Updated October 14th, 2022
If you're among the many employers who are looking for new ways to stand out in an increasingly difficult job market, you’ve probably heard that raising wages alone isn't enough to compete for hourly workers. And sometimes raising wages isn’t an option. Perhaps you’ve considered – or at least heard about – the ability to pay workers a portion of their wages faster than the traditional payroll cycle.
Known as earned wage access (EWA), on-demand pay, or early pay, among other terms, the benefit is in high-demand among workers, especially hourly workers, many of whom see huge advantages to the flexibility of accessing wages sooner than biweekly.
Today’s hourly workers are under enormous amounts of financial stress, with 56% reporting that they’ve experienced a financial hardship1 and 56% reporting that inconsistent pay has had a great or slight impact on their ability to pay bills2. Earned wage access is an easy-to-implement solution to recruit and retain employees given that 83% of hourly workers want more frequent pay3.
But what does offering earned wage access entail for the employer and their hardworking payroll or benefits teams? How does this payment method fit into your existing payroll systems and processes, and who does what?
To help you work through it all, we’ve answered common employer questions, so you have what you need to know about offering earned wage access.
1. When Netspend advances the funds when is Netspend paid back?
With Netspend, you reimburse us on your company’s scheduled payday. You will get an invoice on your payroll processing day for your accounting team’s reference, or you can set up auto-ACH withdrawals. It shouldn’t feel any different from paying your employees their full paychecks.
2. What options are available for employees who want to transfer their funds?
With Netspend Earned Wage Access, workers are in control when it comes to speed and cost. They can choose an expedited transfer (which usually arrives within minutes) to a payroll card, deposit account, or bank account (fees vary, depending on the account type). Alternatively, workers can have funds transferred via ACH to an account at no cost. This method typically takes 2-5 business days.
3. My employees are already paid weekly. What’s the value for them?
Unexpected costs come up with little to no notice – a car that needs fixing, an air conditioning that needs replacing, a hospital bill. Frequent pay is important to hourly employees but having access to their hard-earned money when it is needed most can be vital for making ends meet.
4. How does access to earned wages support the financial health of my employees and help me retain and recruit workers?
Workers know that earlier access to their earned wages can be the difference between paying a bill on time or missing a payment. The ability to bridge gaps in cash flow can be essential when it comes to building financial stability.
Additionally, when wages are delayed or a payment is missed, it can set off a domino effect of damage to a worker’s overall financial situation. This includes extra fees and time spent, which leads to more stress, distraction, and missed work. Hourly workers who say that inconsistent pay impacts their ability to pay bills have to make difficult choices to make ends meet, including delaying paying bills, borrowing from friends, using credit cards or payday loans4.
Research shows that employees who are more financially stable have increased productivity, decreased turnover, and better job performance5. Earned wage access is one piece of a larger financial wellness puzzle that can help increase employee engagement and positively impact employee productivity and health. In fact, 57% of workers that have had five jobs in the past three years6 say EWA would prevent them from leaving their current job7.
Earned wage access will give your workforce more peace of mind when it comes to having access to money they’ve already earned at times when they need it most.
5. Our HR and payroll departments are already stretched thin, and we already have many complex systems and payments to manage. What does Netspend Earned Wage Access implementation look like?
Companies can often go from signup to sending earned wages in around 30 days. No matter how simple or complex your systems are, we can provide a customized solution that will work for your HR and payroll team while meeting the specific payments needs of your employees.
Not to mention, the Netspend Earned Wage Access app is easy for your workers to download and use.
6. What changes will there be to my payroll process?
Prior to payday, a file will be provided to you with all earned wage access transactions for that period. You’ll then deduct those amounts from the employee’s paycheck. For most payroll systems, all you have to do is upload this file when you process your payroll. On the scheduled payday, you will be invoices for the total amount in the deduction file. You can process this through your accounting team or it can be debited from an account you designate (via ACH transfer).
7. There’s a lot of confusion about what earned wage access is exactly. How can I better explain it to my employees?
That’s a good and important question. Our research shows that employees can benefit from more education around earned wage access programs from their employers. For example, of those hourly workers who are offered EWA, half needed additional details to identify it as a benefit they have access to8. So, if you choose to offer an earned wage program, posters, brochures, emails and text, as well as word of mouth are all good ways to spread the word about the availability.
Earned wage access may also be mistaken by employees for a loan, so language is important. Earned wage access gives employees access to the funds they’ve already earned and employees are using these funds to make ends meet. For example, hourly employees report using these funds to fill the gap for everyday expenses, pay their rent or mortgage, pay for unexpected emergencies, and pay for transportation and car payments9. And the impact is big. Hourly employees say that earned wage access helps make their lives easier, reduces stress, avoid late fees and payday loans, and take care of their families10.
To learn more about Netspend Earned Wage Access, visit https://www.netspend.com/business/earned-wage-access or click here for more information on how we can customize a program that will help you recruit and retain employees.
1 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 26
2 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 25
3 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 22
4 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 139
5 Visa, “Earned Wage Access”, 2019 https://usa.visa.com/dam/VCOM/global/run-your-business/documents/visa-earned-wage-access-insights-report.pdf
6 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 5
7 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 59
8 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 10
9 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 55
10 Netspend Pulse Survey of Hourly Workers 2022, June 9, slide 56