Engaging the Human Side of Payroll with Earned Wage Access

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With Missouri and Nevada, each passing legislation in recent weeks aimed at establishing standards for the earned wage access(EWA) industry that will ensure consumer protection, transparency, affordability, and inclusiveness for the financial wellness tool, I thought it was fitting to share a blog I wrote a year ago highlighting the human side of payroll and the impact of EWA on users and their organizations.

While many employers have adopted and realized the positive impacts of offering employees modern digital pay methods like on-demand pay for earned wage access, many more are still holding out, often viewing these digital innovations as simple fads that will eventually go away.

Surprisingly, payroll leaders and practitioners often drive the heaviest pushback to these innovations. Understandably so, given the compliance and controllership imperative that payroll lives and dies by and must steward as a center of expertise for both. As a payroll practitioner, it’s difficult to imagine handing employees the “keys to the castle” and the ability to self-service access to their earned wages – especially mid-pay-cycle.

Most payroll practitioners believe that adopting on-demand pay solutions will translate to yet another tool payroll must test, deploy, and support in their long list of critical responsibilities. Further, many employers believe their payroll operating costs will increase due to adopting on-demand pay. Additionally, the thought of adding yet another niche technology to the employee experience is often undesired.

Despite the misconceptions and apprehension, on-demand pay for earned wage access is now a key component in a modern payroll operating model and employee experience. Organizations continue to realize that the many positive, measurable organizational impacts enabled by offering employees early access to earned wages far outweigh its negligible operational impact.

The realities of adopting earned wage access

Digital payments have quickly become a standard fixture in our personal lives. Mobile apps and access continue to enable increasingly powerful on-demand capabilities, and the pandemic accelerated digital money movement and payments seemingly overnight. Many merchants have even begun declining cash in favor of card or digital payments altogether.

Research and analysis of many of the leading earned wage pay solutions show that these solutions offer an incredibly low-impact activation process, meaning payroll must do very little to launch and operate them. Many practitioners commonly cite the near “set it and forget” experience of enabling and managing modern digital payment solutions.

On-demand pay solutions fundamentally provide payroll with an integrated technology-enabled tool to quickly resolve common issues with little effort and greater speed and efficiency. Issues that require rapid payments such as missed entry or approval of time worked incorrect or missing direct deposits, same-day terminations and compliance-driven payments, shipping outages, and more.

Further, the cost models for on-demand pay are very low, and, in most cases, the ROI realized offsets any cost of adoption. Interestingly, the ROI realized generally has little, if any, impact on payroll itself (although it inherently drives up electronic payments); rather, it is a benefit that commonly leads to measurable improvements in employee engagement, retention, referrals, and candidate interest. Many firms operating in industries heavily dependent on hourly workers (retailers, quick-serve restaurants, home healthcare providers) commonly cite offering on-demand pay for earned wage access as a clear and measurable differentiator over competing employers that do not offer the financial wellness tool.

The role of earned wage access in the employee experience

Now more than ever, employers across sectors recognize the urgency associated with finding, retaining, and developing top talent. Competing in today’s talent market requires a differentiated employee experience that empowers employees across their full work-life journeys. Employees want, need, and deserve employers to provide them with the modern flexibility enablers to shape a unique experience that supports and enables them to meet their personal and professional goals.

Enabling employees to perform their best work goes beyond the tools and support provided in the workplace and should extend to their personal lives. The employee experience doesn’t end when the paycheck is delivered – it must continuously orbit employees to uplift their total wellness enabling a healthy mind, body, wallet, and life. Stress and angst over personal matters carry over to and directly impact workplace performance.

Offering modern financial wellness tools and support through solutions like on-demand pay for earned wage access empowers employees with the autonomy to address a myriad of financial challenges and shortfalls with dignity. More importantly, it shows empathy and solidifies the trust and relationship between employees and employers by helping them navigate personal challenges. When employees feel safe, empowered, and supported in their workplace and personal life, the result is a more engaged, productive, and motivated workforce.

With inflation on the rise and predictions of a potential global recession ahead, now more than ever, employers must look to differentiate their workplace experiences to compete for top talent. Inflation impacts are being felt across workers at increasingly higher income levels. Thus financial wellness will become a broader organizational challenge moving ahead. As budgets and hiring spend becomes strained, the time to re-recruit and engage existing talent is now, and flexibility will be the key to success in that effort. Flexibility to choose roles, projects, work location, learning, career paths, and the modality and timing for which they are paid.

To learn more about the myths, realities, and impacts of earned wage access, see my series of podcasts in partnership with The Source by DailyPay, featuring interviews with HR and payroll practitioners and leaders discussing their experiences with engaging the modern financial wellness solution in their organizations.

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