Supporting Information about Paychex

Major Market Services

Supporting Information
about Paychex

To Our Shareholders

F iscal 2010 was a challenging year for Paychex
as we experienced the most turbulent economic
times most of us can remember. It was also a year of
Our conservative investment strategy continues to be
the right approach given the uncertainty in the financial
markets. Our first priorities are optimizing liquidity and
accomplishment as we met or exceeded most of the safeguarding principal. Investment yield comes second.
financial goals we established at the beginning of the On average, we invested approximately $4 billion of our
year, converted nearly 500,000 of our clients to a new clients’ money as well as our own, with daily balance
payroll platform, invested billions of dollars of our client changes often in the $1 to $2 billion range. Again last
funds with no principal losses, continued to generate year, we managed those investments with no losses
strong growth in our health care offerings, and returned in principal.
94% of our net income to shareholders in the form
of dividends.
OUR BUSINESS
While the economic recovery is slower than we would
like and the challenges of a weak economy are not over, Payroll
many of the key economic indicators that we watch Payroll is the bedrock of our business today – and will
closely are beginning to stabilize and, in some cases, continue to be in the future. That’s why one of our most
turn favorable. Our most important key indicator is checks important accomplishments this year was the completion
per client, and this metric ended the year slightly higher of a new platform that enhances our core payroll
than a year ago; in addition, it was up 1.1% in the fourth processing capabilities. We invested more than $60
quarter of fiscal 2010 compared to the fourth quarter million in modern technology, which allows us to leverage
of fiscal 2009. Looking ahead, we are encouraged yet efficiencies in our processes and offer our clients an even
cautious about the economy, but confident that when greater experience. Nearly 500,000 of our clients are on
it improves Paychex is poised to take advantage of the new platform, and this is just the beginning. Over the
the recovery. next few years, we anticipate adding more functionality,
offerings, and further integration of our products.
FISCAL 2010 RESULTS Paychex Major Market Services (MMS), which provides
payroll and human resource solutions to our larger clients
Our team rose to the challenges we faced this year,
with more complex needs, has delivered strong results
providing excellent customer service, maximizing
for the company throughout the recession – something
shareholder value, and demonstrating outstanding
we expect will continue as we grow our software-as-
expense management in delivering our fiscal
a-service solution. In 2010, we launched an enriched,
2010 results.
seamless integration of MMS services through a single,
Total revenue for the year ended May 31, 2010, was $2.0 Web-based client portal. Using this portal, MMS clients
billion, down 4% from the previous year. Service revenue can process payroll for employees, administer time and
declined 3% to $1.9 billion. Our commitment to controlling attendance, and manage employee benefits at the same
costs helped us meet our expectations for operating time. The integration of our Preview payroll, Time and
income, net of certain items, which was $688.5 million for Labor Online (TLO), and HR Online (HRO) applications
fiscal 2010. As a percentage of total service revenue, it under the name Paychex One-Source Solutions means
was 35.4%, off just 1% compared to fiscal 2009. we offer a single-vendor, easy-to-use solution at a time
Net income was $477.0 million, a decrease of 11%. when business owners – our clients – are facing some of
Diluted earnings per share were $1.32. We returned 94% the same challenges we are.
of our net income, or $448.6 million, to shareholders in
cash dividends. Cash flow from operations was $610.9
million, down 11% due primarily to lower net income.
Our company has no debt and our liquidity position
remains strong, with $657 million in cash and total
corporate investments.

