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How Earned Wage Access Benefits My Company

With recent advances in payroll technology, employees don’t have to wait a full pay cycle to access the money they’ve earned. Earned wage access (EWA) solutions help your employees access a portion of their paycheck early. 

Many of today’s employees consider EWA a benefit when assessing their career options. EWA gives your employees the flexibility they need to handle financial emergencies. Offering EWA to your employees can help your organization stand out and increase employee satisfaction in the long run. 

At Instant Financial, we offer a responsible, employer-sponsored EWA model. This guide explores how earned wage access benefits your organization and what to expect when implementing this financial solution for your employees. 

What is Earned Wage Access (EWA)?

Earned wage access is a payroll tool that allows employees to access a portion of the money they’ve already earned before the end of a pay cycle. This is sometimes called “on-demand pay” or “instant pay.” 

EWA helps employees better manage their cash flow and handle financial emergencies by accessing a portion of their wages early. For example, an employee might want to access a quarter of their paycheck a week before payday to deal with an unexpected car bill. This is particularly helpful for hourly employees whose wages vary significantly between pay periods. 

EWA is not a loan, and there’s no need for repayments or interest fees. Your employees can only access wages they’ve already earned.

How Does Earned Wage Access Work?

EWA platforms are designed to integrate with your organization’s existing payroll systems. Instant Financial integrates directly with your payroll, human capital management, and time and attendance platforms. These integrations make it easy to offer early payouts to your employees, without much extra work for your payroll team. 

Using EWA is simple. Employees log into an earned wage access app or online portal to view their available earnings. If they want early access to their wages before payday, they can request and receive the money in their bank account on the same day and use it immediately. 

There are different types of EWA platforms, each with its own setup and features. Some require the employer to integrate their payroll systems, while others allow employees to use them regardless of their company’s payroll system. 

What’s the Difference Between Employer-Sponsored and Direct-to-Consumer EWA Models?

Both employer-sponsored and direct-to-consumer EWA models have taken off in recent years. Here’s a breakdown of these models to help you decide which makes the most sense for your employees. 

Employer-Sponsored EWA Model

In an employer-sponsored EWA model like Instant Financial, the employer sets up the platform and integrates it with their existing payroll system. 

This approach gives employers more control over their EWA setup. Employers can regulate early payments to encourage financial sustainability and responsibility. 

Direct-to-Consumer EWA Model

A direct-to-consumer EWA model is marketed to employees and does not necessarily integrate with an employer’s payroll system. Instead, the employee downloads a third-party app, answers questions about their income, and connects it with their bank account. Then, they can request early payments for a fee or tip. 

Employer-sponsored EWA platforms like Instant Financial tend to be more responsible and equitable for your employees. While direct-to-consumer models often charge fees to employees, an employer-sponsored model doesn’t. This allows employees to keep all the money they’ve earned. With an employer-sponsored model, you can also limit how much your employees can withdraw in one payment, which encourages financial responsibility. 

What are the Benefits of Earned Wage Access?

Offering earned wage access benefits both your employees and your organization as a whole. With EWA, you give employees more financial flexibility and control over their earnings. Here’s why you should consider implementing EWA in your organization. 

What are the EWA Benefits for Employees?

By offering EWA as a benefit, you can give your employees peace of mind and empower them to take control of their finances. This flexible on-demand pay option supports their well-being in several ways:

Enhances Financial Stability and Reduces Stress

Instant’s 2024 Wages and Wellbeing Study highlights that nearly half of working Americans (49%) are frequently short on money before payday. Living paycheck-to-paycheck can be incredibly stressful, especially when unexpected expenses arise. A sudden medical appointment, car repair bill, or other emergency could force employees to rely on high-interest credit cards or loans, making it difficult to save money.

Earned wage access helps employees bridge the gap between workday and payday. By allowing employees to access their earnings in the middle of a pay period, they can easily make up for budget shortfalls. EWA helps employees buy groceries, put gas in their cars, and meet their day-to-day needs, even during stressful times. It provides an alternative to costly late fees, credit card interest, overdraft fees, or payday loans, which could negatively affect an employee’s financial situation in the long run. 

With EWA, employees get peace of mind knowing that they can access their most recent earnings right away in an emergency. Over time, EWA can help reduce employee stress and improve mental health overall. 

Increases Employee Satisfaction and Loyalty

Research has proven that employees are more productive and engaged when they are financially stable. Financial stress alone costs employers $2,169 per employee annually in productivity and absenteeism.¹

When employees are worried about their finances, they might be distracted at work and struggle to perform their best. This could lead to disciplinary action or even dismissal, further compounding the employee’s financial difficulties. 

However, when employees have access to EWA, they can relax and focus on their work, knowing they can access funds from their paycheck anytime. This peace of mind leads to increased employee satisfaction and longevity. 

Promotes Responsible Financial Habits

When implemented strategically, EWA supports financial wellness and responsibility for your employees. Early access to earnings helps employees stay on top of their budget and avoid taking on debt during times of financial stress.

Say an employee has recently worked overtime and expects a larger paycheck than average next payday. This employee also has a significant medical bill due before payday. With EWA, they can withdraw some of their overtime pay early to pay the medical bill, rather than using a credit card or taking out a loan. This way, the employee doesn’t have to worry about repaying debt or taking on extra interest. 

Offering EWA isn’t about encouraging your employees to spend more. Instead, it gives your team the control and confidence to manage their money in a way that fits their lifestyle. Instant Financial allows employers to limit how much employees can withdraw from each paycheck to encourage responsible use. 

What are the EWA Benefits for Employers?

Earned wage access isn’t just helpful for employees—it also benefits your business. Offering EWA helps organizations recruit and retain great employees for operational efficiency. 

