements (unaudited)......  7


   ITEM 2.   Management's Discussion and Analysis of Financial Condition
              and Results of Operations.................................... 11


PART II.  OTHER INFORMATION

   ITEM 1.  Legal Proceedings.............................................. 14

   ITEM 4.  Submission of Matter to a Vote of Security Holders............. 15

   ITEM 5.  Other Information.............................................. 15

   ITEM 6.  Exhibits and Reports on Form 8-K............................... 15


SIGNATURES................................................................. 16

                                       2
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.    Financial Statements

                     STAFF LEASING, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   UNAUDITED

<TABLE>
<CAPTION>
                                                                       FOR THE THREE MONTHS ENDED      FOR THE SIX MONTHS ENDED
                                                                                  JUNE 30,                     JUNE 30,
                                                                    -----------------------------------------------------------
                                                                           2000            2001          2000           2001
                                                                    -----------------------------------------------------------
                                                                                 (in $000's, except per share data)
<S>                                                                   <C>             <C>             <C>            <C>
Revenues                                                                 $779,842        $787,041     $1,511,157      $1,539,340
                                                                       ------------    ------------  -------------  --------------

Cost of services:

 Salaries, wages and payroll taxes                                        710,296         718,184      1,374,005       1,402,363

 Benefits, workers' compensation, state unemployment taxes and
   other costs                                                             45,438          45,811         89,638          90,274
                                                                       ------------    ------------  -------------  --------------

       Total cost of services                                             755,734         763,995      1,463,643       1,492,637
                                                                       ------------    ------------  -------------  --------------

Gross profit                                                               24,108          23,046         47,514          46,703
                                                                       ------------    ------------  -------------  --------------

Operating expenses:

 Salaries, wages and commissions                                           15,659          14,667         31,050          30,705

 Other general and administrative                                           8,067           7,252         15,503          13,981

 Depreciation and amortization                                              2,188           2,057          4,409           4,119
                                                                       ------------    ------------  -------------  --------------

       Total operating expenses                                            25,914          23,976         50,962          48,805
                                                                       ------------    ------------  -------------  --------------

Operating loss                                                             (1,806)           (930)        (3,448)         (2,102)

Interest income, net                                                        1,181             859          2,137           1,948

Other non operating expense                                                (1,224)             (3)        (1,352)             (7)
                                                                       ------------    ------------  -------------  --------------

Loss before income taxes                                                   (1,849)            (74)        (2,663)           (161)

Income tax benefit                                                           (693)           (183)          (999)           (364)
                                                                       ------------    ------------  -------------  --------------

Net (loss) income                                                        $ (1,156)       $    109     $   (1,664)    $       203
                                                                       ============    ============  ============= ===============

Net (loss) income per share
    - Basic                                                                 $(.05)           $.01          $(.08)           $.01
    - Diluted                                                               $(.05)           $.01          $(.08)           $.01
                                                                       ============    ============  ============= ===============
Weighted average common shares outstanding
    - Basic                                                                21,585          20,613         21,646          20,627
    - Diluted                                                              21,586          20,628         21,647          20,636
                                                                       ============    ============  ============= ===============
</TABLE>

           See notes to condensed consolidated financial statements.

                                       3
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                   UNAUDITED

<TABLE>
<CAPTION>
                                                                                   December 31, 2000         June 30, 2001
                                                                                  -------------------      ------------------
                                                                                (in $000's, except share and per share data)
<S>                                                                             <C>                        <C>
                                   ASSETS
Current assets:

 Cash and cash equivalents                                                            $     51,269           $     46,486
 Certificates of deposit - restricted                                                        7,781                  7,783
 Marketable securities                                                                      37,918                 23,267
 Marketable securities- restricted                                                               -                 15,891
 Accounts receivable, net                                                                   71,343                 62,885
 Other current assets                                                                        3,723                  4,171
                                                                                    -----------------      ------------------
    Total current assets                                                                   172,034                160,483

Property and equipment, net                                                                 25,040                 25,042
Goodwill, net of accumulated amortization
  of $5,612 and $5,246, respectively                                                         9,426                  9,059
Deferred income tax asset                                                                      896                    623
Other assets                                                                                 4,942                  3,710
                                                                                    -----------------      ------------------
                                                                                      $    212,338           $    198,917
                                                                                    =================      ==================
         LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:

 Accrued insurance premiums, health and
   workers' compensation reserves                                                     $     24,156           $     19,500
 Accrued payroll and payroll taxes                                                          75,386                 69,443
 Accounts payable and other accrued liabilities                                              5,457                  4,157
 Income taxes payable                                                                          195                      -
 Deferred income tax liability                                                               5,461                  5,087
 Customer deposits and prepayments                                                           3,298                  3,500
                                                                                    -----------------      ------------------
    Total current liabilities                                                              113,953                101,687

