UPDATE 1-Paychex Q4 net falls as weak economy weighs

* Q4 EPS $0.32, down 16 pct

* FY 2010 net seen down 10-12 pct

* FY 2010 revenue seen down 1-4 pct

NEW YORK, June 26 (Reuters) - Paychex Inc (PAYX.O), a payroll and human resources company, said fourth-quarter net income fell 16 percent as the weak U.S. economy and employment took a toll.

For the quarter, the company earned $113.8 million, or 32 cents a share, a penny shy of Wall Street estimates, on revenue of $495.9 million.

Besides weak economic conditions and the credit crisis, extremely low investment rates of return on funds held for clients hurt the company's results, Chief Executive Jonathan Judge said in a statement.

The company forecast 2010 net income falling 10 percent to 12 percent and a drop in sales of 1 percent to 4 percent.

Shares of the company, which competes with larger rival Automatic Data Processing (ADP.O), closed up 50 cents at $26.69 for the day on the Nasdaq.

The results were released after the market closed. (Reporting by Vikram S. Subhedar; Editing by Steve Orlofsky)