Because of the prevalence of the internet and mobile devices in our lives, we have all become accustomed to getting what we want when we want it. So it’s no wonder that earned wage access has become extremely popular, especially among the new generation of workers.
83% of U.S. workers believe they should have access to their earned wages at the end of each workday. Forbes
It is obvious the daily pay trend is here to stay, and some are even calling it the future of payroll. So we thought we’d go over the ins and outs of earned wage access and give you the rundown on all the reasons it is a benefit you should be offering your employees, especially if they work on an hourly basis.
Earned wage access, also known as on-demand pay and daily pay, gives employees the ability to access their earned wages before payday. It works by pairing the financial technology of an earned wage access solution with a company’s HR technology. The technology incorporates an app integrated with payroll where employees can gain access to their earned wages whenever they need it. Earned wages are typically accessed via pay cards or direct deposit into an employee's bank account.
Many employees in the United States are living paycheck to paycheck. That means that if their car breaks down on the way to work, they may not have the savings to tackle the expense, which means they could miss work and face dire financial consequences. These employees often need early access to their earned wages to cover such expenses.
64% of American adults are living paycheck to paycheck. CNBC
Two-thirds of Americans wouldn’t be able to afford an unexpected $1,000 expense. Associated Press
Kids get sick. People get injured. Life happens. Earned Wage access ensures employees can get the financial coverage they need if something were to happen, providing a greater sense of financial security.
Earned wage access benefits employers because employees that have financial security and empowerment are happier, more productive, and less likely to be looking for the door.
78% of U.S. workers said earned wage access would increase loyalty to an employer. Forbes
Additionally, immediate access to earned wages incentivizes punctuality and eliminates absenteeism because employees receive direct payment for work done.
Restaurants and gig-workers are often the first things that come to mind when you think of earned wage access, but retail, manufacturing, and healthcare are also taking an interest. Whether or not a company can benefit from earned wage access depends on many factors. There are many solutions out there offering different versions of earned wage access, so we recommend looking for an earned wage access solution that is flexible and can meet the needs of your unique business.
While some earned wage access solutions provide the option for direct deposit into an employee's bank account, others utilize payment cards for wages that are allocated before payday. An employee’s earned wages are deposited to the payment card for them to use however they need.
There are two pay models for how people go about getting an early paycheck. There are earned wage access firms that partner with companies to provide employees cash advances, and then there are nefarious businesses that market products for paycheck advance directly to consumers.
Businesses that market directly to consumers are often considered predatory lenders, as seen with many pay-day advance loan businesses.
The earned wage access model that is so popular in today's market involves an on-demand pay company partnering with a business to provide its employees access to their earned wages when they need them, but with more security for employers and employees. This form of earned wage access protects employees from predatory lenders because they are basically receiving a traditional advance with some more modern functionality.
Some earned wage access solutions even allow for employers to set "guardrails" for how much net pay is distributed so that employees still have a paycheck on payday. Proliant's ReadyPay Today has this and other options built-in so that you can tailor the solution to your needs.
Challenges often associated with earned wage access for employers include pay errors and concerns about tax compliance. However, if you have an earned wage access solution built into strong payroll technology, you have a solution that can guarantee accuracy and compliance and eliminate errors.
Proliant’s ReadyPay Today integrates with our robust payroll tools so that employers can rest assured their pay advances have the correct taxes deducted and that there are no payment errors. Accuracy and compliance are kind of our thing. We are highly skilled certified payroll accountants and HR technology experts who keep up with ever-changing regulations across the United States to ensure all of our solutions provide accurate results that are 100% compliant.
ReadyPay Today is a flexible earned wage access solution that allows your employees early access to earned wages. Advances show up on pay stubs, mirroring a traditional advance, ensuring you stay 100% compliant with the IRS. Here are some of the great features that come with ReadyPay Today:
If you are interested in boosting your recruitment efforts with ReadyPay Today, get in touch with one of our payroll experts by clicking the button below.
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