Long-term accrued health and workers' compensation
  reserves                                                                                  20,530                 20,354
Other long-term liabilities                                                                    395                    362

Commitments and contingencies (See notes)

Shareholders' equity:
  Common stock, $.01 par value                                                                 207                    206
    Shares authorized:  100,000,000
    Shares issued and outstanding:
        December 31, 2000 -   20,651,107
        June 30, 2001 - 20,612,562
 Additional paid in capital                                                                 38,960                 38,825
 Retained earnings                                                                          38,305                 37,477
 Accumulated other comprehensive (loss) income                                                 (12)                     6
                                                                                    -----------------      ------------------
    Total shareholders' equity                                                              77,460                 76,514
                                                                                    -----------------      ------------------
                                                                                      $    212,338           $    198,917
                                                                                    =================      ==================
</TABLE>

           See notes to condensed consolidated financial statements.

                                       4
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                                   UNAUDITED
<TABLE>
<CAPTION>

                                   Common                  Additional     Accumulated Other
                                    Stock       Common       Paid In        Comprehensive       Retained
                                  (shares)       Stock       Capital        Income (Loss)       Earnings            Total
                                                            (in $000's except share data)
<S>                              <C>            <C>        <C>            <C>                   <C>               <C>
Balance, January 1, 2001         20,651,107     $  207      $  38,960         $ (12)            $ 38,305          $ 77,460

Repurchase and retirement
 of common stock                    (38,545)        (1)          (135)                                                (136)

Dividends Paid                                                                                    (1,031)           (1,031)

Comprehensive Income:
  Unrealized gain on
    marketable securities                                                        18
  Net income                                                                                         203

Total comprehensive income                                                                                             221
                               --------------  ---------   ------------    -----------       -------------     -------------
Balance, June 30, 2001           20,612,562     $  206      $  38,825         $   6             $ 37,477          $ 76,514
                               ==============  =========   ============    ===========       =============     =============
</TABLE>


           See notes to condensed consolidated financial statements.

                                       5
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   UNAUDITED

<TABLE>
<CAPTION>
                                                                                  For the six months ended
                                                                                          June 30,
                                                                          -----------------------------------------
                                                                                 2000                  2001
                                                                          --------------------   ------------------
                                                                                        (in $000's)
<S>                                                                        <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net(loss) income                                                       $   (1,664)            $      203
    Adjustments to reconcile net (loss) income to net cash
       provided by operating activities:
          Depreciation and amortization                                         4,409                  4,119
          Deferred tax benefit                                                 (1,345)                   (90)
          Provision for bad debts                                                 300                    219
          Other                                                                  (222)                   (70)
          Changes in operating assets and liabilities:
             Certificates of deposit- restricted                                   (4)                    (2)
             Accounts receivable                                              (10,604)                 8,239
             Other current assets                                               5,935                   (448)
             Accounts payable and other accrued liabilities                    (5,197)                (1,300)
             Accrued payroll and payroll taxes                                 21,059                 (5,943)
             Accrued insurance premiums, health and workers'
                compensation reserves                                          17,856                 (4,656)
             Income taxes payable                                                   -                   (195)
             Customer deposits and prepayments                                    498                    202
            Other long-term assets                                             (1,128)                 1,232
            Health and workers' compensation
                reserves - long term                                                -                   (176)
            Other long-term liabilities                                           (10)                   (33)
                                                                          ----------------       --------------
       Net cash provided by operating activities                               29,883                  1,301
                                                                          ----------------       --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of marketable securities                                        (84,791)               (96,299)
    Maturities of marketable securities                                        68,809                 95,150
    Capital expenditures                                                       (1,333)                (3,768)
                                                                          ----------------       --------------
       Net cash used in investing activities                                  (17,315)                (4,917)
                                                                          ----------------       --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payment of cash dividend to shareholders                                        -                 (1,031)
    Repurchase and retirement of common stock                                  (1,055)                  (136)
                                                                          ----------------       --------------
       Net cash used in financing activities                                   (1,055)                (1,167)
                                                                          ----------------       --------------
    Change in cash and cash equivalents                                        11,513                 (4,783)
Cash and cash equivalents - beginning of period                                23,081                 51,269
                                                                          ----------------       --------------
Cash and cash equivalents - end of period                                    $ 34,594               $ 46,486
                                                                          ================       ==============

Supplemental disclosure of cash flow information:
    Income taxes paid                                                        $     63               $    302
                                                                          ================       ==============

    Interest paid                                                            $      -               $      -
                                                                          ================       ==============
</TABLE>

           See notes to condensed consolidated financial statements.