HUMAN RESOURCE SERVICES the complexities of insurance, as well as educational
materials to help them understand the impact of
Paychex HR Solutions regulatory changes on their businesses.
An important contributor to growing Human Resource
Two regulatory changes in the last year that offered an
Services revenue in fiscal 2010 was the launch of
opportunity to strengthen our position as an industry
Paychex HR Solutions, an offering that combines
expert were the HIRE Act, a law offering tax breaks for
Paychex Premier HR, our full payroll and HR outsourcing
businesses hiring the unemployed; and health care
solution, with Paychex Business Solutions, our
reform legislation. Paychex demonstrated that it can
professional employer organization. We expanded our
be a reliable and trusted partner to business owners,
professional employer organization footprint and are now
deciphering the complexities of health care reform
in 21 states, compared to 10 a year ago. Paychex HR
and developing solutions to help businesses stay in
Solutions now serves 502,000 client employees, more
compliance with the
than our next three competitors combined. That’s up 11%
new legislation.
over fiscal 2009.
We did that in several ways, including creating dedicated
401(k)
Web pages to deliver constantly updated information
Recovery in the financial markets and an increase about regulatory changes. Paychex also developed
in larger 401(k) plans converting to Paychex for and conducted dozens of free, online seminars for
recordkeeping services provided a 33% jump last year in businesses – not just clients – that helped bring peace
the asset value of our clients’ 401(k) plans. With over $11 of mind to more than 10,000 participants. Another way
billion in assets and 51,000 clients, Paychex continues to we extended our reputation as a trusted authority was
be a leader in 401(k) recordkeeping. We service about with the creation and distribution of white papers, via
one in every ten 401(k) plans in the country. A recent www.paychex.com, covering topics ranging from how to
industry survey shows that, once again, Paychex sold build a small-business HR program to what criteria to use
more 401(k) plans last year than any other provider. when considering group health insurance.
During the last year, we opened a new channel for
our 401(k) services, offering independent, fee-based
retirement advisors the opportunity to work with their PARTNERS
clients through Paychex. We also provided detailed information about health care
Paychex Insurance Agency reform, the HIRE Act, and changes in COBRA to our
partners in the accounting profession – an important
The number of businesses choosing Paychex Insurance
referral channel for Paychex since the company began
Agency for their insurance services approached 100,000
nearly 40 years ago.
at the end of fiscal 2010. We continue to expand our
insurance offerings – including workers’ compensation In addition, we conducted our most in-depth research
and health and benefits – nationwide. With access to effort to date involving members of the professional
more than 150 top national and regional carriers, our accounting community, an initiative aimed at enhancing
licensed insurance agents have a broad portfolio of plans their role as trusted advisor to their clients. And, we
their clients can choose from. expanded our commitments to two leading channel
organizations: the American Institute of Certified Public
Health and benefits service revenue last year rose 49% to
Accountants (AICPA), and the National Association of
$31 million. We believe insurance services will continue
Enrolled Agents (NAEA), the professional society of
to be a growth opportunity for Paychex, and we are
licensed tax agents. We continue to value the preferred
investing in sales and systems to support that growth.
provider relationships we have with both groups.
We strengthened our position as an industry expert
for clients and other businesses in fiscal 2010 with the
launch of a new Paychex Insurance Agency Web site,
www.paychexinsurance.com. The site provides a range
of resources to help small-business owners navigate

ACCOMPLISHMENTS AND WHAT’S AHEAD
ACCOLADES Our decades of demonstrated expertise and innovation
At Paychex, we value our employees and the in providing payroll and human resource services,
contributions they make every day. Whether it’s one delivered with the highest levels of customer service, will
sales representative signing a new client, our entire continue to drive our growth. Change is part of business,
operations group producing nearly 10 million W-2s for and Paychex is ready to respond because with change
all of our clients, or the team responsible for moving comes opportunity. Whether it’s developing products that
over half a trillion dollars in client funds last year, each best meet our clients’ needs or interpreting regulatory
contribution counts. changes that affect the way our customers do business,
Our employees know this, and through some tough times Paychex has been an essential partner – and we will
again last year, they came to work and delivered. There continue to be an essential partner in the years to come.
is a sense of responsibility that comes with caring about Together we will plan for a future that capitalizes on the
our clients, our shareholders, and our colleagues. We foundation for growth that we have built.
salute that quality inside our company, and we appreciate We thank our shareholders, Board of Directors, clients,
the recognition when it comes from outside. and employees for your support.
One of the accolades we are most proud of recognized Sincerely,
Paychex as one of the world’s most ethical companies.
We earned this prestigious honor from Ethisphere
magazine for a third time in 2010. We were again named
to Fortune’s list of “100 Best Companies to Work For” in
America, as well as Training magazine’s list of top 125
training organizations in the world. Fortune also ranked B. Thomas Golisano
us among the most admired companies and forbes.com Chairman of the Board
rated us among the most trustworthy companies.
These honors speak to the character of our employees
and the standards of our company.

