This is the second in our five-part Q&A series addressing your questions from our recent seminar with the APA. These are more specific questions regarding the logistics of on-demand pay.
1) In order for an employee to participate, would all of their pay need to be direct deposited into a DailyPay account?
There is no need for an employee to change the way they get paid in order to use DailyPay. Transfers from DailyPay can be direct deposited onto a pay card or debit card or into any checking or savings account. On the employer’s side, all enrolled employees will have their pay deposited into a DailyPay account, from which transfers will be issued and remainder pay will be drawn from on payday. However, this is a clerical issue that will not affect the accounts or pay cards employees currently use to receive their pay.
2) How does DailyPay know how many hours an employee has worked or how much of a transfer they are eligible to receive?
DailyPay works in conjunction with the employer’s payroll and time management systems and receives daily reports on each enrolled employee’s hours. DailyPay then takes that time clock report and subtracts any taxes, wage garnishments, benefits payments or other deductions to determine how much each employee is eligible to transfer.
3) How often would an employee receive on-demand pay? If multiple transfers are made before the scheduled payday, what happens to all the benefit deductions and required taxes that must be taken out each pay period?
Employees can receive on-demand pay as often as every day if they so choose. Since life's responsibilities and emergencies don't always coincide with payroll, we want to ensure that workers have access to their earned/unpaid wages whenever they need them. Benefits deductions and taxes are factored in when determining how much an employee is eligible to transfer to ensure that enough funds will be leftover to make those payments. All taxes are paid by the employer on payday, just like they were before DailyPay was implemented.
4) Can an employee change the frequency of their pay after enrolling in DailyPay? For example, if they want to go from being paid daily one month to being paid weekly the next, is that possible?
Yes, absolutely. With DailyPay, an employee is not automatically enrolled in any set pay schedule, but they can transfer their earned wages into their accounts as frequently as needed for a small fee. Even if an employee is enrolled in DailyPay, there would be no fee if they chose not to make a transfer during a pay period and to receive their pay on their regularly scheduled payday. To be paid daily, they would have to go into their app every day and transfer their available balance. The same is true if they wanted to be paid weekly. Each employee is free to elect a transfer whenever they choose, at a cadence that feels comfortable to them.
5) Who handles employee questions regarding the way their pay is calculated: the employer or DailyPay?
While employers will be provided with detailed information regarding this issue during implementation, DailyPay customer service is still available to answer any employee questions as needed. We have 18 call centers in all four U.S. time zones, with over 3,000 workstations. Hours of operation for the phone support are Monday through Friday: 8 a.m.-9 p.m. ET and Saturday: 10 a.m.-4 p.m. ET. Full support is provided in English and Spanish.
6) How and when are the transfers employees request reported to the payroll department?
There are no automatic notifications or reports, but employers can log in to their partner portal at any time to view that information on the dashboard.
7) Is there a certain amount of an employee's pay that can be given before payday, and how is that calculated? Are garnishments and benefit deductions factored in?
DailyPay creates a personalized profile for every user that accounts for differences in their net pay profile. This profile informs what we call the advance rate (or net-to-gross pay ratio). We are the only vendor that creates this personalized profile for each employee. The DailyPay advance rate is dynamic, meaning that as the pay profile of an employee changes, the advance rate will change to accurately reflect the net pay owed to the employee. This enables the user to enjoy continuous, full access to the product, even if they have a non-standard pay profile (e.g., garnishments, benefits in arrears). The dynamic advance rate accounts for these unique employee considerations by adjusting the amount made available to the employee in the Available Balance so that amount will be net of these adjustments. The dynamic advance rate enables the employer to offer the benefit on a universal basis and not restrict access to only employees with certain pay profiles. DailyPay is the only provider who offers up to 100% of net wages to salaried employees.
8) If employees are paid daily on-demand how is overtime pay calculated?
During implementation, employers have the option to register employees with multiple pay rates to account for regular pay and overtime pay. They can also report an employee’s usual amount of hours worked per day and/or the times of their shifts. However, for employees with constant varying hours and schedules, it may be easier for them to receive their overtime pay on their scheduled payday.
9) Is it possible for employees to advance themselves unapproved hours?
Not unless an employee enters false hours into the time clock, which would be an issue of integrity and time theft whether the company offers DailyPay or not. We have some safeguards in place, so our systems automatically recognize unusual or suspicious activity on a user’s account, such as being clocked in for a full 24 hours. Although this may simply be a user error of forgetting to punch out, it will make funds unavailable as a precaution. Because of these safeguards, employers usually report increased time clock compliance as an added benefit to DailyPay. We also have two-factor authentication to prevent fraudulent activity within the app.
10) I don't understand the cost savings of using DailyPay. In my company, every on-demand payment costs $10.00 and every reverse wire from our bank is $30.
Neither of these costs are associated with using DailyPay. Because the funds for employee transfers come directly from DailyPay’s balance sheet and not the employers, the only costs associated with our service are small, ATM-like transfer fees. Employees pay $1.99 for a next-day transfer or $2.99 for a same-day transfer, with no hidden fees whatsoever. Those fees may be electively subsidized by employers as an added benefit, but less than 10% of our partners choose that option.
11) What financial wellness tools do you offer?
DailyPay provides employees with full transparency (up to 100%) into their net earnings. This allows employees to budget their earnings in real time as opposed to budgeting apps of the past that relied on historical data. DailyPay also offers employees a financial wellness portal from within our app. The financial wellness portal features best in class personal finance content from well-respected sources on topics such as budgeting, banking, investing, and managing credit. An in-app savings tool is on our product roadmap to be introduced in 2020.