                                       6
<PAGE>

                      STAFF LEASING, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                  (in $000's, except share and per share data)


1. GENERAL

   The accompanying unaudited condensed consolidated financial statements of
Staff Leasing, Inc. and subsidiaries (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form
10-Q.  These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 2000, included in the Company's Form 10-K.  The financial information
furnished reflects all adjustments, consisting only of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods presented.

   The Company's operations are currently conducted through a number of
subsidiary limited partnerships (the "OLPs") and limited liability corporations
(the "LLCs").  The consolidated operations of the Company exclude intercompany
accounts and transactions. Certain reclassifications have been made to the
consolidated financial statements of prior periods to conform to the current
period presentation.

   New Accounting Pronouncements - In June 2001, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standard
("SFAS") No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets in July 2001.  SFAS No. 141 requires that the purchase method
of accounting be used for all business combinations initiated after June 30,
2001. Use of the pooling-of-interests method will be prohibited.  SFAS No. 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. Thus, amortization of goodwill, including goodwill
recorded in past business combinations, will cease upon adoption of SFAS No.
142, which is effective for the Company on January 1, 2002.  The Company has not
evaluated the effect, if any, that the adoption of SFAS No. 141 and SFAS No. 142
will have on the Company's consolidated financial statements.


2. SUBSEQUENT EVENTS

   On July 31, 2001, Staff Leasing paid dividends totaling $1.03 million ($.05
per share) to stockholders of record as of July 16, 2001

   On August 3, 2001, the Company announced it would begin doing business using
the name Gevity HR.  The new identity is intended to more accurately reflect the
role of the Company, which is to provide human resource solutions to its
clients.  As part of the change in its business name, the Company has taken the
steps necessary to initiate the change of the names of its OLPs and LLCs. On
August 20, 2001, Staff Leasing, Inc. will change its Nasdaq ticker symbol from
STFF to GVTY.

3. ACCOUNTS RECEIVABLE

 Accounts receivable, net, consists of the following:
<TABLE>
<CAPTION>
                                                           December 31,           June 30,
                                                               2000                 2001
                                                            ----------            --------
<S>                                                         <C>                   <C>
Billed to clients.......................................... $ 9,207               $ 4,946
Unbilled revenues..........................................  62,776                58,761
                                                            -------               -------
                                                             71,983                63,707
     Less:  Allowance for doubtful accounts................    (640)                 (822)
                                                            -------               -------
                                                            $71,343               $62,885
                                                            =======               =======
</TABLE>

                                       7
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
                 (in $000's, except share and per share data)


4. PROPERTY AND EQUIPMENT

 Property and equipment (at cost) was comprised of the following:
<TABLE>
<CAPTION>
                                                        December 31,  June 30,
                                                           2000         2001
                                                         -------      --------
<S>                                                       <C>         <C>
Leasehold improvements................................   $ 2,173      $  2,248
Furniture and fixtures................................     3,252         3,318
Vehicles..............................................        66            25
Equipment.............................................     2,862         2,816
Computer hardware and software........................    40,035        43,602
                                                        --------      --------
Total property and equipment..........................    48,388        52,009
 Less accumulated depreciation........................   (23,348)      (26,967)
                                                        --------      --------
                                                        $ 25,040      $ 25,042
                                                        ========      ========
</TABLE>

  Depreciation expense was $4,042 and $3,753 for the six months ended June 30,
2000 and 2001, respectively.


5. COMMITMENTS AND CONTINGENCIES

   On April 30, 1999, a shareholder of the Company, brought a class action in
the Twelfth Judicial Division, Manatee County, Florida against the Company and
certain of its directors alleging that the directors and senior officers of the
Company breached their fiduciary duty to shareholders by failing to pursue a
proposal from Paribas Principal Partners to acquire the Company in order to
entrench themselves in the management of the Company.  Plaintiff seeks
injunctive relief and unspecified damages including attorneys' and experts'
fees. Defendants and counsel for the putative plaintiff class have reached a
preliminary agreement on terms of a settlement, following mediation.  The
settlement is subject to court approval, following notice to the putative class.
Management does not expect this settlement to have a material effect on the
Company's financial position.

   The Company is a party to certain pending claims that have arisen in the
normal course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the consolidated financial
position or results of operations if adversely resolved.

   The Company's employer and health care operations are subject to numerous
federal, state and local laws related to employment, taxes and benefit plan
matters. Generally, these regulations affect all companies in the U.S. However,
the regulatory environment for professional employer organizations ("PEOs") is
an evolving area due to uncertainties resulting from the non-traditional
employment relationships. Many federal and state laws relating to tax and
employment matters were enacted prior to the development of PEOs and do not
specifically address the obligations and responsibilities of these PEO
relationships. If the IRS concludes that PEOs are not "employers" of certain
worksite employees for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), the tax qualified status of the Company's 401(k) retirement plan
as in effect prior to April 1, 1997 could be revoked, its cafeteria plan may
lose its favorable tax status and the Company may no longer be able to assume
the client's federal employment tax withholding obligations. Any adverse
developments in the above noted areas could have a material effect on the
Company's financial condition and future results of operations.