Improves Recruitment and Retention

Earned wage access can positively impact key HR metrics like recruitment, retention, and turnover. At Instant, we’ve seen clients improve their retention rates by over 27% by offering EWA to employees. 

This can have a huge financial and cultural impact across your organization. Recruiting and onboarding great employees is expensive and time-consuming. Offering benefits like EWA encourages your best performers to stay loyal to your company, helping to keep recruitment costs down. 

Enhances Productivity and Engagement

Employees want to work for employers that offer daily pay. According to our 2022 Wages and Wellbeing Study, 79% of workers would be more interested in applying for a job that pays them the same day they work, which is 30% higher than in 2018.

When employees aren’t stressed about their finances, they can stay focused on their work and achieve their full potential. Because of this, offering EWA as an employee benefit can improve morale and strengthen your company culture. It can also lead to better operational efficiency. 

Streamlines Payroll Processes

Employer-sponsored EWA models can be built into your existing payroll platforms, so they aren’t difficult to implement. For example, Instant Financial automates EWA payments for your employees based on data from your systems. This means there’s minimal overhead for busy HR teams. 

What to Look for in an Earned Wage Access Provider

Not all earned wage access providers are created equal. When choosing an EWA solution, you’ll want to find a provider that prioritizes transparency, financial responsibility, and convenience. Here’s what to look for when selecting your EWA provider: 

• Price transparency: Both employers and employees should have full transparency into how the EWA process works and how it will affect their finances. Ideally, employees should not have to pay fees or tips to use an EWA platform. 

• Employer-sponsored model: Organizations should opt for an employer-sponsored EWA model, rather than a direct-to-consumer version. An employer-sponsored model will give you more control over your organization’s EWA, resulting in more consistency for your employees. 

• Ease of integration: Your EWA platform should integrate directly with your existing payroll platform and other HR solutions for ease of use. 

• Data security: EWA platforms should use encryption and other cybersecurity measures to protect your employees’ and your organization’s financial data. 

• Withdrawal limits: Look for an EWA platform with reasonable withdrawal limits for your employees. This will encourage responsible use and prevent employees from becoming reliant on early withdrawals. 

You’ll want to choose the EWA platform that provides the best experience for your entire team. At Instant Financial, we focus on responsible use and long-term employee financial health, without the frustrating hidden fees or a complex setup process. 

How Can Your Company Implement Earned Wage Access? 

If you want to implement earned wage access at your organization, the first step is to evaluate your current payroll and HCM technologies. Review integration options to ensure your desired EWA platform pairs well with your existing system. Instant Financial offers many integration options with a quick and easy setup process. 

Once your organization has implemented earned wage access, the next step is to communicate with your employees about this new benefit. Hold a meeting and distribute written materials to show employees how they can use the EWA platform. This should include clear instructions on accessing the EWA platform online or via an app and a clear explanation of how the process works. 

How Does Instant Financial’s Earned Wage Access Solution Stand Out?

Instant Financial’s EWA platform is built with security, convenience, and financial responsibility in mind. Rather than charging fees to access wages early, employees can cash out without worrying about any extra payments. Our instant pay options help your employees access their money the same day they work. 

Instant Financial is built to integrate seamlessly with your existing HR platforms. When employees choose to access their wages early, payments happen automatically and securely, with minimal input required from your payroll team. 

On top of that, Instant Financial offers more than just EWA. Employers can also enjoy digital tips and payroll cards to support their financial wellness, all in one convenient platform. 

Real-World Impact: Case Studies of Implementing Instant’s Earned Wage Access

Instant Financial’s earned wage access solutions have helped businesses across various industries support their employees. Here’s a look at how two businesses used EWA to improve the employee experience. 

Church’s Chicken: Addressing Employee Financial Stress 

Church’s Chicken wanted to help its hourly employees reduce their financial stress. The fast-food chain also wanted to stand out from the competition and offer benefits that would attract employees. By implementing earned wage access, they helped address their employees’ concerns about financial emergencies, improving employee morale.

Argo Contact Centers: Boosting Employee Loyalty

Argo Contact Centers sought a way to reduce turnover rates and keep employees engaged. By implementing earned wage access, Argo lowered turnover rates by 12% and absenteeism by 13%. This new benefit also boosted employee satisfaction by 12%, keeping teams happier and leading to a rewarding company culture. 

Empower Your Workforce with Instant Financial

Earned wage access provides financial peace of mind for your employees by ensuring they don’t have to wait for a payday to access the money they’ve earned. EWA also helps employers retain great team members and keep them happy. 

When selecting an EWA platform for your organization, look for a responsible model that promotes financial responsibility, like Instant Financial. At Instant, we’re here to support your company and your employees with flexible on-demand pay solutions. Talk to sales or request a demo today to learn how Instant Financial can help.

FAQs About Earned Wage Access Benefits for Businesses

Here are some of the most frequently asked questions about earned wage access. 

Is Earned Wage Access a Loan? 

No, earned wage access is not a loan. Employees access a portion of their paycheck in advance, with no fees or interest. There is no need for employees to repay the advance later. 

How Does EWA Differ from Traditional Pay Advances? 

With a traditional pay advance, employees must make a request directly with HR, who then manually processes the payment if approved. With earned wage access, employees can access their earnings in a mobile app or online portal and request an early payment whenever they’d like. 

Are There Any Fees Associated with Using EWA?

Most earned wage access providers do not charge employees fees to access their wages, although some do. Instant Financial offers ways to avoid fees. 

How Can Employers Implement EWA in Their Organizations?

Employers can implement EWA in their organizations by selecting an automated EWA platform that integrates with their payroll and time-tracking systems. Once the EWA system is set up, employees can request early payments without going through HR.

References

1. “Lowering the Cost of Financial Stress to Employers and Its Impact on Workers.” Manulife Retirement, November 24, 2020.