Paychex Sucks

If your company is looking for a PEO, be very careful, do your homework, shop around and make sure you ask the salesperson the right questions. Also, be sure to check the company’s record of lawsuits. The number 2 PEO in the business has had many lawsuits and class action suits against it, and just settled a 32 million dollar lawsuit in March 2010.

After using the number 2 rated payroll company for 15 years, we switched to their PEO and that mistake ended up costing our company a great deal of money. When our health care renewal rate went up 26%, the payroll company told us that by going with their PEO platform we could save $42,000 in health insurance costs. This company, which was voted most ethical, cost our company dearly because of many hidden cost were never disclosed to us.

Under a PEO, the owners of the company and their employees become employees of the PEO. Therefore the company cannot carry an independent Worker’s Comp policy since the company is no longer the employer. Of course they told us that they have better pricing as a larger company. What was not disclosed was the fact that owners of a company can either waive their Worker’s Comp or cap it at $67,000, saving the company money. When our company realized that under the PEO we were not eligible for the cap, our salesman lied to us and said, “many of his clients hold their own policies.” We were subsequently told by our insurance underwriter that under no circumstances could we hold a Work Comp policy under a PEO. When we confronted the PEO with this fact, they were ready to switch us to another platform, not a PEO, in order for us to hold our own policy. When they first presented the PEO package to us they never asked us how many partners were in our company. Their stupidity cost us a great deal of money. When I spoke to the Worker’s Comp person in their NYS office, I was told, “wow you know a lot about Worker’s Comp. How come this PEO didn’t advise you of this when they were enrolling you?” I can just imagine how many other companies are losing money under the PEOs Worker’s Comp policies.

Our $42,000 health care savings was based on what they said was the advantage of a larger company’s better pricing on health care. At the time we were faced with a 26% increase using our own broker. We actually could have found a better policy with our own broker, and when the PEO’s health insurance policy was up for renewal in Dec 2010, it was a 90% increase! Since the PEO was out of New York State, the State of CT had no control over such an obscene increase in premiums. I subsequently found out that the State of CT can control health care rate increases for small companies

Start up fees and monthly administrative cost were at least 15% higher than what we paid using only their payroll services. Although they claim that they provide HR support, let me say that you would be better off hiring a HR employee rather than paying the PEO.

Our biggest loss occurred with employer payroll taxes, CT and Federal unemployment taxes. By starting our company in the middle of the year, we were now new employees of the PEO and our tax base started at zero. They never asked how many employees earned over $106,800, where social security taxes are capped. Our employees were told they would get their individual overpayment in SS taxes back, but failed to tell the partners that they were still responsible for the employer tax. Tens of thousands of dollars were lost here. The sales person never fully disclosed these overpayments to us. We cannot get refunded for the overpayment in Federal unemployment taxes but only when I found out from my accountant that I can file for reimbursement for the CT SUI did I confront the PEO. They told me they would walk me through the process of filing. I told them that since I pay over a thousand dollars on administrative fees, they should do it for us!

The salesman for the PEO was either ignorant of all of these facts or needed to meet his quota of new clients. We were naïve about asking the right questions, but the PEO never disclosed all of the potential hidden losses that could possibly occur by using this platform.

We lost as much money as they said we would save in health insurance premiums, in employer payroll taxes, Worker’s Comp, set-up fees and administrative cost. In the long run it would have been more cost effective for us to stay with what we had rather than switching to the PEO. However, when offered a $42,000 savings in health premiums, we jumped on the PEO bandwagon. That was a grave mistake. Be very careful if you are considering a PEO and do your research, and have all costs and potential savings spelled out in writing. Otherwise a switch could cost your company much more money that will be saved. The moral of this story…caveat emptor!

Just to comment on "semi-satisfied Paychex EE"'s remarks: The inherent issue at Paychex is not with the front line Operations people, there you may have some bad apples of course but the majority of the Operation team is probably good hard working people with good intentions and any client that expects perfection and gets crazy when there is an error is just off base. The problem at Paychex is with the management (starting with the upper management) and the sales side of the business. It has been proven through the discovery process with several lawsuits over the past several years (read the judge’s ruling and comments in postings above) that Golisano is a bad person that is willing to be unethical in order to gain market share and line his pockets. On the sales side, they had the same issues come to light about the senior management and they have a well earned reputation for not telling the truth. I don’t know how much truth there is about the internal complaints with nepotism and sexual harassment issues but where there is smoke there is most likely fire.

Psyched are complete morons. I could list problems for days but here is the easiest. We end agreement and supposed to be June 1. They close early, so then have to reopen account to let employees take out FAA money left. But by opening they automatically sent money to employee. I say it's your fault, not paying. Finally, they agree. A year later, they try to curate me again, but how? By auto withdraw, but they screw that up and deposit the money. Dumbest people I ever met, dumbest managers, horable sales people. Idiots. I still have check for $.17 they mailed me but could not find back up to explain it. My new 401k admin company called them and laughed at the idiocy. Do NOT ever bother to work with them.