6. EQUITY

   In August 1998, the Company's Board of Directors approved a program to
repurchase up to two million shares of the Company's common stock.  Purchases
could be made from time to time depending upon the Company's stock price, and
were to be made primarily in the open market, but also could be made through
privately negotiated transactions. In January 1999, the Company's Board of
Directors increased this share repurchase plan to three million shares. During
the first quarter of 2001, the Company repurchased 38,545 shares at a cost of
$136,000 to complete the entire three million share repurchase program.

                                       8
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) -- (CONTINUED)
                 (in $000's, except share and per share data)

7. INCOME TAXES

   The Company records income tax expense using the asset and liability method
of accounting for deferred income taxes.  Under such method, deferred tax assets
and liabilities are recognized for the expected future tax consequences of
temporary differences between the financial statement carrying values and the
income tax bases of the Company's assets and liabilities. The Company's
effective tax rate provides for federal and state income taxes. For the six
months ended June 30, 2001, the Company recognized an income tax benefit as a
result of a net loss from operations, tax-exempt interest income and income tax
credits.


8. EARNINGS PER SHARE (EPS)

   There were no common stock equivalents included in the diluted weighted
average shares outstanding for the three and six months ended June 30, 2000,
related to warrants issued in connection with the Company's reorganization and
initial public offering.  All such warrants expired as of March 31, 2001.
Included as common stock equivalents in diluted weighted average shares
outstanding were options granted under the Company's stock option plans, which
totaled 1,769 and 1,300 for the three and six months ended June 30, 2000,
respectively, and 15,745 and 9,550 for the three and six months ended June 30,
2001, respectively.

                                       9
<PAGE>

                     STAFF LEASING, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) -- (CONTINUED)

  The reconciliation of net income (loss) attributable to common stock and
shares outstanding for the purposes of calculating basic and diluted earnings
per share for the three and six months ended June 30, 2000 and 2001 is as
follows:

<TABLE>
<CAPTION>
                                                                      Income
                                                                      (Loss)                    Shares                 Per Share
                                                                   (Numerator)              (Denominator)                Amount
                                                              -------------------     -----------------------     -----------------
                                                                   (in $000's)                (in 000's)
<S>                                                             <C>                     <C>                         <C>
For the Three Months Ended June 30, 2000:
-----------------------------------------
Basic EPS:
----------
Net loss                                                                  $(1,156)                     21,585                 $(.05)
Effect of dilutive securities:
Warrants                                                                                                    -
Options                                                                                                     1
                                                                                      -----------------------
Diluted EPS:
------------
Net loss                                                                  $(1,156)                     21,586                 $(.05)
                                                              ===================     =======================     =================

For the Six Months Ended June 30, 2000:
---------------------------------------
Basic EPS:
----------
Net loss                                                                  $(1,664)                     21,646                 $(.08)
Effect of dilutive securities:
Warrants                                                                                                    -
Options                                                                                                     1
                                                                                      -----------------------
Diluted EPS:
------------
Net loss                                                                  $(1,664)                     21,647                 $(.08)
                                                              ===================     =======================     =================
For the Three Months Ended June 30, 2001:
-----------------------------------------
Basic EPS:
----------

Net income                                                                   $109                     20,613                $0.01
Effect of dilutive securities:
Warrants                                                                                                   -
Options                                                                                                   15
                                                                                     -----------------------
Diluted EPS:
------------
Net income                                                                   $109                     20,628                $0.01
                                                              ===================    =======================    =================

For the Six Months Ended June 30, 2001:
---------------------------------------
Basic EPS:
----------
Net income                                                                   $203                     20,627                $ .01
Effect of dilutive securities:
Warrants                                                                                                   -
Options                                                                                                    9
                                                                                     -----------------------
Diluted EPS:
------------
Net income                                                                   $203                     20,636                $ .01
                                                              ===================    =======================    =================
</TABLE>

                                       10
<PAGE>

ITEM 2.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

  The following table presents the Company's results of operations for the three
and six months ended June 30, 2000 and 2001, expressed as a percentage of
revenues:

<TABLE>
<CAPTION>
                                            FOR THE THREE       FOR THE SIX
                                            MONTHS ENDED        MONTHS ENDED
                                               JUNE 30,           JUNE 30,
                                            -------------      -------------