LEADERSHIP CHANGE John M. Morphy
On July 12, 2010, Paychex announced that Jonathan Senior Vice President, Chief Financial Officer,
J. Judge submitted his resignation as president and and Secretary
chief executive officer, effective July 31, 2010. We thank
Jon for his contributions in growing service revenues,
strengthening our management practices, overseeing key
technology advances, and leading our successful entry
into the health and benefits business. Moving forward, we
formed a strong and experienced executive committee
to lead the company in the interim, with oversight from
Paychex Chairman B. Thomas Golisano and the Board
of Directors. The executive committee is comprised of
John Morphy, senior vice president, chief financial officer,
and secretary; Martin Mucci, senior vice president of
operations; and Delbert Humenik, senior vice president of
sales and marketing. The company will be well managed
during the period of time we search for a new president
and chief executive officer.

Financial Highlights

In millions, except per share amounts Year ended May 31,

Results of Operations 2010 (1) 2009 Change
Service revenue $ 1,945.8 $ 2,007.3 (3%)
Interest on funds held for clients 55.0 75.5 (27%)
Total revenue $ 2,000.8 $ 2,082.8 (4%)
Operating income $ 724.8 $ 805.2 (10%)
As a percent of total revenue 36% 39%
Net income $ 477.0 $ 533.5 (11%)
As a percent of total revenue 24% 26%
Diluted earnings per share $ 1.32 $ 1.48 (11%)
Cash dividends per common share $ 1.24 $ 1.24

Year ended May 31,

Selected Financial Data 2010 2009
Operating income, net of certain items(2) $ 688.5 $ 729.7
Purchases of property and equipment $ 61.3 $ 64.7
Cash flows from operations $ 610.9 $ 688.8
Cash and total corporate investments $ 656.9 $ 574.7
Total assets $ 5,226.3 $ 5,127.4
Total debt $ - $ -
Stockholders’ equity $ 1,402.0 $ 1,341.5
Dividends paid as a percentage of net income 94% 84%
Return on stockholders’ equity 34% 41%
(1)
Includes an expense charge of $18.7 million to increase the litigation reserve, which reduced diluted earnings per share by $0.03.
(2)
Refer to the Overview section of Item 7 of our Annual Report on Form 10-K for the year ended May 31, 2010, for further information.

2,082.8
2,066.3
2,000.8
1,886.9

1,674.6

576.1
515.4 533.5
464.9 477.0

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
TOTA L RE V EN U E NET INCOME
(millions $) (millions $)

SAS 70 Report on Controls

PricewaterhouseCoopers LLP
1100 Bausch & Lomb Place
Rochester NY 14604-2705
Telephone (585) 232 4000
Facsimile (585) 454 6594
pwc.com

