Open Enrollment – Financial Benefits

By Jeanniey Mullen

“With employers adding financial benefits like student loan assistance to their open enrollment offerings, DailyPay offers a solution to another common financial challenge: gaining early access to earned wages.”

Why You Should Add a Daily Pay Benefit to Open Enrollment Offerings

As companies battle high turnover rates and benefits packages become increasingly competitive, many employers are scrambling to find cost-effective ways to increase retention. With many new voluntary benefits on the market, ranging from student loan assistance to company-funded babysitters for date night, it may seem difficult to find benefits that add value for all employees. One of them, however, is on-demand pay, which appeals to the 78% of the workforce living paycheck to paycheck. By allowing employees to draw from their earned but unpaid wages on-demand, companies are citing reduced turnover, increased employee engagement, improved timeclock compliance, and increased productivity.

The future of pay is employee-centric

Employees are accustomed to bi-weekly or semi-monthly payroll schedules, but these inflexible systems cause innumerable issues. When paydays are not aligned with an individual employee’s bill due dates, such as a mortgage payment, employees may be consistently adding late payment fees to their largest and most anxiety-inducing expenses. This constant pattern of “treading water” financially makes it impossible to save money and create any type of emergency fund. And it continues the paycheck-to-paycheck cycle. This phenomenon is not limited to lower-income workers. In fact, 28% of employees earning between $50,000 and $99,999 live paycheck to paycheck, and 70% of them are in debt. Whether the issue is not earning enough to make ends meet, poor financial management or anything in between, a daily pay benefit can help empower employees to lead financially healthier lives.

Adding this benefit to your open enrollment offerings will round out your company’s benefits package. It will make your compensation seem even more attractive to your employees. It will also make the benefits election process less daunting to employees, as it will be completed in full once annually, instead of in smaller increments throughout the year. This can make the changes less intimidating, as well as get employees excited to utilize earned wage access during the financially taxing holiday season. Most importantly, adding this benefit will cost to your company nothing. While increasing de minimis benefits, such as occasional catered meals, in-office snacks and beverages, or employee birthday gifts may seem like the right answer for companies struggling to remain competitive on a limited budget, offering a daily pay benefit will have a much more meaningful effect on employees than those small treats. Higher-value benefits such as tuition assistance are also steadily rising in popularity in high-turnover sectors such as the quick-service restaurant industry, but these programs still do not benefit every employee.

Offering daily pay doesn’t mean running daily payroll

Many companies are concerned that offering a daily pay benefit means they will have to run payroll daily. That’s simply not the case. DailyPay works with your existing payroll system, so after the initial implementation, no further work is required from the internal payroll/benefits team. DailyPay is designed to pair seamlessly with a number of payroll providers’ systems, such as ADP, Ceridian and Paycor. Payroll is run on the same systems and schedules as usual, and any transfers requested from employees come directly from DailyPay’s balance sheet. DailyPay is then repaid at the time payroll is run for all employee transfers during that pay period. Because the employees, or end-users, are responsible for the small, ATM-like fees whenever they make a transfer, there is no cost whatsoever to the employers. This is a key differentiator from so many others in the marketplace. Employers can also elect to cover the cost of the transfers as an additional employee benefit if they so choose. Employees are free to use this benefit as often as every day or as infrequently as once a year, dependent on their own individual financial needs. They will only be charged when they actually request a transfer.

Choosing the best daily pay benefit provider

All earned wage access providers operate differently, which is why choosing the right provider is so critical. There are many “wolves in sheep’s clothing” marketing themselves as daily pay providers who are really just neo-payday lenders. These companies use a wide range of predatory practices, from requiring employees to “tip” them for their services to charging monthly subscription fees, to debiting employee bank accounts. Many also allow employees to debit a flat percentage of their earned wages, such as 50%, without accounting for wage garnishments, such as child support or benefits in arrears. This creates myriad administrative and legal issues for payroll teams when funds are then overdrawn. DailyPay uses a proprietary algorithm that includes child support and other wage garnishments in the calculation of an employee’s available balance, which ensures that the employee’s legal responsibilities are taken care of before anything else. Our system allows employees 24/7/365 visibility into their available balance in our app, which can also be used as a budgeting tool. Our fees for the end-users are also very transparent: $2.99 for a same-day transfer of any size, and $1.99 for a next day transfer, with no cost whatsoever to the business.

Providing employees much-needed financial security

According to our user surveys, while 82.5% of employees use DailyPay to pay bills, others welcome the security it provides just by being there for emergencies. There have been many anecdotes about funds not being available for urgent automobile repairs or unforeseen medical bills until the employee used DailyPay to access their earned wages. The safety net and empowerment that this solution creates helps many struggling Americans feel less stressed and allows them to begin to take control of their finances. They can feel the sense of pride that comes from the ability to pay their bills on time. They have the security of knowing they have a simple back-up plan for any financial emergency. They have the joy that comes from being able to treat themselves or their family members to small gifts in a way they weren’t able to before.

We’ve heard anecdotes from users who are now able to avoid paying late fees on their mortgages, used transfers to cover emergency medical bills for their children or pets, and others who could finally treat themselves to a little pampering with a weekly manicure. Happier, more grateful employees whose needs are being met are much more likely to give back to the company providing them with that security, which in turn results in happier customers frequenting your business. This goes back to a simple business principle: when you take care of your employees, they take care of you.