                                            2000    2001       2000     2001
                                            ----    ----       ----     ----
<S>                                        <C>      <C>        <C>     <C>
Revenues.................................   100.0%  100.0%     100.0%  100.0%
Cost of services:
 Salaries, wages and payroll taxes.......    91.1    91.3       90.9    91.1
 Benefits, workers' compensation, state
  unemployment taxes and other costs.....     5.8     5.8        5.9     5.9
                                            -----   -----      -----   -----


   Total cost of services................    96.9    97.1       96.8    97.0
                                            -----   -----      -----   -----

Gross profit.............................     3.1     2.9        3.2     3.0
                                            -----   -----      -----   -----

Operating expenses:
 Salaries, wages and commissions.........     2.0     1.9        2.1     2.0
 Other general and administrative........     1.0      .9        1.0      .9
 Depreciation and amortization...........      .3      .2         .3      .2
                                            -----   -----      -----   -----

Total operating expenses.................     3.3     3.0        3.4     3.1
                                            -----   -----      -----   -----

Operating loss...........................     (.2)    (.1)       (.2)    (.1)
Interest income, net.....................      .2      .1         .1      .1
Other non-operating expenses.............     (.2)     .0        (.1)     .0
                                            -----   -----      -----   -----

Loss (income) before income taxes........     (.2)     .0        (.2)     .0
Income tax benefit.......................      .1      .0         .1      .0
                                            -----   -----      -----   -----

Net loss (income)........................     (.1)     .0        (.1)     .0
                                            =====   =====      =====   =====
</TABLE>

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

   Revenues were $787.0 million for the three months ended June 30, 2001,
compared to $779.8 million for the three months ended June 30, 2000,
representing an increase of $7.2 million, or 1.0%. Revenue growth was primarily
due to the Company's new client selection strategy of enrolling larger clients
with higher wages per paid worksite employee. The number of average paid
worksite employees decreased 9.0%, from 116,591 to 106,118. From June 30, 2000
to June 30, 2001, the number of clients decreased 15.6% from 9,809 to 8,279.
During the second quarter of 2001, the Company terminated client relationships
with approximately 1,600 employees that were unprofitable or running low payroll
volumes per employee.

   Cost of services was $764.0 million for the three months ended June 30, 2001,
compared to $755.7 million for the three months ended June 30, 2000,
representing an increase of $8.3 million, or 1.1%. Cost of services was 97.1% of
revenues for the three months ended June 30, 2001, compared to 96.9% of revenues
for the three months ended June 30,2000.

   Salaries, wages and payroll taxes of worksite employees were $718.2 million
for the three months ended June 30, 2001, compared to $710.3 million for the
three months ended June 30, 2000, representing an increase of $7.9 million, or
1.1%.

   Benefits, workers' compensation, state unemployment taxes and other costs
were $45.8 million for the three months ended June 30, 2001, compared to $45.4
million for the three months ended June 30, 2000, representing an increase of
$.4 million, or 0.9%. The increase was primarily due to increased participation
in insurance programs and an increase in SUTA rates in the state of Florida. In
2001, the Company has a workers' compensation program with CNA.

                                       11
<PAGE>

This program is an insured loss sensitive program for a term of one year. An
accrual for the workers' compensation costs for the second quarter of 2001 was
made based on prior loss experience, the Company's business mix, and actual
claims for the second quarter. Accruals for subsequent periods will be affected
by further changes in the Company's business mix and actual claims experience.
The final costs of coverage will be determined by the actual claims experience
over time as claims close and by the administrative costs of the program. In
2000, the Company had workers' compensation programs with CNA and the Texas
Workers' Compensation Insurance Fund (Texas Fund). The Texas Fund was the
provider of workers' compensation insurance for clients based in Texas. The
Texas Fund program was a guaranteed cost insurance arrangement with a term of
one year that expired December 31, 2000. For the remainder of the country, the
Company's workers' compensation program was an insured loss sensitive program
with CNA.

   Gross profit was $23.0 million for the three months ended June 30, 2001,
compared to $24.1 million for the three months ended June 30, 2000, representing
a decrease of $1.1 million, or 4.6%. Gross profit was 2.9% of revenues for the
three months ended June 30, 2001, compared to 3.1% for the three months ended
June 30, 2000.

   Operating expenses were $24.0 million for the three months ended June 30,
2001, compared to $25.9 million for the three months ended June 30, 2000,
representing a decrease of $1.9 million, or 7.3%. Operating expenses were 3.0%
of revenues for the three months ended June 30, 2001, compared to 3.3% for the
three months ended June 30, 2000.

