Companies across the country are recognizing the value of adding earned wage access (EWA) to their employee benefits packages. Organizations that have implemented the offering report significant benefits, including higher employee retention and greater talent acquisition.
But EWA, which enables employees to access their earned wages at any time rather than waiting until payday, is still a relatively new offering in the employee benefits space. As a result, many HR executives lack a clear understanding of what it is and how it will affect their business. To help clear up the confusion and debunk some of the most common EWA misconceptions, we asked three industry experts to weigh in:
- Matt Pierce, Founder and CEO of Immediate, which partners with employers to provide EWA
- Bruno Stanziale, CEO and Chairman of the Board at Fusion Recruiting Labs, Inc., which helps HR departments recruit individuals and accelerate the hiring process
- Sanjay Singh, Ph.D., Board Member and Advisor at Pack Health, a chronic disease management digital health company that is using Immediate to offer EWA to employees
All three experts will be participating in a panel discussion on “A Hidden Threat: The Downstream Impact of Outdated Employee Benefits” hosted by Unleash on May 27th. You can register for the event here, but in the meantime, here’s what they said are the top six misconceptions about EWA solutions:
Misconception #1: We Don’t Have Time or Resources to Implement EWA
Many companies fear that an EWA implementation will be complicated and burdensome on their HR teams, but the Immediate integration process is easy. It takes minimal time to implement, entails no up-front costs, and requires no ongoing charges (unless your company elects to cover the ATM-like fees charged to employees for EWA transactions).
Immediate is resource light. Its EWA solution integrates seamlessly with all payroll platforms, which means there is no need to undergo a complicated vendor shift. The solution aligns with any payroll platform to track wages that are earned but not yet paid.
Once implemented, EWA requires no employer resources. When an employee requests a real-time payment, Immediate automatically handles the fund disbursement. For any financial outlay, the Immediate software makes up the balance by deducting the equivalent amount from earnings deposited by employers each pay day.
Misconception #2: No one will actually use EWA
As a relatively new offering, EWA market saturation and utilization is positioned to skyrocket in the years to come. It holds great promise in that it provides freedom and wage flexibility for employees to access funds on their own schedules, rather than waiting for an employer designated pay day.
In fact, nearly one-quarter of employees that have access to EWA use it each pay period. Other data underscores the fact that demand for EWA is high among employees—and that many are likely to use it if available. A recent survey found that more than half of employees have asked for a pay advance, while another recent study found that 72% of Americans want on-demand access to their wages.
Misconception #3: Employees Will Be Able to Access Funds Before Earning Them, So We Will Incur Losses If They Leave the Company Abruptly
With Immediate, employees have access to their earned wages at any time, rather than waiting until payday. Employees are not able to access pay in advance, so there is no risk to your company.
In fact, the biggest risk your company faces associated with EWA is not implementing it. Studies show that EWA is playing a significant role in talent attraction and retention. In a recent survey of 1,250 employees across various industries, 80% said that if they were seeking employment, they would prioritize a company that offers EWA.
Misconception #4: Offering EWA is Like Offering a Loan and Will Encourage Bad Habits
EWA is not a loan. It simply enables employees to withdraw their accrued pay before their scheduled paycheck. The only cost to employees is an ATM-like fee for withdrawals. Some employers choose to cover this fee for their employees.
If your organization prefers, you can also create customized limits on EWA. For example, you can set a max withdrawal of 50% of earned wages.
Misconception #5: Our Employees are Salaried and Don’t Need EWA
Recent studies suggest that hourly employees aren’t the only group that benefits from EWA. Thirty-six percent of salaried workers say they are very concerned about their financial stability going into 2021, compared to only 30% of hourly workers, according to a recent survey.
In addition, many Americans—regardless of whether they are paid hourly or salaried—struggle to pay for unexpected and urgent expenses that crop up. A recent study found that 40% of Americans would need to find an alternate cash source to cover the cost of an unexpected $400 expense. This is exactly the type of situation in which EWA access would be a huge asset.
Misconception #6: We Don’t Pay According to a Typical Two-week Period, So EWA Doesn’t Make Sense For Us
EWA is an attractive offering for employees even if your company doesn’t follow a typical payment schedule. That’s why Immediate is set up to be flexible to meet various organizations’ needs.
For example, if you have a rough average of what employees generally make within a certain pay period, Immediate can set a dollar limit for what employees can withdraw during that time period.
For more information or if you have questions on EWA, reach out firstname.lastname@example.org.
To learn more about EWA from the experts featured in this piece, register for our May 27th webinar with Unleash: A Hidden Threat – The Downstream Impact of Outdated Employee Benefits.