Company Name: Paychex, Inc.
Public Availability Date: July 18, 2005

Document Sections:

INQUIRY LETTER
INQUIRY LETTER
APPENDIX 1
INQUIRY LETTER
APPENDIX 2
STAFF REPLY LETTER

[INQUIRY LETTER]

June 10, 2005

Via Hand Delivery and Overnight Delivery

U.S. Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
100 F Street NE
Washington, DC 20549

Re: Paychex, Inc. Shareholder Proposal Submitted On Behalf of the United Brotherhood of Carpenters Pension Fund

Ladies and Gentlemen:

We respectfully request that the staff of the Division of Corporation Finance (the "Staff") concur that it will not recommend enforcement action to the Securities and Exchange Commission (the "Commission") if Paychex, Inc. ("Paychex" or the "Company") omits from its proxy materials for its 2005 Annual Meeting of Shareholders a proposal and supporting statement (the "Second Proposal") submitted by the United Brotherhood of Carpenters Pension Fund (the "Proponent"), dated May 2, 2005, but received by the Company via mail on May 3, 2005.

It is our opinion that the Proposal is excludable under Rule 14a-8(i)(11) because it substantially duplicates a proposal submitted by the AFSCME Employees Pension Plan (the "First Proposal" and, with the Second Proposal, the "Proposals") which was previously submitted to the Company on May 2, 2005 and which the Company intends to include in its proxy materials for its 2005 Annual Meeting of Shareholders.

We have enclosed, pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended, six copies of this letter and the Second Proposal. (The Second Proposal is enclosed as Exhibit 1). For your convenience, we have also enclosed six copies of all other correspondence exchanged between the Company and the Proponent to date in connection with the Second Proposal (as part of Exhibit 1), as well as six copies of the First Proposal (as Exhibit 2). A copy of this letter is being mailed simultaneously to the Proponent informing it of the Company's intention to omit the Second Proposal from its proxy materials for its 2005 Annual Meeting of Shareholders.

The resolution portion of the Second Proposal is as follows:

"Resolved: That the shareholders of Paychex, Inc. ("Company") hereby request that the Board of Directors initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders."

Pursuant to Rule 14a-8(i)(11), the Company may omit a proposal if it substantially duplicates a proposal previously submitted to the Company by another proponent that will be included in the Company's proxy materials for the same meeting.

The resolution portion of the First Proposal is as follows:

"RESOLVED that the stockholders of Paychex, Inc. ("Paychex" or the "Company") amend Article II, section 9 of the bylaws to add the following sentence immediately before the last sentence in that section:

`Directors shall be elected by a majority of the shares present in person or represented by proxy, provided a quorum is present at the meeting.'"

The Staff has taken the position that proposals may be excluded under Rule 14a-8(i)(11) where the core issues addressed by the proposals are the same even if the proposals are not identical. See, e.g., USG Corp. (April 7, 2000) (hereafter, "USG Corp."). In USG Corp. the Staff concluded that a proposal requesting that the board of directors redeem its shareholder rights agreement and not reinstitute or replace the shareholder rights agreement with any other form of "poison pill" was substantially duplicative of a proposal that would require the company to redeem or cancel its shareholder rights agreement and would prohibit any new shareholder rights agreement or other form of "poison pill" from becoming effective unless it had been approved by the company's shareholders. Similarly, in AT&T Corp. (March 2, 2005), the Staff permitted the company to omit a proposal from its proxy materials on the basis that such proposal was substantially duplicative of a previously received proposal where the first proposal would amend the company's by-laws to require that the Board of Directors seek shareholder ratification of certain types of severance agreements with any officer that would provide specified types of severance benefits with a total present value exceeding 2.99 times the sum of the officer's base salary plus target bonus and the second proposal would urge the Board of Directors to seek shareholder approval for future severance agreements with senior executives, including "golden parachute" and "golden good-bye" severance agreements, which would provide benefits exceeding 2.99 times the sum of the executive's base salary plus bonus. Baxter International (February 7, 2005) provides an additional example of the Staff's stated position on the application of Rule 14a-8(i)(11) where the proposals are not identical but share the same core issues. In Baxter, the Staff concurred in the company's conclusion that a shareholder proposal was substantially duplicative of a previously received proposal where the first proposal requested that the company's Directors take the necessary steps to amend the by-laws to require that each director be elected annually, and the second proposal asked that the company take the necessary steps to reorganize the company's Board of Directors into one class subject to election each year.

