Colorado’s unemployment rate currently sits at 2.6 percent. This low unemployment rate has forced employers to consider different ways to recruit and retain talent. One new tool that businesses big and small are turning to is on-demand pay or same-day pay.
Generally, employers pay on a 24 or 26 pay period schedule, which means that employees need to wait two or more weeks for their pay. The inability to access pay immediately has a negative effect on many employees. For example, an overdraft fee may cost an employee around $35. A payday loan company may charge a similar fee. Additionally, same-day pay is the norm for employees in the gig economy. Therefore, many employees are used to receiving pay on the same day it was earned.
That is where on-demand pay or same-day pay tools have come into play. Paylocity offers one such tool to its users. Their tool allows employees to access up to $1000 of previously earned wages in just one click to authorize the deduction. Currently, the employee would be charged a fee of around $1 to $3 and only be able to access money that has already been earned. The employee will then receive the requested amount that same day into the bank account that they have on file.
Employers like Amazon and Walmart are already beginning to use these types of tools for recruiting and retention. The thought is that if an employee can avoid a late fee, overdraft fee, or payday loan fee, they may be more willing to work for that employer. Offering same day pay tools may be one way that employers can differentiate themselves and from the competition.