Earned Wage Access: The Key to Financial Freedom

July 3, 2024

by Malysa O’Connor

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Earned wage access (EWA) is revolutionizing how people think about payday. It’s a game-changer for employees living paycheck to paycheck, struggling to make ends meet between pay periods.

Legion InstantPay allows employees to access their earned wages before the pay period has elapsed. They can access a portion of their paycheck as soon as they’ve earned it, offering flexibility to cover unexpected expenses, pay bills on time, and enjoy more pay flexibility.

This innovative solution has gained popularity in recent years as a way to manage finances and avoid high-interest payday loans or credit card debt.

Key Summary

  • Earned wage access is changing how employees meet their financial obligations, lifting some burdens and offering greater autonomy when balancing a budget.
  • With Legion InstantPay, employees can access their earned income the next day without penalties or fees. 
  • With comprehensive benefits packages, including EWA, employers become more attractive to job seekers and give themselves a competitive edge in retaining employees. 

Benefits of Earned Wage Access for Employees

Legion InstantPay offers employees flexibility to access pay when they need or want it. It can also provide a safety net in case of unexpected expenses or financial emergencies. With access to earned wages before payday, employees can avoid overdraft fees, late payment penalties, and the need for high-interest, short-term loans.

InstantPay offers employees greater control over their finances, allowing them to budget and plan for expenses. This flexibility can reduce stress and improve well-being in and out of the workplace.

Employees can also view their potential earnings associated with certain schedules and open shifts. When employees see how much they can earn by working a particular shift, they’re more incentivized to take on more shifts. 

Benefits of Earned Wage Access for Employers

The benefits of EWA for employers and HR departments cannot be overstated. Increased employee satisfaction, productivity, and higher retention rates often follow. By offering such a valuable financial benefit, companies demonstrate their commitment to employee well-being, which can lead to a more engaged and loyal workforce.

There are also significant operational efficiency gains with Legion InstantPay. Employees are incented to have exception-free, accurate timesheets and increased schedule adherence because the pay is only available after their timecard is approved. 

EWA can also help businesses retain their employees and recruit higher-caliber candidates, especially in tighter markets, because financial perks are a top priority for job seekers. 

Benefits of Fully Embedded EWA Within WFM

As part of Legion’s highly adopted mobile app, Legion InstantPay gets your employees on the road to financial wellness quickly and easily with no new app or IT project required. InstantPay is fully embedded into the Legion app. It provides real-time access to earned wages in the same app your employees regularly use to check their schedules, record hours worked, manage time off, and more. Why does this matter? Studies have shown that while standalone EWA apps see 24-30% adoption rates when embedded directly in the workforce management software, EWA delivers significantly higher adoption rates of 60-70%.

All the data needed to run a fully compliant EWA/InstantPay program is available directly from Legion. Legion manages schedule costs and generates timesheets, accurately computing the wages based on wage rates, overtime, double-time, secondary wage rates, and more, making it available for instant payment. 

And, no separate/special onboarding/offboarding is required for employees to access Legion InstantPay. 

How Earned Wage Access Manages Compliance

As EWA programs have gained popularity in recent years, they have also attracted the attention of regulators and lawmakers. 

Several states have taken steps to regulate EWA programs. In 2019, California became the first state to pass legislation addressing EWA providers. The law requires providers to be licensed and to comply with certain disclosure and fee requirements.

The Consumer Financial Protection Bureau (CFPB) has been monitoring the Earned Wage Access industry at the federal level. In 2020, it issued an advisory opinion stating that EWA programs are not considered credit under the Truth in Lending Act when they meet certain criteria.

Legion WFM Minimizes Compliance Risks

Legion Workforce Management (WFM) eases managers’ burdens by enabling intelligent automation to manage compliance across all jurisdictions. Predictive scheduling and labor laws can be applied to employees’ schedules, making managers instantly aware if their actions or edits introduce risks or violate rules. 

Time and attendance tracking automatically incorporates compliance rules when computing premium pay. This allows companies to navigate compliance challenges with confidence.

How Earned Wage Access Helps Businesses Scale

Legion WFM helps businesses protect their most valuable asset: their people. When top talent is recruited and retained, things can really take a turn for the better. 

New offerings such as instant access to earned wages exemplify an employer’s dedication to their employees’ financial well-being and, ultimately, their well-being. 

Integration with Existing Payroll Systems

A seamless integration can ensure a smooth rollout and minimize disruptions to your payroll processes. Legion WFM has pre-built connectors into most HRIS and POS systems, meaning fewer hassles and a lower cost of ownership. 

This allows businesses to maintain control and customize to meet their own unique needs. Ultimately, it can free up valuable HR and IT resources so they can focus their time and attention on other projects. 

Pro Tips for Successful Implementation

Successful implementation requires careful planning, communication, and ongoing management to ensure the program is meeting the needs of employees and employers.

Legion WFM offers a seamless transition with rapid time-to-value. Using a two-phased model, businesses are up and running in weeks. 

First, a small set of locations is quickly onboarded to collect feedback with minimal business disruption. 

Then, those results are tied into a training and rollout plan to meet the needs of every employee. Metrics are gathered throughout the process to ensure a smooth and easy transition. 

Communicate the Benefits to Employees

When implementing Legion InstantPay, it’s important to illustrate the benefits to your employees. Many workers may not be familiar with EWA or may be hesitant to use it, so it’s important to explain how the program works and how it can help them better manage their finances.

Emphasize the key benefits of EWA, such as increased financial flexibility, reduced reliance on high-interest loans, and the ability to cover unexpected expenses without incurring debt.

Measure the Impact on Employees

Measure the impact of EWA with key metrics such as employee retention and satisfaction. Conduct surveys and publish polls to gather employee feedback to see how the program has affected their financial well-being and overall job satisfaction.

Legion Frontline Communications allows employers to capture the pulse of employees and gain actionable insights through communication tools built right into the app. They can also track views, clicks, and responses to see where the needle lies. 

It’s wise to start tracking retention rates at this juncture to see if there are discernable improvements. Companies can make data-driven decisions about optimizing their EWA program over time by regularly measuring and analyzing these metrics.

93% of employees who have experienced Legion InstantPay’s benefits report a stabilized or improved financial situation. 65% state they’re in a better financial circumstance than they were with traditional payment methods. 

Address Common Concerns and Questions

As with any new workplace benefit, it’s natural for employees to have questions and concerns. Sometimes, employees are curious about the potential impact on their credit score, the fees associated with the program, and the security of their personal and financial information.

Be proactive in providing clear, concise information about how the program works, what fees (if any) are involved, and how employee data is protected. 

With Legion InstantPay, there are no fees associated with next-day transfers. However, employees who want immediate access to their earnings will incur a small fee. 

Encourage open communication and feedback, and be prepared to adjust the program as needed based on employee input and usage patterns.

Earned Wage Access: The Place Where Employee and Employer Needs Conveniently Converge

Earned Wage Access is more than a buzzword; it’s a powerful tool that can enhance your people’s financial wellness. 

You can boost retention, reduce financial stress, and create a happier, more productive workforce by giving employees access to their earned wages when needed.

Schedule a demo today to learn more about the benefits of embracing Legion’s fully embedded EWA solution. Your employees will thank you, and your bottom line will reap the rewards over time.