For some workers, waiting around for payday can be inconvenient. For others, it's a real struggle to make ends meet. To help bridge the gap, some employers are offering workers faster access to their pay.
South Carolina restaurant chain Lizard’s Thicket has recently begun offering a voluntary benefit that allows its employees to access their wages ahead of scheduled paychecks. This helps workers avoid other options available to them if they need money fast like payday advance loans when they need money in a pinch.
Lizard’s Thicket — which has 15 locations in the Palmetto State and more than 700 employees — partnered with tech provider DailyPay to implement the program. “DailyPay’s solution makes our employees happier because the instant access to their earned wages makes them more financially secure,” says William Johnson, payroll & benefits manager at Lizard’s Thicket. “Although they are assessed a fee per transaction, the amount is miniscule and straightforward compared to other options.”
Except for a slight dip in 2015, employers offering payroll advances has hovered around the 20th percentile for the past few years, according to Society for Human Resource Management’s 2017 annual study.
At Lizard’s Thicket, more than a third of all eligible employees are using DailyPay after its implementation two months ago. The benefit is free to the employer and has been popular with the employees of the southern dining establishment.
“DailyPay’s solution makes our employees happier because the instant access to their earned wages makes them more financially secure,” adds Johnson.
Financial wellness remains a challenge
“As we all know, paycheck advances are not financial wellness tools and they often lead to financial mismanagement,” adds DailyPay’s CEO Jason Lee.
When the employee uses DailyPay, they see all of their earnings accruing daily into their available balance, he says. In addition, they have the ability to transfer any of those funds instantly. This means the employee views this balance as literally “their money” and as such budgets it as she would her own money.
With these early-access-to-pay programs, the positives for workers are best realized by using the right daily payment method.
“Not all daily pay programs are created equal,” says Lee. “To no one’s surprise, the rise of this new benefits category brings with it new questions and choices about how to best implement a daily pay benefit for your specific employee base.”
Once the decision has been made, the impact on workers is profound, according to Lee. “By giving people the power to instantly access their earned wages before payday, we crack down on financial stress. When given this daily pay benefit, employees are better able to thrive in the workplace when they are not weighed down by financial burdens like paying bills late,” he says.
There are a few extra steps that need to be taken like creating the roster and earnings files and sending them to DailyPay daily as well as making direct deposit account updates from DailyPay once per payroll cycle, Johnson notes. These processes were not difficult nor technically challenging, but it is a part of the startup process.
“Overall it is truly a simple platform that is designed for the company who doesn't have the time or desire to learn another complex system,” he says.
And for employers, a simple and effective program such as early access to pay can only enhance a company’s bottom line.
“By arming employees with financial security, we have seen that from a business perspective, this has helped with recruiting, engagement and retention costs,” Lee notes.
And financial literacy is not lost on employees receiving early access to their pay.
“Our ultimate goal is making sure we are empowering employees to achieve financial wellness,” Lee says. “DailyPay has a Financial Literacy section where employees have access to materials that help them budget, choose the right bank, plan for retirement, and other necessary tools to get them on the right track.”
“Overall, our experience has been very positive,” Lizard’s Thicket’s Johnson adds. “Of course, some of our more technology-challenged employees found the DailyPay system more difficult to access than others, but DailyPay has a reliable customer service line for employees to address those issues.”
He adds, “Our high utilization rate speaks for itself, the benefit has been a hit with our employees.”
Register or login for access to this item and much more
All Employee Benefit Adviser content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access