Research shows that employees want their employer to care about their financial wellness. Included in that is the ability to access wages they have already earned before the next payday. In fact, 76 percent of workers across all age groups say it’s important for employers to offer Earned Wage Access (EWA).1
EWA may be something you’ve never heard of, but if you’re looking to recruit and retain top employees, this is an important tool in your HR toolbox. A benefit that employees want with no cost to you and is easy to implement sounds like a dream. Here are the details.
What is EWA?
Earned Wage Access allows employees to receive the pay they have already earned before payday. It’s not a loan. It’s the employee’s earned wages.
How it works is simple. Using the EWA feature with an electronic pay card solution like Wisely® by ADP®, the employee can receive a percentage of pay already earned in a fully self-service manner via a web or mobile app. The employee has already worked the hours. That money becomes available immediately, and the pay on payday is smaller–but only by the amount already received if the company chooses an EWA solution like Wisely that does not charge the employee a fee to access their earned wages.
State law governs how often companies need to pay employees, but generally, people get paid about twice a month. Emergencies, however, don’t operate on an every-other-Friday schedule.
EWA gives employees the flexibility to be paid when they need money rather than having to wait. For instance, if you blow a tire or crack a tooth, without EWA, an employee without funds readily available may have to wait until the next payday or take out a payday loan at a high-interest rate. With EWA, as long as the employee has worked the requisite hours, they can withdraw a portion of that pay.
The system can tie into the company’s time tracking system (or for salaried exempt employees, into the number of days they have worked), so as long as that is up to date, the employee can access income. Or there can be other solutions if the systems don’t speak to each other.
Depending on the EWA solution selected, the company may be able to control the number of withdrawals per pay period and set the maximum percentage withdrawal amount available for employees. At all times, the employee clearly sees the balances within the app. This way, there are no surprises on payday.
How EWA helps retention
Ninety percent of Americans identify finances as a critical cause of stress. In November 2021, only 68 percent of Americans could cover a $400 emergency with cash or a cash equivalent. That number dropped to 51 percent by March of 2022. Inflation is causing financial stress even for people who have steady employment.
EWA solves an immediate problem and can prevent late fees, overdraft fees, and high-interest loans. While only 20 percent of employees without EWA thought they would use it regularly, 67 percent of people with this benefit end up using it every pay period or every other pay period.1 This means it fills a need people didn’t even know they had.
While you may think this is a benefit for young or low-income employees only, it turns out that employees in all age ranges and income levels said they would like to see this as a benefit–in fact, most people want it.
How EWA helps recruitment
If you’re struggling to recruit enough employees–a problem many companies are having–offering a benefit that your competitors do not provide can be a substantial recruiting advantage. Ninety-six percent of employers who offer EWA said it helps them attract candidates, according to an ADP study1. According to another study from PwC, found that, employers received twice the number of job applicants when offering EWA.
EWA is relatively easy and inexpensive to implement. The perceived costs and complications are the most significant things that keep businesses from going this route. Still, if you go with an established provider, it can be simple to implement, and the administrative costs are Potentially non-existent.
Because it’s popular across all age and income groups, you can set it up as a benefit for everyone–from entry-level to executives. It won’t be the top reason people will take a job–that’s still going to be salary–but it will definitely be a competitive benefit.
Helping your employees with their finances reduces their stress and increases your retention and recruiting prowess. It’s a winning strategy for every business.
To learn more about EWA and how to offer it to your employees, check out ADPs complimentary webinar: Offering EWA: Strategic and Compliance Considerations – Thursday, Sept 8th / 2 pm ET
Register Now: Offering EWA: Strategic and Compliance Considerations – Thursday, Sept 8th / 2 pm ET
Also, check out the research that covers Earned Wage Access benefits in today’s world of work