The core issues addressed by the First Proposal and the Second Proposal are the same. Each Proposal seeks to institute the requirement that the Company replace the plurality voting standard for the election of directors that it presently uses with the requirement that directors be elected by the majority vote of the shareholders. In addition, the supporting statements for the Proposals include similar arguments in support of a majority vote standard. For example, both Proposals cite the concern that under a plurality voting standard, a director nominee in a director election could be elected by a single affirmative vote, even where a majority of the votes cast are "withheld" from the director nominee.

The Staff has consistently taken the position that proposals that have the same "principal thrust" or "principal focus" may be considered substantially duplicative for purposes of Rule 14a-8(i)(11) even where such proposals differ as to terms and scope. See, e.g., Comcast Corporation (March 22, 2005) (hereafter, "Comcast") (granting relief where the first proposal requested that the company's Board of Directors adopt a resolution requiring that the Chairman of the Board serve in that capacity only and have no management duties, titles or responsibilities and the second proposal asked the Board of Directors to submit for shareholder approval an amendment to the company's articles of incorporation to require that the Chairman of the Board be an independent director who has not previously served as an executive officer of the company); Bank of America (February 25, 2005) (granting relief where the first proposal recommended that the Board direct management to publish annually a detailed statement of political contributions made by the company and the second proposal requested that the company annually submit to its shareholders a report containing certain detailed information relating to the company's political contributions); and Home Depot (February 28, 2005) (granting relief where the first proposal requested that the compensation committee adopt a performance and time-based restricted share grant program for senior executives that would include specified features and the second proposal asked the compensation committee to adopt a policy that a significant portion of restricted stock and deferred stock units granted to senior executives require the achievement of performance goals as a prerequisite to vesting).

The Proposals contain an identical "principal thrust" or "principal focus," although the terms differ slightly as to the initial procedure for implementation. The "principal thrust" or "principal focus" of each is adoption of a majority vote standard for the election of directors in place of the plurality vote standard. The Proposals are essentially identical as to scope, but differ procedurally in that the First Proposal, if approved by shareholders, would amend the Company's By-laws to incorporate a majority vote standard for the election of Directors, and the Second Proposal requests that the Board initiate the appropriate process to amend the Company's Restated Certificate of Incorporation or By-laws to incorporate a majority vote standard. Also, both Proposals contemplate the same ultimate implementation methodology (an amendment to one of the Company's organizational documents).

The Staff has taken the position that differences in implementation methodology between proposals that possess the same core issues or have an identical "principal thrust" or "principal focus" may be deemed substantially duplicative for purposes of Rule 14a-8(i)(11). See, e.g., Metromedia International Group, Inc. (March 27, 2001) (hereafter, "Metromedia") (granting relief where the earlier received proposal requested that the Board amend the company's certificate of incorporation and the later received proposal, if approved by shareholders, would have amended the company's by-laws without the need for Board approval); USG Corp. (granting relief where one proposal, if approved by shareholders, would amend the company's by-laws, and the second proposal requested action by the Board of Directors); and Comcast (granting relief where one proposal requested a resolution of the company's board of directors and the other requested that the Board of Directors submit for shareholder approval an amendment to the company's articles of incorporation). As in Metromedia, one of the Proposals, if approved by the Company's shareholders, would automatically amend one of the Company's organizational documents (the Company's By-laws), while the other proposal requests Board action that would subsequently result in an amendment to one of the Company's organizational documents.

The Company believes that if it were to include both Proposals in its proxy materials, the identical nature of the Proposals would create the potential for confusion for its shareholders. In addition, if a majority of the shareholders were to vote in favor of one of the Proposals, but not the other, the Company's Board of Directors would not have a clear understanding of the shareholders' intent with respect to the issue of majority voting in the election of its Directors.

For purposes of Rule 14a-8(i)(11), a registrant may only omit from its proxy materials a proposal which substantially duplicates another previously submitted proposal. See, e.g., USG Corp. As in USG Corp., where the Staff concurred in the company's opinion that the second proposal was substantially duplicative of the first proposal, and could be omitted from the company's proxy materials, Company officials have advised that, while both Proposals are dated May 2, 2005, the First Proposal was received by facsimile that day, while the Second Proposal was received only by mail the following day.

