Earned wage access (also known as EWA) is a new trend in modern payroll services that helps employers attract and retain employees. If you’re wondering ‘why this’ and ‘why now,’ the answer is Fintech. Technology has evolved to a place where it is not only possible, but also practical, to offer alternatives to the traditional bi-weekly, paper checks only payroll cycle.
In this short guide, we’ll dig into the mechanics of how EWA works for both employees and employers to give you a better understanding of this key benefit. According to recent surveys, as much as 76% of the workforce, across all age groups, want EWA and believe it’s important for employers to offer. Some will even consider leaving their job for another employer who offers this unique benefit.
The employee-driven demand for EWA highlights an opportunity for employers, staffing agencies, and payroll providers to embrace this new trend in payroll flexibility.
How Does EWA Work?
EWA is an alternative to the traditional payroll cycle that enables workers to access accrued wages on demand. While some companies have offered EWA for about a decade, their EWA offerings were manual and, as a result, very tedious. As the years passed, however, new and better solutions to EWA – and payroll in general – began to emerge.
How EWA Works for Employees
EWA uses a tech-enabled platform that integrates with payroll processing software to track hours worked and calculate earnings in real time. Employees can then opt to have their accrued wages advanced prior to their next payroll cycle (potentially as soon as shortly after a shift is completed).
Taking an advance of earned wages results in a disbursement of funds allocated by paper check, direct deposit, digital wallet, or reloadable debit pay card. The employee can then access the funds just like normal wages, except with much more flexibility and on demand. Traditionally, employees would have to wait until the next payroll cycle to receive a paper check. The on-demand nature of EWA cuts out the wait time while also helping employers attract, retain, and engage talent.
It’s important to note that there are different business models for EWA services. Some providers offer instant access to wages while others have a short waiting period. And again, wages can be paid out in various ways – from paper checks to loading reloadable payroll cards.
How Does EWA Work for Employers?
One concern that many employers have is how this new way of payroll access affects their payroll process. Payroll is a big investment of time and labor. Even relatively small companies spend an average of four business days processing their payroll.
Automated payroll processes and outsourced services have become a common way to trim the expense of costly payroll services. Thus, it’s easy to understand why employers wouldn’t want to further complicate the process.
EWA Supplements (Not Replaces) Your Existing Payroll Process
The good news is that most advanced EWA solutions integrate with your existing processes without changing them. With a modern Fintech solution (like Juice’s Pay Today service), you can continue to process your payroll on a monthly, or bi-weekly schedule for employees who prefer that. In other words, it does not detract from your payroll processes, it simply adds more flexibility for employees.
The modern Fintech solution that enables instant access to payroll plugs into your payroll process and connects it to a technology platform that facilitates pay disbursement to your employees.
Importantly, EWA is not a payday loan – which can often perpetuate cycles of debt that make employee financial problems worse. The “earned” part of EWA means that employees can access the funds as they are earned, rather than on specific paydays.
EWA Allows Employers to Offer Pay Flexibility [and Be a Hero to Their Employees]
For the past several decades, payroll options have been restrictive. Employees often needed a traditional bank account in order to get paid through direct deposit – something that forced unbanked or under-banked workers to seek out expensive alternatives like check cashing services.
With modern Fintech, employers can offer more flexibility to employees to get paid the way they want, for example:
- Earned Wage Access
- Access to a Personal “Neobanking” Account
- Digital-First Pay Solutions (App and Mobile Wallet)
- Reloadable Pay Cards
- Traditional Direct Deposit
- Freedom from Traditional Banking Institutions
- Ability to Choose When to Get Paid (On-Demand or Regularly Scheduled Payday)
Benefits of EWA for Employers
EWA is desirable for employees, but it also offers many benefits for employers. The ability to offer pay flexibility can reduce financial stress across the workforce, leading to improved productivity and better retention rates. Plus, employers benefit from an easy-to-implement payroll perk that attracts job candidates.
At the end of the day, employers get:
- Positive Work Environment
- Stronger Loyalty
- Less Turnover
- More Job Candidates
- More Productivity
- Better Engagement
How Does EWA Work for Staffing Agencies?
Staffing agencies, which employ about 3.1 million workers in the US, are one of the biggest benefactors of EWA. In a sea of competition all contending for the same pool of candidates, EWA can help a staffing agency differentiate their service offering and attract new workers. In short, offering this payroll perk makes agencies a hero to employees and client companies.
While most employees at a staffing agency see the benefit in flexible payroll, it’s those who live paycheck-to-paycheck that see EWA as a necessity. Comparatively, offering EWA is an easy, low-cost way to make a big difference in an agency’s ability to recruit and retain staff.
How Does EWA Work for Payroll Providers?
EWA is a great way for payroll providers to stand out in the crowd. The market for outsourcing is becoming increasingly crowded – as 73% of organizations currently outsource some form of payroll. By offering the benefits that employees want most, your client companies will see better retention, better productivity, and happier employees.
Empower Your Employees with EWA & Modern Fintech
The ability to offer EWA, facilitated either through the employer, payroll provider, or staffing agency, meets the needs of both employees and employers. By relieving financial stress with more control and greater flexibility, employers benefit from happier, more invested employees that get more done.
Are you ready for a low-cost solution that is proven to help retain and attract employees?
Learn how Juice’s Earned Wage Advance solution can help.