Report of Independent Auditors

To the Board of Directors of Paychex, Inc.:
We have examined the accompanying description of the controls related to the payroll processing
systems of Paychex, Inc. (“Paychex” or “the Company”). Our examination included procedures
to obtain reasonable assurance about whether (1) the accompanying description presents fairly,
in all material respects, the aspects of the Company’s controls that may be relevant to a user
organization’s internal control as it relates to an audit of financial statements; (2) the controls
included in the description were suitably designed to achieve the control objectives specified in
the description, if those controls were complied with satisfactorily and user organizations applied
the controls contemplated in the design of the Company’s controls; and (3) such controls had
been placed in operation as of September 30, 2010. The control objectives were specified by
the management of Paychex. Our examination was performed in accordance with standards
established by the American Institute of Certified Public Accountants and included those procedures
we considered necessary in the circumstances to obtain a reasonable basis for rendering our
opinion.
In our opinion, the accompanying description of the aforementioned controls presents fairly, in all
material respects, the relevant aspects of the Company’s controls that had been placed in operation
as of September 30, 2010. Also, in our opinion, the controls, as described, are suitably designed
to provide reasonable assurance that the specified control objectives would be achieved if the
described controls were complied with satisfactorily, and user organizations applied the controls
contemplated in the design of the Company’s controls.
In addition to the procedures we considered necessary to render our opinion as expressed in the
previous paragraph, we applied tests to specific controls to obtain evidence about their effectiveness
in meeting the control objectives, during the period from October 1, 2009 to September 30, 2010.
The specific control objectives and controls, and the nature, timing, extent, and results of the tests
are listed in Section III. This information has been provided to user organizations of Paychex and
to their auditors to be taken into consideration, along with information about the internal control of
user organizations, when making assessments of control risk for user organizations. In our opinion,
the controls that were tested were operating with sufficient effectiveness to provide reasonable, but
not absolute, assurance that the specified control objectives were achieved during the period from
October 1, 2009, to September 30, 2010.

PricewaterhouseCoopers LLP
1100 Bausch & Lomb Place
Rochester NY 14604-2705
Telephone (585) 232 4000
Facsimile (585) 454 6594
pwc.com

The relative effectiveness and significance of specific controls at Paychex and their effect on
assessments of control risk at user organizations are dependent on their interaction with the
controls, and other factors present at individual user organizations. We have performed no
procedures to evaluate the effectiveness of controls at individual user organizations.
The description of controls at Paychex is as of September 30, 2010, and the information about
tests of the operating effectiveness of specific controls covers the period from October 1, 2009
to September 30, 2010. Any projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the controls in existence. The potential
effectiveness of specific controls at Paychex is subject to inherent limitations and accordingly, errors
or fraud may occur and not be detected. Furthermore, the projection of any conclusions, based on
our findings, to future periods is subject to the risk that changes made to the system or controls
or the failure to make needed changes to the system or controls, may alter the validity of such
conclusions.
The information included in Section V describing the Company’s other functions and services
is presented by Paychex to provide additional information and is not part of the Company’s
description of controls that may be relevant to user organizations’ internal control as it relates to an
audit of financial statements. Such information has not been subjected to the procedures applied
in the examination of the description of Paychex, related to the payroll processing systems, and
accordingly, we express no opinion on it.
This report is intended solely for use by the management of Paychex, its users and the independent
auditors of its users.

December 7, 2010

Description Of Controls

Overview of Payroll Product Offerings
Paychex, Inc. (Paychex or the Company) is a leading national provider of comprehensive payroll,
human resource, and benefits outsourcing solutions for small- to medium- sized businesses.
Paychex has more than 100 offices and serves over 554,000 payroll clients nationwide as of May
31, 2009. In fiscal 2009, the Company reported over $2 billion in revenues. The Company’s payroll
services include production of employee payroll checks and earnings statements, accounting
records, management reports, and tax payment notices, as well as payroll tax returns for federal,
state, and local jurisdictions.
The scope of this report includes payroll processing for the Core Payroll and PREVIEW® systems of
Paychex. Also included in the scope of this report are several Paychex products that support payroll
input to the Core Payroll system, including Paychex Online Payroll® and Internet Time Sheet and the
calculation of payroll taxes. This report has been prepared to provide information on the Company’s
controls that may be relevant to the internal controls of Core Payroll and PREVIEW® clients. For the
purposes of this report, payroll services include calculation and delivery of employee pay, including
the calculation of federal, state and local payroll taxes and the production of management reports.
In 2009, the Core Payroll platform was upgraded to provide a more user-friendly interface and
advanced reporting capabilities. The development of this platform, as well as the conversion and
testing, followed the system development and maintenance process described in this report. This
report includes the controls over the development, testing, implementation, and conversion of the
platform. The additional products and services offered by Paychex as listed in Section IV are not
within the scope of this report.
The corporate office is located in Rochester, New York and provides administrative and operational
support to the Paychex facilities. Staffing at most locations consists of Managers, who manage
the operations; Supervisors, who oversee and supervise daily Core Payroll system input and
processing; Specialists, who manage the initial client relationship for the first few payrolls and
facilitate the ongoing processing of client payroll information; Computer Operators, who process
and print payrolls; Distribution Specialists, who pack and prepare payroll for delivery; and Sales
Representatives who sell the Company’s products and services. All significant computer operation
and data processing activities occur at the Corporate Data processing centers located near
Rochester, New York.
Paychex offers two payroll services to comprehensively address the different needs and levels
of complexity of clients. The Core Payroll product is generally designed for clients with one to 49
employees. Core clients communicate their payroll information for processing via phone, fax, or
electronically via Paychex Online Payroll® or Internet Time Sheet. The Paychex Online Payroll® service
is an Internet-based service allowing clients to send payroll information to Paychex for processing
through a secure internet site. Internet Time Sheet allows clients to enter and transmit basic payroll
information to the branches. Paychex then updates the client records and processes the payroll.
Paychex Business Solutions (PBS) is a Professional Employer Organization (PEO) that provides an
integrated suite of services critical to managing a user organization’s business, including payroll
preparation. PBS clients utilize the Core Payroll system, which is covered by this SAS 70, for
payroll processing.

