Paychex 2011 Annual Report Download - page 20

options provide a cost-effective solution that offers the benefit of convenient, one-step payroll account reconcil-
iation for employers.
Regulatory compliance services: We offer new-hire reporting services, which enable clients to comply with
federal and state requirements to report information on newly hired employees. This information aids the
government in enforcing child support orders and minimizes fraudulent unemployment and workers’ compensation
insurance claims. Our garnishment processing service provides deductions from employees’ pay, forwards
payments to third-party agencies, including those that require electronic payments, and tracks the obligations
to fulfillment. These services enable employers to comply with legal requirements and reduce the risk of penalties.
Human Resource Services
Paychex HR Solutions: We offer comprehensive human resource outsourcing solutions that provide
businesses a full-service approach to the outsourcing of employer and employee administrative needs. Our
Paychex HR Solutions offering is available as an administrative services organization (“ASO”), previously known
as Paychex Premier»Human Resources, and a professional employer organization (“PEO”). Both options offer
businesses a combined package of services that includes payroll, employer compliance, human resource and
employee benefits administration, risk management outsourcing, and the on-site availability of a professionally
trained human resource representative. These comprehensive bundles of services are designed to make it easier for
businesses to manage their payroll and related benefit costs while providing a benefits package equal to that of
larger companies. Our PEO differs from the ASO in that we serve as a co-employer of the clients’ employees,
assume the risks and rewards of workers’ compensation insurance, and provide health care coverage to PEO client
employees. PEO services continue to be sold through our registered and licensed subsidiary, Paychex Business
Solutions, Inc. The integration of the sales and service models of the ASO and PEO under Paychex HR Solutions
has reduced redundancies and created more flexible options for business owners to find the solution that best meets
their needs. In fiscal 2011, we introduced Paychex HR Essentials, which is an ASO product that provides support to
our clients over the phone or online to help manage employee-related topics. As of May 31, 2011, Paychex HR
Solutions were utilized by 21,000 clients with approximately 567,000 client employees.
Retirement services administration: Our retirement services product line offers a variety of options to
clients, including 401(k) plans, 401(k) SIMPLE, SIMPLE IRA, 401(k) plans with safe harbor provisions, profit
sharing, and money purchase plans. These services provide plan implementation, ongoing compliance with
government regulations, employee and employer reporting, participant and employer online access, electronic
funds transfer, and other administrative services. Auto enrollment is an optional plan feature allowing employers to
automatically enroll employees in their company’s 401(k) plan and increase overall plan participation. Clients have
the ability to choose from a group of pre-defined fund selections or to customize their investment options within
their plan. Selling efforts for these services are focused primarily on our existing payroll client base, as the
processed payroll information allows for data integration necessary to provide these services efficiently. We are one
of the largest 401(k) recordkeepers for small businesses in the U.S. We earn an average fee of slightly less than
twenty-five basis points from the external fund managers based on the total asset value of client employee 401(k)
funds. In May 2011, we acquired ePlan Services, Inc., a provider of recordkeeping and administrative solutions to
the defined contribution marketplace. This acquisition allows us to expand our retirement services to financial
advisers. As of May 31, 2011, retirement services were utilized by approximately 57,000 clients and the asset value
of client employee 401(k) funds externally managed totaled approximately $15.3 billion.
Insurance services: Our licensed insurance agency, Paychex Insurance Agency, Inc. (“Paychex Insurance
Agency”), provides insurance through a variety of carriers. Insurance offerings include property and casualty coverage
such as workers’ compensation; business-owner policies; commercial auto; and health and benefits coverage including
health, dental, vision, and life. Our insurance services simplify the insurance process to make it easy to find plans with the
features and affordability to meet the client’s needs. With access to numerous top national and regional carriers, our
professional insurance agents enjoy a wide selection of plans from which to best match the insurance needs of small
business. Clients also have the option to integrate with Paychex payroll processing for easy, accurate plan administration.
Paychex Insurance Agency has a website, www.paychexinsurance.com, with information and interactive tools to help
educate visitors on insurance and aid in making business insurance decisions. As of May 31, 2011, approximately
100,000 clients have appointed Paychex Insurance Agency as their agent for servicing their business insurance needs.
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