With so many new benefits emerging for companies, executives and human resource leaders have been on top of the changing landscape.
A perfect example is on-demand pay. On-demand pay benefits both employees and employers. Companies can easily set up an on-demand pay program that’s fully compliant by working with an experienced provider. On-demand pay allows employees to access wages immediately, rather than waiting for a traditional paycheck at the end of a two-week period. Employees and companies will embrace it because of the benefits involved for all parties and the changing expectations of employees.
Here is an overview of the benefits of adding on-demand pay, how companies can offer it, and the compliance requirements you must follow.
What is on-demand pay?
When a worker completes their tasks or worked the required hours, they earn a certain amount of money. Traditionally, workers will receive their earned wages every two weeks. For example, if a worker earns $300 a day, it may not seem fair to them that they have to wait up to two weeks to receive their money.
The on-demand pay model addresses this issue. On-demand pay simply allows employees to access their wages as soon as they have been earned instead of waiting.
The benefits of on-demand pay
There are obvious benefits from workers being able to access wages faster than workers are accustomed to. Data from the Federal Reserve indicates nearly 40 percent of American workers would struggle financially to cover $400 or more of unexpected expenses. Knowing that they may always access their earned wages right away can reduce an employee’s stress level.
On-demand pay offers them a fast and financially better solution than they had in the past. If employees need to access money fast, they’d have few options. Often, they would be forced to use services with high fees, including credit cards, payday loans, or bouncing a check.
The new generation of workers is also used to an on-demand lifestyle with easy access to entertainment like movies and food from delivery services. It makes sense that is how pay would evolve.
On-demand pay can also yield significant benefits for employers. Financial stress is among one of the top contributing factors to disengagement in the workplace. If an employee doesn’t have to stress about their personal finances, they will more likely be engaged and productive.
There is strong data to indicate offering on-demand pay can help an employer retain current workers and attract new ones. Research has shown that approximately 79 percent of workers state immediate access to earned wages is a factor that could significantly influence their decision to look for work at another company. That means offering on-demand pay to your workers can give them another reason to stay with the organization.
It’s also a great recruiting tool for businesses. A Ceridian survey found that its clients who offered on-demand pay closed job openings 15 percent faster and lowered attrition rates by 21 percent.
On-demand pay compliance
If a business decides to offer on-demand pay, specific federal regulations exist regarding compliance. The federal government requires that:
- Employers allow employees to choose where their money gets sent.
- Employers do not charge fees for using an on-demand pay service, payment delivery, and starting an account.
- Employers choose on-demand services whose connected prepaid cards are available through several reputable merchants.
- Workers can use the service to access their wages at no cost.
- Workers are appropriately informed that setting up and using an account does not come with any fees.
Getting started with on-demand pay
On-demand pay is rapidly becoming a must-have benefit in the United States. Numerous large corporations and others have offered it to employees, including Walmart, McDonald’s, and Taco Bell.
It is important that your employees thoroughly understand how to take advantage of on-demand pay options before fully rolling out this benefit. That’s why it is crucial to work with a provider with an excellent track record and the on-demand features you want for your business and workforce.
Edenred’s AnytimePay offers everything your company needs to operate a fully compliant, on-demand payment program. With Anytime Pay, employees can add funds from their paychecks to a prepaid card. The card can access money for food at any time. The funds are available within seconds of being requested. Employees will always have money in between paydays for food, including eating at restaurants, buying groceries, or ordering from delivery apps.
The payments are processed each pay cycle. There’s no debt collection or other uncomfortable administrative work. The business has complete control over the program while Edenred helps maintain all compliance standards.
On-demand pay is an excellent benefit for your employees and company. Schedule a meeting today, and we’ll be happy to get started or provide you with more information.