   Salaries, wages and commissions were $14.7 million for the three months ended
June 30, 2001, compared to $15.7 million for the three months ended June 30,
2000, representing a decrease of $1.0 million, or 6.4%. Salaries and wages for
the second quarter of 2001 decreased from the second quarter of 2000 primarily
due to a reduction of internal employees in the first half of 2001 and unusual
expenses of $.5 million in the second quarter of 2000 related to management
reorganization.

   Other general and administrative expenses were $7.3 million for the three
months ended June 30, 2001, compared to $8.1 million for the three months ended
June 30, 2000, representing an decrease of $.8 million, or 9.9%. Other general
and administrative expenses were .9% of revenues for the three months ended June
30, 2001, compared to 1.0% for the three months ended June 30, 2000.

   Depreciation and amortization expenses decreased by $.1 million for the three
months ended June 30, 2001, compared to the three months ended June 30, 2000,
representing a decrease of 6.0%.

   Interest income was $.9 million for the three months ended June 30, 2001 and
$1.2 million for the three months ended June 30, 2000.

   Income tax benefit of $.2 million for the three months ended June 30, 2001
was the result of a net loss from operations, tax-exempt interest income and
income tax credits. The Company's effective tax rate for financial reporting
purposes differs from the statutory federal rate of 34% primarily because of
state income taxes and tax credits.

   Net income was $.1 million for the three months ended June 30, 2001, compared
to a net loss of $1.2 million for the three months ended June 30, 2000,
representing a decrease of $1.3 million or 108.3%.


Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

   Revenues were $1,539.3 million for the six months ended June 30, 2001,
compared to $1,511.2 million for the six months ended June 30, 2000,
representing an increase of $28.1 million, or 1.9%. Revenue growth was primarily
due to the Company's new client selection strategy of enrolling larger clients
with higher wages per paid worksite employee. The number of average paid
worksite employees decreased 8.1%, from 115,818 to 106,470. From June 30, 2000
to June 30, 2001, the number of clients decreased 15.6% from 9,809 to 8,279.
During the first six months of 2001, the Company terminated client relationships
with approximately 5,100 employees that were unprofitable or running low payroll
volumes per employee.

   Cost of services was $1,492.6 million for the six months ended June 30, 2001,
compared to $1,463.6 million for the six months ended June 30, 2000,
representing an increase of $29.0 million, or 2.0%. Cost of services was 97.0%
and 96.8% of revenues for the six months ended June 30, 2001 and 2000,
respectively.

   Salaries, wages and payroll taxes of worksite employees were $1,402.4 million
for the six months ended June 30, 2001, compared to $1,374.0 million for the six
months ended June 30, 2000, representing an increase of $28.4 million, or 2.1%.

                                       12
<PAGE>

   Benefits, workers' compensation, state unemployment taxes and other costs
were $90.3 million for the six months ended June 30, 2001, compared to $89.6
million for the six months ended June 30, 2000, representing an increase of $.6
million, or .7%. The increase was primarily due to increased participation in
insurance programs and an increase in SUTA rates in the state of Florida.
Benefits, workers' compensation, state unemployment taxes and other costs were
5.9% of revenues for the six months ended June 30, 2001 and 5.9% for the six
months ended June 30, 2000.  In 2001, the Company has a workers' compensation
program with CNA.  This program is an insured loss sensitive program for a term
of one year.  An accrual for the workers' compensation costs for the six months
ending June 30, 2001 was made based on prior loss experience, the Company's
business mix, and actual claims for the six months ended June 30, 2001.
Accruals for subsequent periods will be affected by further changes in the
Company's business mix and actual claims experience.  The final costs of
coverage will be determined by the actual claims experience over time as claims
close and by the administrative costs of the program.  In 2000, the Company had
workers' compensation programs with CNA and the Texas Workers' Compensation
Insurance Fund (Texas Fund). The Texas Fund was the provider of workers'
compensation insurance for clients based in Texas.  The Texas Fund program was a
guaranteed cost insurance arrangement with a term of one year that expired
December 31, 2000. For the remainder of the country, the Company's workers'
compensation program was an insured loss sensitive program with CNA.

   Gross profit was $46.7 million for the six months ended June 30, 2001,
compared to $47.5 million for the six months ended June 30, 2000, representing a
decrease of $.8 million, or 1.7%. Gross profit was 3.0% of revenues for the six
months ended June 30, 2001, compared to 3.2% for the six months ended June 30,
2000.

   Operating expenses were $48.8 million for the six months ended June 30, 2001,
compared to $51.0 million for the six months ended June 30, 2000, representing a
decrease of $2.2 million, or 4.3%. Operating expenses were 3.1% of revenues for
the six months ended June 30, 2001, compared to 3.4% for the six months ended
June 30, 2000.  Operating expenses in the six months ending June 30, 2000
included unusual expenses of $1.0 million related to management reorganization.