PREVIEW® is the second service and specializes in meeting the needs of current clients who have
outgrown the Core Payroll service or new clients with more complex payroll and human resource
needs. For businesses with over 50 employees, this comprehensive service addresses their specific
payroll and human resource needs. The focal point is the PREVIEW® payroll software, which can
be used as a traditional on-site, PC-based system or via a secure web-hosted environment. Using
PREVIEW®’s extensive features, the client has total control over the payroll process and direct
access to their payroll data. Paychex, however, still handles software maintenance and compliance,
payroll tax preparation, and payroll packaging.
Paychex provides a consistently high level of service to our clients by standardizing many
components of the payroll process. Payroll software applications, computer equipment, and
operating procedures are standardized, allowing Paychex to implement enhancements to its
payroll products and respond to federal, state, and local statutory changes in an efficient,
consistent manner.

Sarbanes Oxley Compliance

Report On Management’s Assessment Of
Internal Control Over Financial Reporting

Management of Paychex, Inc. (the “Company”) is responsible for establishing and maintaining
an adequate system of internal control over financial reporting as such term is defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s
internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of the Consolidated Financial Statements. Our
internal control over financial reporting is supported by a program of internal audits and appropriate
reviews by management, written policies and guidelines, and careful selection and training of
qualified personnel.
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements and even when determined to be effective, can only provide reasonable
assurance with respect to financial statement preparation and presentation. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Audit Committee of our Company’s Board of Directors meets with the independent
registered public accounting firm (the “independent accountants”), management, and internal
auditors periodically to discuss internal control over financial reporting and auditing and financial
reporting matters. The Audit Committee reviews with the independent accountants the scope
and results of the audit effort. The Audit Committee also meets periodically with the independent
accountants and the chief internal auditor without management present to ensure that the
independent accountants and the chief internal auditor have free access to the Audit Committee.
The Audit Committee’s Report can be found in the Definitive Proxy Statement to be issued in
connection with the Company’s 2010 Annual Meeting of Stockholders.
Management assessed the effectiveness of the Company’s internal control over financial
reporting as of May 31, 2010. In making this assessment, management used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control
— Integrated Framework.” Based on our assessment, management believes that the Company
maintained effective internal control over financial reporting as of May 31, 2010.
The Company’s independent accountants, Ernst & Young LLP, an independent registered
public accounting firm, are appointed by its Audit Committee. Ernst & Young LLP has audited and
reported on the Consolidated Financial Statements of Paychex, Inc. and the effectiveness of the
Company’s internal control over financial reporting. The reports of the independent accountants are
contained in this Annual Report on Form 10-K.

/s/ Jonathan J. Judge /s/ John M. Morphy

Jonathan J. Judge John M. Morphy
President and Chief Executive Officer Senior Vice President, Chief Financial Officer, and Secretary

Source: PAYCHEX, INC., 10-K, July 20, 2010

Report of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors
and the Stockholders of Paychex, Inc.

