As we head into 2023, organizations across the country are reviewing their employee benefits programs and determining what additional benefits they’ll offer their employees to stay competitive in a challenging hiring environment, while considering their employee well-being.
Earned wage access will play a central role this year in HR departments, and with that will be the need to sift through the available vendors, their solutions and how they’re delivered. There are many half-truths and misinformation about how various earned wage access programs are structured.
In this first blog post of a 4 part series, we’ll cover some of the most common misconceptions about on-demand pay, and explore the real truths that you should assign to memory.
MYTH 1: All earned wage access vendors are the same
TRUTH: There are a number of methods to deliver on-demand pay, some of which we discuss more in our 2023 Buyers Guide here, but know that not all vendors are created equal. Some vendors charge fees to employees, others offer a subscription model, while others – like Instant – charge no fees to employees or employers, ensuring optimal financial wellness for all.
MYTH 2: Earned wage access payments are just a loan
TRUTH: Payment given to employees in between pay periods is simply wages they’ve already earned. With the proper guardrails and compliance measures in place, it’s a smart way to help employees access money that’s rightfully theirs, and put them back on track to improve their financial wellness
MYTH 3: All states have the same regulations in place with respect to earned wage access
TRUTH: Not surprisingly, the regulations in place for how organizations can implement earned wage access vary from state to state; in some states, some earned wage access models are not even permitted. It’s important to choose the right vendor that complies with regulations in the states your business operates in.
MYTH 4: Earned wage access fees are insignificant, and just like an ATM fee
TRUTH: Despite what some vendors claim, the fees attached to various earned wage access programs can be as predatory as a payday loan. Consider a seemingly simple $2.99 fee on $50 for 5 days – that’s an annual percentage rate (APR) of 436%.
MYTH 5: We only have a salaried workforce, so earned wage access wouldn’t work for us
TRUTH: Any employee can benefit from having access to on-demand pay, whether an hourly employee or a member of your salaried staff. At its core, earned wage access is a financial wellness solution that allows employees to better take control of their own finances, regardless of how they are paid.
As you embark on your earned wage access discovery for 2023, be sure to check out our new Buyers Guide, which explores these myths along with other key items your organization should consider as you look to level up your employee benefit programs this year.
You can download it here, or visit our website at instant.co to learn more about Instant’s comprehensive suite of fee-free on-demand pay solutions.