Frequently Asked Questions About Earned Wage Access

As the adoption of earned wage access (or on-demand pay) continues to gain momentum as a meaningful, tangible benefit for employers and employees alike, we thought we’d answer some of the common questions that we’ve seen surface. In this FAQ-style blog post, we’ll explore what earned wage access is, its benefits for organizations, why it should be offered fee-free, and more.

1. What is Earned Wage Access (EWA)?

Earned wage access is an employee benefit program that allows employees to access a portion of their earned wages before their next scheduled payday. Instead of waiting for a bi-weekly or monthly paycheck, employees can access a portion of their earned income at the end of their shift or workday, to buy groceries, get gas or just save for a rainy day.

2. How does EWA work?

EWA platforms integrate with an employer’s payroll system, allowing easy and accurate calculations of hours worked, hourly wages, and more. Employees then typically log in to a mobile app to view their accrued wages, where they can choose to access a portion of those wages instantly, while also seeing their account balance and a history of transactions. Then, at payday, the employee’s pay is distributed, minus any of the earned wages they’ve accessed during the pay period.

3. What are the benefits of EWA for employees?

Earned Wage Access provides several benefits to employees, including:

• Financial Flexibility: Employees can access their earned wages when needed, helping them manage unexpected expenses or just save money for a rainy day.
• Reduced Financial Stress: Immediate access to earned wages can prevent employees from resorting to high-interest loans or credit cards.
• Increased Job Satisfaction: Providing earned wage access shows that employers care about their employees’ financial well-being, boosting morale and job satisfaction.

4. How does Earned Wage Access benefit organizations?

Offering earned wage access can positively impact organizations in multiple ways:

• Improved Employee Retention: Financial stress is a significant factor in employee turnover. EWA can reduce financial stress, leading to higher retention rates.
• Increased Productivity: When employees are less worried about their finances, they can focus more on their work, resulting in increased productivity.
• Enhanced Recruitment: EWA can be a valuable benefit in attracting top talent, particularly among Millennials and Gen Z, who value financial wellness and flexibility.
• Reduced Absenteeism: Employees who have access to their wages when needed are less likely to miss work due to financial emergencies.

5. Why should EWA be fee-free for employees?

At Instant, we offer a fee-free model for employees to access their pay, as we believe employees shouldn’t have to pay to get paid.

Offering earned wage access without fees can amplify its benefits:

• Promotes Financial Wellness: Charging fees for EWA could negate the financial relief it provides. Fee-free earned wage access ensures employees fully benefit from the service.
• Equitable Access: Making earned wage access fee-free ensures that all employees, regardless of their financial situation, can access their earned wages without additional burdens.
• Positive Employer Image: Providing fee-free EWA enhances the company’s reputation as a culture-forward, employee-centric organization.
• Debt-cycle Avoidance: Earned wage access programs with fees end up with APRs that rival credit cards and payday loans.

6. Does Earned Wage Access impact payroll?

If you’re working with an experienced vendor, there should be minimal impact on your existing payroll processes. Standard practice is to get your earned wage access vendor integrated with your payroll and time and attendance systems to access your employee and census data – from there, once initially set up, there should be very little additional work required by your payroll team to manage on an ongoing basis.

7. How can organizations implement EWA effectively?

To implement EWA effectively, organizations should:

• Choose a Reliable EWA Provider: Select a provider with a proven track record and experience in the space.
• Communicate Clearly: Educate employees about how earned wage access works, its benefits, and how to use it responsibly.
• Monitor Usage: Regularly review earned wage access usage data to ensure it is meeting employee needs without negatively impacting the organization.
• Think long-term: Choose a vendor that offers more than just earned wage access, and can meet all of your employee pay needs, including digital tips and electronic payroll.

8. Are there any regulatory considerations for implementing Earned Wage Access?

Yes, there are regulatory considerations that employers should be aware of when implementing EWA:

• Compliance with Wage and Labor Regulations: Ensure that the earned wage access program complies with federal and state wage and labor regulations.
• Data Privacy: Protect employees’ personal and financial information by choosing a provider with strong data security measures.
• Disclosure Requirements: Clearly disclose the terms and conditions of the EWA program to employees to avoid any misunderstandings.

9. What should organizations look for in an EWA provider?

When selecting an EWA provider, organizations should consider the following factors:

• Reputation and Experience: Choose a provider with a solid reputation and experience in offering EWA services.
• Integration Capabilities: Ensure the provider can seamlessly integrate with your existing payroll and HR systems.
• User Experience: The platform should be user-friendly and accessible to employees.
• Support Services: Look for a provider that offers excellent customer support to both employers and employees.

10. Is there more to Earned Wage Access than meets the eye?

Yes! At Instant we think of EWA as just one part of a larger employee pay offering. When considering your employee pay programs, don’t forget there are other elements that can result in a more well-rounded experience and offering for your employees, including:

• Digital Tips: For organizations that handle customer tips, consider a digital tipping solution that allows you to pay your employees their tips electronically, instead of having to manage cash each day. There are considerable time and cost savings associated with this, not to mention going cashless is what many employees expect today.
• Electronic Pay: Instead of cutting paper checks for your employees each payday, consider going the electronic route, and let your employees get access to their pay via a payroll card. Not only will employees get quicker access to their pay, your organization can save on all the time and money normally associated with managing the physical check process.

Conclusion

Earned Wage Access (EWA) offers significant benefits for both employees and organizations. By providing financial flexibility, reducing stress, and enhancing job satisfaction, earned wage access can lead to a more productive and loyal workforce. Offering this service fee-free ensures equitable access and promotes financial wellness, positioning the organization as a leader in employee-centric benefits. Implementing EWA effectively requires careful planning and clear communication, but the rewards can be substantial for both employees and employers.

To learn more about fee-free earned wage access and the value it can add to your business please drop us a line at www.instant.co/demo/.