Earned wage access (EWA) is a company benefit that allows employees to receive part of their paycheck before payday. It is also known as on-demand pay and is frequently offered as an option for hourly workers. Companies like Walmart, Amazon, and McDonald’s offer EWA as part of their benefits.
To access earned wages early, employees need to download an EWA app that partners with their employer and link a bank account or debit card where the money can be deposited. The app is usually tied to the employer’s payroll system and may show how much of the paycheck has been earned at the end of each payday.
Apps typically limit the amount that can be requested each day or pay period, with half of the earned wages being a common limit. The employer may also set its own restrictions. When an advance is requested, the app will provide information on how much can be received and when, as well as any transfer fees. If the employee agrees, the funds are usually deposited into their account within a day or two. Fees may be deducted from the advance before it is received or withdrawn with repayment. On the next payday, any amount received in advance will be deducted from the paycheck.
Earned wage access can be a valuable tool for employers to attract and retain top talent. It can help alleviate financial stress on employees, which can be a distraction at work, and improve productivity. It also maintains payroll integrity with no separate payroll cycles, additional withholding, paper statements, funding, or money movement required.
EWA has gained interest not only among workers in the gig economy but also in “traditional” businesses. It allows employees to access their pay when they want, rather than according to a scheduled determined by the employer. This flexibility can be beneficial for employees who need access to their wages before payday. However, employers have questions regarding the actual date of payment for tax withholding, depositing, and reporting purposes.
Employers can use EWA as a tool in their recruitment efforts, as it represents an additional benefit for potential employees. It can also help reduce turnover and associated costs, as employees who use EWA may be more loyal and want to stay with the company longer. EWA can help to relieve financial stress and eliminate the need for employees to wait for their next paycheck to access pay.
Proponents of EWA argue that it provides employees with an alternative to high-cost forms of credit, such as payday loans. With many employees lacking emergency savings and saving little, EWA can help them meet financial needs in the middle of a pay period. Reports have shown improved recruitment and retention rates among employers that offer EWA. It can also boost company loyalty among employees, particularly for younger workers.
However, some consumer advocacy groups have raised concerns about fees and other problematic aspects associated with certain EWA services. It is important for employees to carefully consider the terms and fees associated with EWA before using it.
In conclusion, earned wage access is a company benefit that allows employees to access part of their paycheck before payday. It provides flexibility and financial security for employees and can be a valuable tool for employers to attract and retain top talent. However, it is important to consider the terms and fees associated with EWA before using it.