Based on the foregoing, the Company hereby respectfully requests that the Staff agree that it will not recommend any enforcement action if the Second Proposal is in fact excluded from the Company's proxy materials for its 2005 Annual Meeting of Shareholders.

In the event that the Staff does not concur with the Company's position, we would appreciate an opportunity to confer with the Staff concerning this matter prior to the issuance of its Rule 14a-8 response. In such case, please contact the undersigned at (585) 383-3788 or by fax at 585-383-3441.

We appreciate your attention to this request.

Sincerely,

/s/

Stephanie L. Schaeffer
Director of Legal Affairs
Paychex, Inc.

cc: Douglas J. McCarron
General President
United Brotherhood of Carpenters and Joiners of America
101 Constitution Avenue, N.W.
Washington, D.C. 2001
Phone: (202) 546-6206
Facsimile: (202) 543-5724
[Via facsimile and Overnight Mail]

Ed Durkin
United Brotherhood of Carpenters
Corporate Affairs Department
101 Constitution Avenue, N.W.
Washington, D.C. 20001
Phone: (202) 546-6206 ext. 221
Facsimile: (202) 543-4871
[Via facsimile and Overnight Mail]

[INQUIRY LETTER]

May 2, 2005

John M. Morphy
Corporate Secretary
Paychex, Inc.
911 Panorama Trail South
Rochester, NY 14626-0397

Dear Mr. Morphy:

On behalf of the United Brotherhood of Carpenters Pension Fund ("Fund"), I hereby submit the enclosed shareholder proposal ("Proposal") for inclusion in the Paychex, Inc. ("Company") proxy statement to be circulated to Company shareholders in conjunction with the next annual meeting of shareholders. The Proposal relates to the issue of the Company's director election vote standard. The Proposal is submitted under Rule 14(a)-8 (Proposals of Security Holders) of the U.S. Securities and Exchange Commission proxy regulations.

The Fund is the beneficial owner of approximately 6,200 shares of the Company's common stock that have been held continuously for more than a year prior to this date of submission. The Fund intends to hold the shares through the date of the Company's next annual meeting of shareholders. The record holder of the stock will provide the appropriate verification of the Fund's beneficial ownership by separate letter. Either the undersigned or a designated representative will present the Proposal for consideration at the annual meeting of shareholders.

If you have any questions or wish to discuss the Proposal, please contact Ed Durkin, at (202) 546-6206 ext. 221 or at edurkin@carpenters.org. Copies of any correspondence related to the proposal should be forwarded to Mr. Durkin at United Brotherhood of Carpenters, Corporate Affairs Department, 101 Constitution Avenue, NW, Washington D.C. 20001 or faxed to 202-543-4871.

Sincerely,

/s/

Douglas J. McCarron
Fund Chairman

cc. Edward J. Durkin

Enclosure

[APPENDIX1]

Director Election Majority Vote Standard Proposal

Resolved: That the shareholders of Paychex, Inc. ("Company") hereby request that the Board of Directors initiate the appropriate process to amend the Company's governance documents (certificate of incorporation or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders.

Supporting Statement: Our Company is incorporated in Delaware. Among other issues, Delaware corporate law addresses the issue of the level of voting support necessary for a specific action, such as the election of corporate directors. Delaware law provides that a company's certificate of incorporation or bylaws may specify the number of votes that shall be necessary for the transaction of any business, including the election of directors. (DGCL, Title 8, Chapter 1, Subchapter VII, Section 216). Further, the law provides that if the level of voting support necessary for a specific action is not specified in the certificate of incorporation or bylaws of the corporation, directors "shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors."

Our Company presently uses the plurality vote standard for the election of directors. We feel that it is appropriate and timely for the Board to initiate a change in the Company's director election vote standard. Specifically, this shareholder proposal urges that the Board of Directors initiate a change to the director election vote standard to provide that in director elections a majority vote standard will be used in lieu of the Company's current plurality vote standard. Specifically, the new standard should provide that nominees for the board of directors must receive a majority of the vote cast in order to be elected or re-elected to the Board.

Under the Company's current plurality vote standard, a director nominee in a director election can be elected or re-elected with as little as a single affirmative vote, even while a substantial majority of the votes cast are "withheld" from that director nominee. So even if 99.99% of the shares "withhold" authority to vote for a candidate or all the candidates, a 0.01% "for" vote results in the candidate's election or re-election to the board. The proposed majority vote standard would require that a director receive a majority of the vote cast in order to be elected to the Board.

