Implementing Earned Wage Access Is Easier Than You Think

BY DARLENE MIRANDA

Noother department understands the adage of ‘time is money’ better than the payroll team. Literally their entire focus revolves around time and money.

So, it makes perfect sense that the payroll team would make it a priority to avoid unnecessary time-consuming tasks. Interestingly, that approach is especially helpful when considering new technology. Take earned wage access as an example. The rapid rise in popularity of earned wage access, where employees and contractors can access their earned income before payday, has also seen a rapid rise in the number of providers, with each using different approaches to deliver the service. The wide variety of approaches makes it difficult for payroll leaders to wade through the marketing hype to really understand the impact to their time when it comes to implementing and maintaining this new technology.

By nature of their position, payroll professionals spend dedicated time defining processes that ensure people are paid the right amount on the right day. Now, we understand that change can be daunting, especially when it can seem to repudiate established norms. But, if done the right way and with a trusted provider, change can be good for everyone involved: employees, employers, and payroll professionals.

In my position in product development, it’s critical to understand the challenges payroll professionals face daily. I’ve had so many conversations with your colleagues and the questions we typically hear include:

• If I do implement EWA, will it change existing payroll processes?

• Will it increase my team’s workload?

• Will it increase calls from employees? And if they do call, will I be able to easily access the information I need to help them?

• And most importantly, do my employees really want this and will they be motivated to adopt it?

Here are four key thoughts to help address these common EWA questions.

TIME IS MONEY…MONEY IS TIME

Earned Wage Access platforms were created with the intent for the payroll professional to not even notice they were there - in a good way. Seamlessly integrating into all the major payroll systems easily and efficiently is generally how EWA solutions make that happen. This allows employers to offer EWA while still maintaining their standard payroll distribution schedule. Some EWA providers only require information needed to verify employment, verify direct deposit accounts, and verify earnings information. This data makes it easy for employees to enroll by simplifying employment verification. Once employees enroll, they are immediately presented with accurate information about their earnings with the ability to access earned wages should they need to - even throughout pay period transitions. This provides employees with the knowledge of exactly how much they have earned, empowering them to make the best financial decisions for themselves or family.

Some providers have even created features to combat the time-consuming off-cycle payment to extend EWA capabilities to increase operational efficiency. Companies spend an abundance of time and money each year making payments outside of their usual payroll schedule. This labor-intensive process often features the creation of paper checks for bonuses, termination pay or to make other necessary off-cycle payments to employees. The creation of the paper check and the costs to overnight it to the recipient can cost upwards of $50 each. DailyPay’s Cycle allows the disbursement of electronic off-cycle payroll payments, instead of waiting for a paper check to be processed, distributed, and cashed.

IS THE JUICE WORTH THE SQUEEZE?

It’s estimated that the total cost to hire a new employee can be three to four times the position’s salary. However, with earned wage access, research shows that employees stay longer on the job, thus reducing the pricey expense of constantly filling vacant positions. According to research from the Mercator Advisory Group and DailyPay, employee tenure increases by an average of 35% when employees have access to earned wage access. And according to Harvard Business Review, employees who stay longer at a job are more productive. So, the combination of lower recruiting costs, the impact of more experienced and engaged employees, and increased operational efficiency for payroll teams can drive significant savings for a company.

WILL MY COMPANY HAVE TO FUND THE EWA PAYMENTS?

With some Earned Wage Access providers, you won’t incur any risk of there being an impact to your company’s cash flow because most solutions don’t have any pre-funding requirements for employers. It’s critical to work with a trusted partner that can scale with your organization.

WILL MY EMPLOYEES EVEN FIND EWA USEFUL?

EWA has emerged as one of the most adopted benefits, outside of health benefits. It’s become the expected way to get paid. In fact, according to a study from ADP, 75% of surveyed millennials say that the availability of earned wage access would influence their acceptance of a job offer.

The two-week pay cycle is a paradigm that has been ingrained into our work culture since World War II. But the marriage of technology and the expectations of an ‘on-demand’ world has changed the way people will be paid forever. Today’s worker understands this. And more and more, forward-thinking employers do as well. So, who’s getting the top talent in one of the tightest labor markets in recent memory… your company or your competitors offering EWA today?

Darlene Miranda, Vice President and General Manager Enterprise Product, DailyPay Darlene.miranda@dailypay.com www.dailypay.com

At HRCI, we have the honor of working with thousands of HR professionals at varying stages of their careers. Recently, three HR professionals – Amela Orlovic, Kaitlin Memmen and Alexandra Miller – who are working on their master’s degrees at Georgetown University gave HRCI a front-row seat to an important capstone project titled Establishing and Maintaining Trust. Not only are their findings compelling, their chosen topic was a great reminder about something we assume but don’t necessarily articulate: The Importance of Trust.

According to PwC’s 2022 report on trust, 51 percent of business leaders and 41 percent of employees strongly agree that trust is a leading priority at their organization. However, operational and behavioral elements of trust are not typically defined. HR can rectify these challenges.

It’s no wonder that trust has been eradicated in business, as well as society at large. Egregious events such as the fall of Enron, fraudulent Wells Fargo accounts, the tragedy of the Boeing 737 MAX and the demise of Silicon Valley Bank topped the headlines in recent years. Economic anxieties, mass shootings, COVID-19 and the #MeToo movement have illuminated significant cracks in society. According to the 2023 Edelman Trust Barometer, business is considered more competent and ethical than media and government. The same report goes on to highlight that in our polarized society, among those feeling the divide, the employer is the only trusted institution.

Taking steps to address trust requires a foundational understanding of what trust is to employees. The research conducted by Orlovic, Memmen and Miller shows that trust is personal. It is based on a positive expectation that an individual will not act opportunistically at another’s expense, i.e., they will be ethical, honest and professional. Trust in capability and consistency – for example, that a manager can and will do something they’ve committed to – is known as Cognitive Trust. The other side of trust is Affective Trust – characterized by feelings of security and perceived strength of the relationship. Both cognitive and affective trust are integral parts of psychological safety.

As teams work together, trust builds through interactions that demonstrate that managers and other team members can be trusted, both cognitively and effectively. By making sure everyone knows what’s expected, giving employees a safe space in which to admit mistakes, and being willing to give and accept feedback reinforces the building blocks of trust in the workplace.

Trust and employee engagement go hand-in-hand. The research from Orlovic, Memmen and Miller revealed that employees who trust their employers experience 74 percent less stress and 40 percent less burnout. One-third of employees indicated they would stay longer with an employer if its leaders kept their promises, and 28 percent said they would extend their tenure if transparency was practiced at all levels. Research shows that highly trusted workplaces enjoy 50