   Salaries, wages and commissions were $30.7 million for the six months ended
June 30, 2001, compared to $31.1 million for the six months ended June 30, 2000,
representing a decrease of $.3 million, or 1.1%. Salaries and wages for the six
months ending June 30, 2001 decreased from the six months ending June 30, of
2000 primarily due to unusual expenses of $.5 million incurred in 2000 related
to management reorganization. Salaries, wages and commissions were 2.0% of
revenues for the six months ended June 30, 2001 and 2.1% for the six months
ended June 30, 2000.

   Other general and administrative expenses were $14.0 million for the six
months ended June 30, 2001, compared to $15.5 million for the six months ended
June 30, 2000, representing a decrease of $1.5 million, or 9.8%. Other general
and administrative expenses were .9% of revenues for the six months ended June
30, 2001, compared to 1.0% for the six months ended June 30, 2000.

   Depreciation and amortization expenses decreased by $.3 million for the six
months ended June 30, 2001, compared to the six months ended June 30, 2000,
representing a decrease of 6.6%.

   Interest income was $1.9 million for the six months ended June 30, 2001,
compared to $2.1 million of interest income for the first half of 2000,
representing a decrease of $.2 million.

   Other non-operating expense was $0 for the six months ended June 30, 2001
compared to $1.4 million for the six months ended June 30, 2000.  Other expense
in the six months ending June 30, 2000 included unusual expenses related to
conclusion of the strategic alternative process and management reorganization

   Income tax benefit was $.4 million for the six months ended June 30, 2001
compared to $1.0 million for the six months ended June 30, 2000.  The tax
benefit was the result of a net loss from operations, tax-exempt interest income
and income tax credits. The Company's effective tax rate for financial reporting
purposes differs from the statutory federal rate of 34% primarily because of
state income taxes and tax credits.

   Net income was $.2 million for the six months ended June 30, 2001, compared
to a net loss of $1.7 million for the six months ended June 30, 2000,
representing a increase of $1.9 million or 112.2%.

Liquidity and Capital Resources

  The Company has approximately $93.4 million in cash, cash equivalents,
restricted cash, marketable securities and restricted marketable securities at
June 30, 2001.

                                       13
<PAGE>

   The Company has no long-term debt as of June 30, 2001. In July 1999, the
Company entered into an agreement with Bank of America for a $10 million
revolving line of credit to provide for intra-day working capital needs.
Borrowings under the credit facility bear interest at variable rates based on
the lenders' base rate or LIBOR.  No borrowings have been made against the
credit line. The Company does not plan to renew the line of credit in 2001.  At
June 30, 2001, the Company had net working capital of $58.8 million versus $58.1
million as of December 31, 2000, representing an improvement of $.7 million, or
1.2%.

   The Company's primary short-term capital requirements relate to the payment
of accrued payroll and payroll taxes of its internal and worksite employees,
accounts payable for capital expenditures and the payment of accrued workers'
compensation expense and health benefit plan premiums. As of June 30, 2001, the
Company had $7.8 million of restricted certificates of deposit, with original
maturities of less than one year, as collateral for certain standby letters of
credit issued in connection with the Company's health benefit plans and $15.9
million in restricted securities related to a workers' compensation collateral
trust agreement with CNA.

   Net cash provided by operating activities was $1.3 million for the six months
ended June 30, 2001 compared to net cash provided by operating activities of
$29.9 million for the six months ended June 30, 2000, representing a decrease of
$28.6 million, or 95.7%.

   In the six months ending June 30, 2001, $136,000 was used to repurchase
38,545 shares of common stock under the Company's stock repurchase program and
7,780 restricted shares were repurchased from a former employee in accordance
with the terms of the Company's restricted plan.

   The Company did not pay any cash dividends prior to March 14, 2001.  On that
date, the Board of Directors declared a cash dividend of $0.05 per share of
common stock, payable on April 30, 2001 to holders of record on April 16, 2001.
The Board of Directors declared a cash dividend of $0.05 per share of common
stock, payable July 31, 2001 to holders of record on July 16, 2001. While these
dividend declarations are part of an intended regular quarterly dividend
program, any future determination as to the payment of dividends will be made at
the discretion of the Board of Directors of the Company and will depend upon the
Company's operating results, financial condition, capital requirements, general
business conditions and such other factors as the Board of Directors deems
relevant.