We have audited the accompanying consolidated balance sheets of Paychex, Inc. as of May
31, 2010 and 2009, and the related consolidated statements of income, stockholders’ equity, and
cash flows for each of the three years in the period ended May 31, 2010. Our audits also included
the financial statement schedule listed in the Index at Item 15(1). These financial statements and
schedule are the responsibility of Paychex, Inc.’s management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Paychex, Inc. at May 31, 2010 and 2009, and the consolidated
results of its operations and its cash flows for each of the three years in the period ended May 31,
2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Paychex, Inc.’s internal control over financial reporting as of May
31, 2010, based on criteria established in “Internal Control — Integrated Framework” issued by the
Committee of Sponsoring Organizations of the Treadway Commission and our report dated July 16,
2010 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Cleveland, Ohio
July 16, 2010


Report of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors
and the Stockholders of Paychex, Inc.

We have audited Paychex Inc.’s internal control over financial reporting as of May 31, 2010, based on
criteria established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). Paychex Inc.’s management is responsible
for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Report on Management’s Assessment
of Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company’s internal control over financial reporting is a process designed 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. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
In our opinion, Paychex, Inc. maintained, in all material respects, effective internal control over financial
reporting as of May 31, 2010, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets as of May 31, 2010 and 2009, and the related
consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the
period ended May 31, 2010 of Paychex, Inc., and our report dated July 16, 2010, expressed an unqualified
opinion thereon.

/s/ Ernst & Young LLP

Cleveland, Ohio
July 16, 2010


Code of Business Ethics & Conduct
Full text available online at: www.paychex.com/investor/governance/ethics.aspx

Code of Business Ethics and Conduct

The Paychex Code of Business Ethics and Conduct organizes a set of company standards for
proper business conduct so our employees can gain a better understanding of the way Paychex
wishes to conduct business. Paychex maintains a strong belief in the value of ethical behavior. The
trust and confidence of the public, our stockholders, our clients, and our own employees is a critical
asset that benefits all.
All members of the Paychex Board of Directors, all Officers, and all Paychex employees (collectively
referred to as “employees” throughout this Code), are expected to read and understand this Code
of Business Ethics and Conduct. Each of us is personally responsible for making sure that our
business decisions and actions comply at all times with the letter and spirit of this Code.
In addition, each of us has a duty to report behavior on the part of others that appears to violate
this Code or any other compliance policy or procedure of Paychex. Ethical concerns, questions, or
complaints may be raised with your immediate supervisor, Human Resources, or submitted directly
to the Audit Committee as outlined within this Code. All concerns, questions, and complaints will be
taken seriously and handled promptly and confidentially. No retaliation will be taken for raising any
concern, question, or complaint in good faith.

Privacy Statement

Paychex, Inc. is committed to providing payroll processing, payroll tax preparation, and human
resource solutions for your small- to medium-sized business. In an effort to meet that commitment,
you will have to provide to Paychex business, financial, and/or personal information about yourself
and your employees. Your privacy and the privacy of the information provided are important to us.
Paychex protects the security of your business, financial, and personal information and honors
your choices for its intended use. Paychex uses reasonable care and maintains appropriate policies
and procedures to protect your data from loss, misuse, unauthorized access, disclosure, alteration,
or destruction.
Paychex does not sell or disseminate customer information to any third parties under any
circumstances, except to fulfill legal and regulatory requirements, and to facilitate customer
requested transactions. Third party service providers with access to client information are required
to keep that information confidential and use it only to provide services for Paychex or the client.