Paychex has made our corporate office look like a complete bunch of incompetent idiots! I have worked there - they don't care about you once you have signed on. I've worked there. (I left on good terms for those skeptics out there) The company I work for now went to Paychex because I knew the system...even though I don't do payroll which is their bad not Paychex'.

Their check printing and shipping processes have MUCH to be desired! Wednesday we transmitted our Friday checks (which we missed the deadline for same day processing by 10 minutes) and then on Thursday we processed our bonus checks dated for the next Monday. Friday we were wondering where checks were. They had processed them all together and took it on themselves to combine the delivery and deliver them on Monday. So here we are on Saturday with 15 locations sitting at their offices waiting for checks with employees waiting to get their checks.

I realize there is incompetence in all businesses but give me a break here. Now I will have to transmit my payroll by 9AM on Wednesday, call Paychex 15 minutes later to make sure they received it and that they have processed it.

We started out with Paycom (I lovingly call them "Paybom") which we got what we paid for - crap. We went to Paychex which didn't start well because some sales person thought it would be great to demonstrate the software with a power point presentation instead of the software. I'm already suggesting we go to ADP or Ceridian and just bite the bullet for the costs.

George, if you are looking for a complete solution maybe I can be of assistance. Please contact me at david.roth[at]mail.com. I work for a national payroll provider and would be happy to introduce our solutions to you.

Paychex Rep... I'm betting that other Paychex employees are cringing at your attempt to defend the Paychex 401k product. The fact is that you wrong about Paychex having the least expensive 401(k) in the business. Since Paychex 401k sales reps are not licensed, most of them are completely unaware that Paychex not only charges a hard dollar fee, but collects a trail from the investments. There are some exceptions to this (for instance if you are set up in Vanguard types of funds that don't pay Sub TA's, or 12b1's). Just because Paychex doesn't charge additional wrap fees (like most of the insurance companies do), doesn't mean they are always the cheapest. That being said, Paychex has the ability to give you a very reasonable offering. They just have to get better at disclosing exactly how much they make (luckily there are new fee disclosure laws that will force the issue). If anyone is interested to learn the basics of how fees work in a 401(k), and what to watch out for, feel free to email me at Gresham_Jeff(at)yahoo.com Once you know how it all works, it's pretty easy to find a low cost solution.

I'm not sure that I would want the least expensive 401(k) any more than I would want the least expensive Surgeon or Indian food. I'm not sure I would trust a Paychex Sales Rep to sell me a 401(k) any more than I would trust Rhitu (the waiter at my favorite Indian restaurant) to perform surgery on me? I am very sure that I trust Rhitu to disclose that what I am about to eat will keep me from showing up to work for 3 days more then I trust a Paychex Sales Rep to disclose all of the fees in the 401(k) they are about to sell me.

Any Premier/HR, current or former, reps have any input as to the positives or negatives of their role vs. a regular payroll rep?

Hey "Searching". The food chain at Paychex is like this (from lowest to highest paid): 1. Core sales rep (small business payoll). 2. HRS rep (sells 401(k) and FSA). 3. Premier rep (HR Bundles solutions). 4. MMS sales (Major Accounts payroll rep). Who knows if it has changed since I worked there, but that's how I know it to be.

Angry Dentist. I agree with what you say about not trusting Paychex sales reps to disclose the fees... generally speaking that is. I've heard Paychex 401K managers say during an interview "Who cares if you don't know about 401(k)'s. I just want someone who can sell. Fake it till you make it". Now THAT'S scary. The bottom line though is that there are incompetent sales reps, and there are competent ones. I've met some Paychex 401k reps that know more than the majority of licensed financial advisors... they are just few and far between. Unfortunately what this all means is that we all have to do a little research before we blindly have faith in the "experts"... and that goes for surgeons too!... As far as my trust in waiters? Well lets just say I almost always write the total out like a check along the side of the receipt so it's harder for them to adjust their own tip... thanks to the greedy TGI Fridays waiter 5 years ago.

Golisano looks like he is unloading the Sabres. You lucky Paychex employees can now look forward to him focusing more attention on you! I also wouldn't want to be a competitor, the C.E.O. of "one of the worlds most ethical companies" is probably plotting to kidnap your children and hold them hostage until you sell him your company. If hiring an executive from Pitney Bowes (one of the most ruthless, unethical sales companies) as new VP of Marketing is any idication of the future for Paychex we have some fun lawsuits to look forward to.

Now that their biggest selling month is over it's going to be interesting to se how bad they tanked, which will prove their leadership from the top down is inferior in today's marketplace. Get ready to watch a mass exodus of their top reps leaving....I give it 6 months.

I switched payroll companies beginning of year after 4 yrs of price increases, personnel changes, and lots of errors. I would never use this company again or refer them.

