Reporting Ethics Concerns
In the event employees have any concerns about the conduct of a Paychex executive, or about the company’s accounting, internal accounting controls, or auditing matters, they may anonymously communicate that concern directly to the Audit Committee chair of the Paychex Board of Directors by using the toll-free number (1-855-753-0485) or the form on the website, both of which are established and coordinated by a confidential and independent third-party service. Paychex policy prohibits retaliation against individuals who raise a concern, complaint, or question in good faith.
Paychex Third Party Code of Conduct
The Paychex Third Party Code of Conduct sets forth Paychex’ expectations for environmental, ethics, anti-corruption, human rights, diversity and inclusion, workplace safety and health, financial integrity, trade controls and non-retaliation policies and practices for third parties conducting business with Paychex.
Anti-Corruption
The Paychex Code of Business Ethics and Conduct and Paychex Foreign Corrupt Practices Act Policy and Procedures provide requirements for employee conduct with regard to anti-corruption. These policies require all employees to comply with the provisions of the Foreign Corrupt Practices Act. Specifically, employees must adhere to the following provisions:
- Do not make payment, promise to pay, or give anything of value to any foreign official or political party for the purpose of influencing any act or failure to act.
- Do not induce any foreign official or party to use influence to affect a decision of a foreign government or agency, in order to obtain or retain business.
- Do not contract with any business in which a government official or employee holds a significant interest, without the prior approval of the Paychex legal department. In addition, all Paychex employees are required to complete an annual online training program called The Right Way: Living the Values.
Free and Fair Competition
We are also committed to dealing fairly and honestly with our competitors. As a general rule, employee contacts with competitors should be limited and always avoid subjects such as prices, customers, and suppliers. Collusion among competitors is illegal, and the consequences of a violation are severe. Our general standards are:
Fair Competition
Employees may not knowingly make false or misleading statements regarding Paychex’s competitors or the products of our competitors, customers, or suppliers.
No Collusion
Employees may not enter into an agreement or understanding, express or implied, with any competitor concerning prices, discounts, other terms or conditions of sale, profits, or costs.
Equal Consideration
We expect all employees to stress the benefits of Paychex products and services to provide our customers with the full opportunity for equal consideration. We prohibit the unauthorized or improper solicitation of confidential data from a competitor’s employees or customers.
Compliance with Antitrust Laws
Employees must comply with antitrust laws—they may not participate in any discussion, agreement, or scheme with any competitor or potential competitor that involves prices, territories, or customers.
Lobbying
In 2017, the company initiated limited lobbying activities related to issues impacting our clients. Paychex has one registered federal lobbyist and spends a limited amount on advocacy. Under the federal Lobbying Disclosure Act (LDA), we report every quarter to the nearest $10,000 on what we have spent on lobbying activities that quarter. The amounts have ranged from $10,000 to $150,000 a quarter. Expenses include the time and expenses of the registered lobbyist on advocacy efforts, time and expenses of other Paychex employees on advocacy efforts, association dues that go toward lobbying, and outside lobbying consultants. In addition, through the LDA’s contribution report (LD-203), Paychex discloses any federal campaign contributions by the company or our in-house lobbyist. Paychex does not have a Political Action Committee.
Paychex Code of Business Ethics and Conduct states that employees may not make any political contribution or participate in lobbying activities as a representative of Paychex, except as specifically authorized to do so. Paychex has not made any political contributions to candidates in the last six years. We do not disclose who is the focus of our advocacy, but specific issues lobbied on are disclosed in our quarterly Form LD-2. Paychex uses lobbying efforts to advocate for the small to medium-sized businesses we provide services for.
Financial Assistance Received from the Government
State and local jurisdictions often provide economic incentives to encourage businesses to invest within their geographical footprint. The incentives come in the form of cash grants, tax abatements and tax credits. Paychex facilities and tax teams work together to identify and, where appropriate, secure incentives for investments in real estate and labor.
Approach to Tax
Paychex primarily operates within the U.S., but also operates in Denmark, Germany, and India. Less than 1% of revenues and earnings before taxes are generated outside of the U.S. Paychex has a commitment to comply with the tax law in all operating countries and a commitment to comply with and follow the spirit of the law or engage in tax fairness in all operating countries. The company’s Tax Department is a component of the Finance Organization, which ultimately reports into the Chief Financial Officer.
In the regular course of business, Paychex must regularly interpret complex and unclear tax law, rulings, and court decisions as they apply to the company’s business. Any positions Paychex takes on its tax returns are based on valid business purpose, underlying substance to the transactions, and a good-faith interpretation of the existing state of tax rules.
Accordingly, Paychex has a policy to not shift profits via transfer pricing to tax haven jurisdictions for purposes of tax avoidance.
Professional Integrity
The Tax Department employs multiple certified public accountants, who are required to maintain continuing professional education credits and apply an ethical standard to their work product. Additionally, licensed professionals are required to attend Ethics training to maintain their credentials. In addition to these professional requirements, one of the company’s core values is Integrity. This core value instills an obligation of all employees to act with integrity.
The Tax Department has instituted various informal communication channels for employees to voice concerns regarding any potential unethical behaviors. More formally, employees can communicate any concern related to accounting, internal accounting controls, or auditing matters to the Audit Committee chair of the Paychex Board of Directors by using a toll-free number or a form on the website. Both of these communication channels are established and coordinated by a confidential and independent third-party service.
Monitoring Proposed Tax Legislation
The company monitors proposed tax legislation to understand if there are potentially any implications that could impact our business. There is typically a public comment period when new legislation is being proposed, in which the company will participate. We, both on our own and in concert with our key industry coalitions such as the National Payroll Reporting Consortium (NPRC), National Association of Professional Employer Organizations (NAPEO) and the IRS Reporting Agents Forum (RAF), are in continual dialogue with the IRS and state/local tax authorities to discuss the impact of proposed tax policies on small and mid-sized businesses, including how to implement tax changes in a way that effectively fulfills tax statutes, while being as minimally onerous to business operations as feasible. Federal, state, and local taxing entities reach out to Paychex in particular, given our primary small-business client niche, for input on the likely practical implications of changes to the small-business community.
Our close relationship with this crucial stakeholder group allows us to represent their perspective in a uniquely effective way. This is augmented by an extensive program of client, prospect, and CPA forums and webinars to both elicit real-time feedback on practical implications and communicate information on proposed and enacted tax changes in a straightforward, consumable way
