It doesn’t take much business experience to know that getting your compensation strategy right is crucial for recruiting and retaining top talent. But, paying employees isn’t only a question of how much. You’ll also want to consider your payroll options, or how to pay employees as well. Especially for those managing hourly workers. Did you know:
- Almost a quarter of American households are unbanked or underbanked. Either they don’t have a bank account or, if they do, still rely on non-traditional financial services like pay day loans or check-cashing services.
- More than 125 million Americans live paycheck-to-paycheck, and 40% couldn’t handle a financial emergency of more than $400.
- And finally, 80% of workers want their employer to provide benefits that directly impact their financial wellbeing
If you consider these facts, especially in this intense war for talent, you’ll understand why finding the right payment methods and paying employees faster is very important. In fact, it could give you a competitive advantage. And, for hourly workers like those in healthcare, hospitality and restaurant industries with turnover as high as 150%, HR leaders must find creative ways to attract talent and keep high performers engaged during these turbulent times. Let’s take a look at the options.
How Can Employers Pay Employees Faster?
Today, there are a number of ways employers can pay employees that don’t involve a trip to the bank. In addition to the traditional paper paycheck, payroll options include:
- Direct deposit
- Cash
- Physical pay cards
- Digital pay cards / Digital wallet payment
It’s important to note here that employers can also pay employees faster by activating something called earned wage access (EWA), also known as on demand pay. This benefit allows employees to view and access wages they’ve already earned and deposit funds into a bank account, onto a physical card, into a digital wallet app or get cash from a participating retailer.
Offer employees more flexible pay options with Paycor
Employees can’t afford to wait two weeks for payday. That’s why Paycor offers flexible pay options organizations can utilize to support their workforce, increase retention, and attract talent.
With OnDemand Pay built directly into our payroll solution, Paycor helps by enabling employers to provide employees access to their earned wages. It is available for all Paycor customers. Additionally, with OnDemand Pay, workers can easily access earned wages through a physical pay card or a digital pay card that can be spent using a digital wallet. By empowering employees to see what they’ve earned and access funds when they need it through Paycor Mobile, the peace of mind positively impacts employees who will come to work less stressed.
Paycor’s Mobile Wallet feature offers employees secure, timely access to wages and resources like financial wellness and counseling.
Key benefits include:
- Receive direct deposit up to 2 days prior to payday with the Paycor Visa® Card
- Access budgeting tools and goal-based savings to manage your income
- Track earnings, bills, and spending in one place
- Access free financial counseling or self-paced courses to help plan for the future
Direct Deposit
The most popular method of paying workers is through direct deposit. In fact, 94% of employees get paid this way, according to the 2020 “Getting Paid in America” Survey. When you consider the advantages, this is unsurprising:
- Instant Funds for (Most) Employees
If employees have an accessible bank account, they can get their pay instantly. No more queuing up at the bank then being forced to wait for the funds to clear. This is especially useful for paying employees who are remote, on vacation or just busy. - No Printing Cost
Direct deposit saves employers the time and cost of printing (or worse, handwriting) individualized pay checks each pay period. (There may still be state laws mandating physical pay stubs—see below for more. - Data Security
When you go paperless, there’s less sensitive information out there that could end up in the wrong hands. - Reduced Chance of Fraud
Checks and payroll cards can be lost or stolen, whereas with direct debit you know immediately that an employee’s pay has ended up in the right hands. - No Employee Fees
Employees want to be to use as much of their pay as possible, and direct deposit should mean they avoid wasting big chunks of their wages on fees.
What are Pay Cards?
Pay cards are cards through which employees receive wages in place of paper checks or direct deposit. Employers load their employee’s pay onto a pre-paid debit card at the end of each pay period. This method gives employers a way to pay employees electronic, while catering to all employees, not just those who have a conventional banking setup.
How Are Employers Using Pay Cards?
Employees are given a card with a PIN which is automatically reloaded each pay period. Employees can withdraw money or make purchases just like they would with a traditional debit card.
There are a few reasons employers might consider this a viable option:
- Accessible for Unbanked and Underbanked Employees
Payroll cards put salaries in the hands of all employees, no matter their banking setup. New employees won’t be forced to create new accounts in order to be paid. Unlike with paper checks, unbanked employees aren’t forced to pay fees to cash-checking services. - No Fees for Employees
Just like direct deposit, employees should be able to access their funds without cost. - Paperless Possibilities
Payroll cards offer companies an alternative way to cut down on the time and cost spent printing checks. - Multiple Uses
All benefits and reimbursements can be transferred to the same card, keeping things simple for you and your employees. - Employee Protection
Payroll cards are essentially debit cards, and they receive the same protection from the Federal Deposit Insurance Corporation (FDIC) against fraud or loss.
How Can Employers Utilize Digital Wallet Payments for Employees?
To help make things even easier for employees, pay cards can also be used and stored completely digitally. This expedites payment and eliminates the wait for physical cards. Employees just opt to securely store their pay card information within a virtual wallet app on their smartphone.
Choosing the Right Payment Method for Your Employees
Now that many American workers are looking for help with financial wellbeing (80% to be exact) it might help to consider all of the options available to alleviate financial stress. Employees can be more focused at work when they are not consumed with worry about their financial situation. Additionally, it has been proven that employees with early access to earned wages are more likely to stay at a company longer and have increased morale (HBS 2022).
Employers Need to Be Aware of the Risks
- Provide more than one option
Legally, Employers must offer an alternative to payroll cards—like paper checks or direct deposit. - Potential Costs
Employers can face fees to set up and maintain payroll card program. And while they aren’t allowed to pass these fees on to employees, ATMs fees and transaction costs can still eat into salaries. - The Inconvenience of Lost Cards
The FDIC do offer protections, but we all know that in reality it’s rarely that simple. If a card is lost or stolen, employees might not realize immediately. When they do, they could end up low on cash while waiting for cards to be replaced and funds reimbursed. - Beware of Local Regulation
Before implementing a payroll card program, employers should look out for any state or local legislation regulating or limiting the use of payroll cards.
Don’t Forget Paystubs
Remember, even if you’re attempting to go paperless, check the legislation in your state. Many states require employers to offer pay stubs, and some specify these must be printed.
How Paycor Helps
Finding the best way to pay employees isn’t easy, but partnering with the right payroll provider can help. Paycor offers multiple payment methods, including direct deposit, payroll cards, digital wallet payment and paper checks. What’s more, we automate the creation of pay stubs to comply with the labor law wherever you are. Our intuitive and easy-to-use software simplifies the entire payroll process and with dedicated support from HR experts, you can be sure you’re always compliant with ever-changing regulations.