While paying employees biweekly or semimonthly may be standard practice, it’s time to analyze whom that schedule truly benefits. When employees are not paid immediately for their labor, they are essentially giving their employer a loan for the entire duration of the pay period. And while this schedule may reduce cost, paperwork and simplify processes for the payroll team, it often has the opposite effect for the employees. Although they may have completed their scheduled shifts and earned hundreds or even thousands of dollars during that period, not having access to those funds until payday can be a major cause of financial and emotional stress.
Beyond just stress, many hardworking Americans also fall victim to overdraft and late fees when they can't pay bills on time or they find themselves completely helpless in the face of a financial emergency. Unforeseen car repairs, medical bills, veterinary costs or household emergencies can leave someone in a real bind. Those are the times when many hardworking individuals are forced to go to friends and family or even payday lenders for high-interest loans just to survive. Is all this turmoil a fair exchange for reducing the administrative burden of running payroll more frequently?
This is where alternate payment solutions, such as DailyPay, come into the picture. While many people believe that instant pay technology is akin to a loan or a pay advance, it is actually very different. Since users can only pull from funds they’ve already earned, there is no interest and no repayment. DailyPay simply functions as an ATM for an employee’s own earnings. NPR’s Podcast, Planet Money, recently explored how the daily pay benefit is growing in popularity by helping employees navigate this unfair payday structure. You can listen to the podcast here.