A new study completed by Instant Financial and Center for Generational Kinetics, shows that 60% of Americans believe that their employers should offer them immediate access to their earnings.
A majority of employers currently pay their staff wages for services performing on a weekly, bi-weekly, semi-monthly, or monthly basis. At a federal level, employers have no requirements when it comes to pay frequency, however, some U.S. states have pay frequency requirements.
For example, in the state of New Hampshire, employers are required to pay staff wages on a weekly or bi-weekly schedule. If an employer would like to pay semi-monthly or monthly pay frequencies, they are required to get approval from the New Hampshire Department of Labor. While in Michigan the frequency is dependent on the occupation.
More and more employers are now introducing a new pay frequency so that employees can get instant access to pay. This new pay frequency is generally referred to as earned or early wage access (EWA).
Essentially, it is an on-demand program that allows staff to get same day access to pay for their work completed. This new pay frequency has been tested primarily by app-based drivers. For example, companies such as Uber allow their employees to cash out up to five times per day for wages earned.
How do EWAs work? Employees will have access to a mobile application where they can access accrued wages before the end of their normal pay cycle. They can then transfer these amounts to their bank account, or to a pre-paid debit or payroll card. Unlike payday lending, employees will have instant access to wages for work performed that day.
You may be asking yourself how this is beneficial to your employees. There can be multiple benefits to switching to this pay frequency. Immediate access to earnings can help you retain and attract talent.
For example, the study showed that 70% of all working Americans would be more interested in applying for a job that offers same day pay for work performed. The study also found that 54% of Americans are concerned about making their current paycheck last until their next pay day and 51% of survey respondents answered that they end up short on money before their next payday.
This means that offering on-demand pay could help alleviate unnecessary financial stress on employees, which could in turn help increase productivity and decrease absenteeism. Overall, considering amending your staffs’ pay frequency, could help boost employee morale and their job satisfaction. Before making a switch, be sure to check out your state’s pay frequency requirements!
If you have additional questions, be sure to chat with your Human Resources representative for assistance.