It is our contention that the proposed majority vote standard for corporate board elections is a fair standard that will strengthen the Company's governance and the Board. Our proposal is not intended to limit the judgment of the Board in crafting the requested governance change. For instance, the Board should address the status of incumbent directors who fail to receive a majority vote when standing for re-election under a majority vote standard or whether a plurality director election standard is appropriate in contested elections.

We urge your support of this important director election reform.

[INQUIRY LETTER]

May 2, 2005

VIA Overnight Mail and Telecopier (585) 383-3428

Paychex, Inc.
911 Panorama Trail South
Rochester, New York 14265

Attention: John M. Morphy, Chief Financial Officer, Senior Vice President and Corporate Secretary

Dear Mr. Morphy:

On behalf of the AFSCME Employees Pension Plan (the "Plan"), I write to give notice that pursuant to the 2004 proxy statement of Paychex, Inc. (the "Company"), the Plan intends to present the attached proposal (the "Proposal") at the 2005 annual meeting of shareholders (the "Annual Meeting"). The Plan is the beneficial owner of 3,912 shares of voting common stock (the "Shares") of the Company, and has held the Shares for over one year. In addition, the Plan intends to hold the Shares through the date on which the Annual Meeting is held.

The Proposal is attached. I represent that the Plan or its agent intends to appear in person or by proxy at the Annual Meeting to present the Proposal. I declare that the Plan has no "material interest" other than that believed to be shared by stockholders of the Company generally. Please direct all questions or correspondence regarding the Proposal to Charles Jurgonis at (202) 429-1007.

Sincerely,

/s/

GERALD W. McENTEE
Chairman

Enclosure

[APPENDIX2]

RESOLVED that the stockholders of Paychex, Inc. ("Paychex" or the "Company") amend Article II, section 9 of the bylaws to add the following sentence immediately before the last sentence in that section:

"Directors shall be elected by a majority of the shares present in person or represented by proxy, provided a quorum is present at the meeting."

SUPPORTING STATEMENT

Currently, Paychex uses a plurality voting standard for director elections, which means that the nominee who receives the most votes will be elected. Nearly all corporate director elections, including the last 10 at Paychex, are uncontested; in other words, there is only one candidate for each open seat. (Harvard Law School Professor Lucian Bebchuk has estimated that there were only about 80 contested elections at public companies from 1996 through 2002.) In uncontested situations, a plurality voting standard ensures that a nominee will be elected even if holders of a majority of shares voting exercise their right to withhold support from the nominee on the proxy card. Indeed, under plurality voting, a nominee could be elected by a single share.

Section 216 of the Delaware General Corporation Law allows a corporation to deviate from the plurality vote default standard by establishing a different standard in its charter or bylaws. This proposal would do that by amending Paychex's bylaws to require directors to be elected by a majority of shares voting at a meeting.

We believe that a majority vote standard for director election would foster a more robust system of board accountability. Under the case law of Delaware, where Paychex is incorporated, the power of stockholders over director election is supposed to be a safety valve that justifies giving the board substantial discretion to manage the corporation's business and affairs. Requiring a nominee to garner majority support among stockholdersthus giving stockholders' withhold votes real meaningwould help restore this safety valve.

We believe Paychex shareholders would benefit from increased accountability, where in 2004, holders of approximately 36% of shares voted withheld support from a director. A growing number of shareholders appear to agree with our concerns. The Council of Institutional Investors recently adopted a new policy in favor of majority voting in director elections. At 2005 annual meetings, majority election proposals are receiving strong investor support, with one receiving a majority of votes at Marathon Oil.

We urge stockholders to vote FOR this proposal.

[STAFF REPLY LETTER]

July 18, 2005

Response of the Office of Chief Counsel Division of Corporation Finance

Re: Paychex, Inc. Incoming letter dated June 10, 2005

The proposal requests that the board initiate the appropriate process to amend Paychex's governance documents to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast.

There appears to be some basis for your view that Paychex may exclude the proposal under rule 14a-8(i)(11), as substantially duplicative of a previously submitted proposal that will be included in Paychex's 2005 proxy materials. Accordingly, we will not recommend enforcement action to the Commission if Paychex omits the proposal from its proxy materials in reliance on rule 14a-8(i)(11).

Sincerely,

/s/

Heather L. Maples
Special Counsel