Cautionary Note Regarding Forward-looking Statements

   In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company herein or orally, whether in presentations, in
response to questions or otherwise. Any statements that express, or involve
discussions as to, expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words or
phrases such as "will result," "are expected to," "will continue," "estimated,"
and "projection") are not historical facts and may be forward-looking and,
accordingly, such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results or performance
of the Company to be materially different from any future results or performance
expressed or implied by such forward-looking statements.  Such known and unknown
risks, uncertainties and other factors include, but are not limited to, the
following: (i) the potential for additional subsidies for health benefit plans;
(ii) volatility in workers' compensation rates and unemployment taxes; (iii)
possible adverse application of certain federal and state laws and the possible
enactment of unfavorable laws or regulation; (iv) impact of competition from
existing and new professional employer organizations; (v) risks associated with
expansion into additional states where the Company does not have a presence or
significant market penetration; (vi) risks associated with the Company's
dependence on key vendors; (vii) the possibility for client attrition; (viii)
risks associated with geographic market concentration and concentration of
clients in the construction industry; (ix) the financial condition of clients;
(x) the failure to properly manage growth and successfully integrate acquired
companies and operations; and (xi) other factors which are described in further
detail in the Company's filings with the Securities and Exchange Commission.

   The Company cautions that the factors described above could cause actual
results or outcomes to differ materially from those expressed in any forward-
looking statements made by or on behalf of the Company. Any forward-looking
statement speaks only as of the date on which such statement is made, and the
Company undertakes no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is

                                       14
<PAGE>

not possible for management to predict all of such factors. Further, management
cannot assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.


PART II.  OTHER INFORMATION

ITEM 1.  Legal Proceedings

   Lawrence E. Egle v. Staff Leasing, Inc., et al. On April 30, 1999, a
   ----------------------------------------------
shareholder of the Company, brought a class action in the Twelfth Judicial
Division, Manatee County, Florida against the Company and certain of its
directors alleging that the directors and senior officers of the Company
breached their fiduciary duty to shareholders by failing to pursue a proposal
from Paribas Principal Partners to acquire the Company in order to entrench
themselves in the management of the Company.  Plaintiff seeks injunctive relief
and unspecified damages including attorneys' and experts' fees. Defendants and
counsel for the putative plaintiff class have reached a preliminary agreement on
terms of a settlement, following mediation.  The settlement is subject to court
approval, following notice to the putative class.  Management does not expect
any settlement to have a material effect on the Company's financial position.

   The Company is a party to certain pending claims that have arisen in the
normal course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the consolidated financial
position or results of operations if adversely resolved.

ITEM  4.  Submission of Matter to a Vote of Security Holders

       The Annual Meeting of Shareholders of the Company was held May 24, 2001.
Holders of 16,611,211 shares of common stock were present in person or by proxy
which constituted a quorum.  The two proposals voted on at the meeting were
approved.  The vote of the stockholders was as follows:

      1.  Election of two Class I Directors to serve until the annual meeting of
shareholders in 2004 or until their successors are duly elected and qualified.

                                           For      Withheld
                                        ----------  --------

      Michael K. Phippen                15,916,648   694,563
      John E. Panning                   15,914,597   696,614

      2.   Approval of new Employee Stock Purchase Plan
                                           For      Withheld    Abstain
                                        ---------   ---------   -------
                                        15,758,359   798,664    54,188

ITEM. 5.  Other Information:

      In February 2001, Staff Leasing and Oracle Corporation announced a
strategic partnership to provide online human resource solutions to small and
medium-sized businesses through Oracle.com. Staff Leasing will offer services
ranging from basic payroll processing to payroll processing and human resource
management solutions to include the full package of Staff Leasing's core
competencies, but offered without the traditional co-employer relationship of a
professional employer organization.

      On April 25, 2001, Staff Leasing proceeded with its previously announced
national expansion efforts and opened second offices in Atlanta, Georgia and
Phoenix, Arizona.  On June 21, 2001, Staff Leasing announced the opening of its
first office in New York City.

      On July 1, 2001, the transfer agent for the common stock of Staff Leasing,
Inc. was changed to the American Stock Transfer and Trust Company, 59 Maiden
Lane, Plaza Level, New York, NY 10038.  Shareholders can reach the American
Stock Transfer and Trust Company at (800) 937-5449.

      The new Employee Stock Purchase Plan was effective as of July 1, 2001.



ITEM 6.  Exhibits and Reports on Form 8-K:
          None

                                       15
<PAGE>

                                  SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.


                                    STAFF LEASING, INC.



Dated:  August 14, 2001              /s/ Michael K. Phippen
-------------------------------------------------------------------
                                    Michael K. Phippen
                                    Chairman of the Board, Chief
                                    Executive Officer (Principal
                                    Executive Officer)

Dated:  August 14, 2001              /s/ John E. Panning
-------------------------------------------------------------------
                                    John E. Panning
                                    Chief Financial Officer, Chief Operating
                                    Officer  (Principal Financial and Accounting
                                    Officer)

                                       16