People complain too much.. there was so much in here i couldn't read it all.. If you don't like certain products don't use them.. simple as that.. and about Paychex filing stuff without SS#s and things like that.. every client gets a list with their payroll package of missing information.. the specialist can't track down every piece of missing information for every employee for the 300 or so companies that they are all taking care of.. if you want it fixed give the information to your specialist and you have nothing to worry about.. ive been with them for years and have no complaints

If you sell insurance first they screw up your payroll then they try to steal your clients by selling their own insurance. That is a great business model. Just deal with independent payroll providers. They usually provide better service anyway.

I let this company talk me into using their workmans comp services, what a big mistake. Their insurance agents are unqualified to write policies, it's totally obvious they write business to hit quota and not worry about their clients. Not only did I go through an audit but they wrote the policy under the wrong class codes even though I questioned the lower rates. My code was a higher premium that i KNEW was correct, but this moron at paychex changed the nature of my business and it cost me over $9000.00 in additional premium. Guess what, between the payroll cost going up and the insurance errors ( can you say errors and ommissions) my annual payroll cost was over $14,000.00 for only a 14 person payroll. What a huge mistake on my part. My suggestion when your local paychex rep comes knocking, shut the door and say NO THANK YOU

Always love reading this blog. Paychex has over 550,000 clients nationwide and is still showing growth. You really think this company is going down. No person or company is perfect but if Paychex screws up just 1% of the time it touches a lot of people and business.

For those who say you get payroll done for a lot less..... You do realize that the local providers are operating in the red and give those great deals to build ip their client base in hopes of Paychex or ADP buying them out. That how the locals make money. Ask the rep from the local provider to show you their company's financials and then ask yourself am I going to trust them with my tax liabilities. Next time I'm on here I'll post links to the locals that went under and funny thing how they always close their doors after they've swept your account.

For those who feel robbed for years.... You realize you're not in a contract. It's your choice to process.

For ex Paychex Ops employees I feel for you. The job is hard with little reward. However go get a degree so your not doing those bs jobs.

ADP reps and some of the others that put their email on here in hopes of getting business, classy.

ADP reps how's the telemarketing going? I haven't had to pick
up the phone in a year to beg for appointments. Thriving off ADP call ins. 157% quota and Paychex is sending me to the Bahamas.

Just out of curiosity I did an audit of over 500 sales that I've done in the last 5 years in the small business and Major Markets to see how many have left the service. 15 are no longer clients and 6 of those are out of business. For the uneducated folks that are questioning this, took the Excel client list and matched to my sales. Decided to call on the lost clients since there weren't too many that's how found some are out business. I was able to get 2 clients back for January. Granted I call every sales every 6 months as long as I still have that zip code so I am able to assist if something is going wrong. This is huge way for me to generate more business from current client referrals. This is Paychex largest source of new business.

So sorry to disappoint but Paychex is going anywhere. Oh the lawsuits, are their any corporate monsters not getting sued?

Keep the posts coming, it's so entertaining. Hope this post got you more fired up!

Hey All-Star Paychex Employee - FYI you do not need a college degree to be a sales rep at Paychex, so you can take your online basket weaving BS degree off the shelve. Keep drinking the cool-aide believing that Paychex actually cares about you. With Paychex completing the acquisition of SurePayroll today they are officially admitting that online is the future of payroll, an area they have failed at for years. The ridiculous fees Paychex charges are continually being watered down, what happened last year, a 50% decrease in fees, and what what do you think will happen to the compensation plan, bonuses and commission structure? You will be simply replaced by a computer soon, have fun in Bahamas, you earned it!!! P.S. don't forget to wear your knee-pads the next time you come to my office!!!

Sorry but the number of clients at Paychex is not growing, it’s shrinking. You might want to read your own financial reports (see below), in a frantic effort to offset the higher than expected loses and overall poor sales performance; they have had massive price increases to offset all of the lost business.
Period Ending May 31, 2010 May 31, 2009 May 31, 2008
Total Revenue 2,000,820 2,082,759 2,066,323

You must also be an anomaly (or lying but I would never assume a sales rep at Paychex is lying) because the baseline lost business is 12-15% for companies being acquired or going out of business and Paychex overall lost business is close to 30% this past year, so you only losing 3% is pretty unbelievable. I would love to see any information on lawsuits or judgments against ADP that come close to what has come to light from the past few Paychex lawsuits, feel free to give the case and I will be happy to look it up and post it on this site. I hope that you have a great celebration in the Bahamas, I am just happy that I dumped my Paychex stock in 2007. BTW… Did you actually tell someone in Operations at Paychex to “get a college degree so they don’t have to do a bs job”?!? I’m sure that you got a great degree from a great college?

Is that what they tell you - "are their any corporate monsters not getting sued"? Have you not read any of the judgements against Paychex, they discovered, through discovery, that Paychex and Golisano was grossly unethical. I am sure that the sales reps at Enron were making the same type of statements.