Business Continuity Plan

Paychex, Inc is dedicated to providing seamless business operations in spite of unexpected events.
These sudden, uncontrollable scenarios can vary from inclement weather to intentionally damaging
acts. The impact of each scenario, depending on its severity, can range from minimal to critical. The
Company is committed to identifying potential risks and evaluating their potential impacts - before
the situation occurs to determine what appropriate measures should be taken.
To ensure a rapid response to potential harmful situations, the Company has developed a
combination of technological solutions and comprehensive recovery planning strategies.
• Duplicate copies of data (backups) of employer and employee master files and tax files are
performed daily at the Corporate Data Centers and each processing location.
• Payroll transaction files are backed up throughout each processing day.
• Weekly backups are performed for payroll history.
• Business critical application transaction files are electronically transmitted throughout each
processing day.
• Backup tapes and other critical supplies needed to process payrolls, such as client contact lists
and payroll forms, are stored off-site.
The Corporate Data Centers have appropriate geographic separation for incidents of local and
regional disaster, and are equipped with heat, smoke detection, fire suppression systems, redundant
uninterruptible power systems (UPS) and redundant generator power. In addition, the branch offices
are equipped with heat, smoke, and fire detection systems. Certain branches have a UPS and
generator that protect computers, phones, and alarm systems from power surges or failures. Power
failure tests are performed in each corporate processing data center and at each branch annually.
Each Data Center operates independently, and is designed to handle the full load of all centers.
Comprehensive plans are in place for each critical business unit and each Paychex location to
ensure the timely relocation of critical personnel to alternate work spaces. These plans are tested
multiple times each year.
A dedicated team of business continuity professionals are involved with creating and maintaining
business continuity strategies.

Security Statement

A Commitment to Security
Paychex, Inc. is committed to protecting the security and integrity of our customer information
through procedures and technologies designed for this purpose. Here are some of the things
we do with our technology and our internal training to ensure that your information in our systems
is protected:
• e maintain polices and procedures covering the physical security of our workplaces,
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systems, and records.
• ur physical, electronic, and procedural safeguards are built on industry recognized
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best practices.
• e use technological means such as backup files, virus detection and prevention, firewalls,
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and other computer hardware and software to protect against unauthorized access or alteration
to customer data.
• e encrypt sensitive information that is transmitted over the Internet.
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• e limit employee access to customer information, to those who have a business reason to
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know, through formal approval processes, access controls, and internal auditing.
• e require our employees to take information security awareness training and to apply this
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training to their job every day.
• e use advanced technologies for the backup and recovery of customer information.
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Fidelity Bond Coverage

November 1, 2010

To Whom It May Concern:
Brown & Brown, Inc. is the insurance broker for Paychex, Inc. This letter is in response to your recent inquiry
as to Paychex’ fidelity bond coverage.
Paychex has fidelity coverage through St. Paul Fire and Marine Insurance Company (primary) and Federal
Insurance Company (excess). The fidelity bond coverage provided by these policies includes Advantage
Payroll Services, Inc., a subsidiary of Paychex, Inc. The current policy period is 11/01/10-11.
The coverage provided to Paychex and its subsidiaries is as follows:
Primary Excess
Employee Dishonesty $25,000,000 $25,000,000
Forgery & Alteration $10,000,000
Theft Inside/Outside $10,000,000
Computer Fraud $25,000,000 $25,000,000

As one of Paychex’ clients, covered property under the policies includes Client Property which is in the
care, custody and control of Paychex. No Paychex client has ever suffered a loss as a result of employee
dishonesty, forgery or alteration, or computer fraud arising from their use of Paychex’ services.
Although the above coverages are subject to deductibles, Paychex maintains (as per their 5-31-10 Annual
Report) an extremely strong balance sheet. With over $5.2 billion in assets and $1.4 billion in shareholders’
equity, should a loss occur under these coverages, Paychex’ financial condition would not be materially
impacted through absorbing the deductible under a loss.
This letter is issued as a matter of information only and confers no rights upon you. This letter does not
amend, extend or alter the coverages provided by the policies.
We hope this helps explain the fidelity coverage Paychex maintains.

Brown & Brown of NY, Inc.

Steven E. Davis
Account Executive
Brown & Brown of NY, Inc.
45 East Avenue
Rochester, New York 14604-2286
Phone (585) 232-4424
Fax (585) 232-5813

Supporting Information about Paychex

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