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On-Demand Pay


In a world where 4 in 10 Americans can't cover an unexpected expense of $400 and workers are quitting their jobs at higher rates than at any other time on record, HR managers are searching for tools that both encourage worker retention and improve employees' ability to better control their finances.

Several firms are adopting services that support on-demand pay for earned wages, a type of payment system that promises to disrupt traditional weekly, biweekly and monthly payment schedules.

Mainly targeted to part-time workers or low-income employees, pay on demand—or what advisory firm Gartner has dubbed flexible earned wage access (FEWA)—is projected to grow quickly. Gartner's data shows that less than 5 percent of large U.S. companies with a majority hourly paid workforce are currently using a FEWA solution. This is expected to increase to 20 percent by 2023.

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On-Demand Pay Broadens Workers' Financial Well-Being
SHRM | Sep 2019

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Law Firm Articles

Many states require employee authorization for deductions from pay in connection with advances or overpayments. Because of these requirements, employers should consider whether and when internal advances amount to "deductions" from wages that are subject to state law restrictions. This is an important consideration for employers with employees in many states, as wage deduction laws vary from state to state, and employers need to understand the wage deduction authorization requirements for each state (for example, in some states, a blanket authorization at the time of hire is permissible, while in other states it is not).
On Demand: It's Not Just About Movies—It's About Pay!
Seyfarth | Mar 2019

A fundamental issue raised by wages-on-demand products is whether the advances being provided are loans governed by federal or state lending laws. Critics of wage advance programs view them as an updated form of payday lending. The federal Consumer Financial Protection Bureau (CFPB), however, has acknowledged that some wage advance services do not involve an extension of credit and thus aren't covered by its payday lending regulation. Unfortunately, the Bureau failed to provide detailed guidance on how to determine which business models trigger the rules and which do not.
What Employers Need to Know About Advance Wage Payment Products
Womble | Aug 2019

California's labyrinthian wage and hour laws make traditional payroll compliance hard enough. Instant pay apps, which in some sense turn every day into a potential pay day, inject additional legal considerations into the mix that employers must appreciate as they evaluate whether (or how) to offer this type of benefit.
Pay Day, Every Day? Instant Pay Apps And Their Wage And Hour Implications
Sheppard Mullin Richter & Hampton | Dec 2019

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