Should I Let My Employees Access Paychecks Early?

Imagine, one of your employees having to rush their child to an urgent care, but they realize their payday is 4 days away. They can’t cover for the prescription to give their child. They go into work the next day wondering what to do next with a bill sitting from the urgent care visit. This situation is not just kept in their personal life, this can show at work, too. Late arrivals, lacking in energy, decreased productivity, a sudden request for time off.

This is the reality for many employees across the country. ‍

1. 59% of employees reported they are currently stressed about their finances
2. 49% of employees said their pay isn’t keeping up with rising costs.

Think about how these pressures carry into the workplace. Higher turnover, absenteeism, lower productivity, and delayed results. Now, add early paycheck access into the picture. Early paycheck access, commonly delivered through earned wage access, allows employees to use money they have already earned to fill short-term income deficits. Let’s dive deeper on what it is, why it should matter in retention and productivity, and what to look for in providers.

What is early paycheck access?

Early paycheck access is any benefit that enables employees to get paid ahead of their usual payday. A variation of that is earned wage access (EWA) which lets employees transfer a portion of their earnings prior to their next regular pay cycle, and is also the most popular and employee-friendly variation.

How it works: Connected to the employer’s payroll and timekeeping system, employees use an app and request to transfer of earned wages to their bank account. Once the request is approved, funds can be sent within minutes for free or for a small fee. Their next paycheck will include the rest of their earned wages that have not been transferred.

Why Employee Financial Stress is a Business Problem

Financial wellness can be assumed to be a personal matter, but the data says otherwise. Financial stress carries on an employee and is one of the most hidden productivity taxes. Read more how financial wellness impacts mental health here.

• 59% of employees are financially stressed right now. 53% of them have less than $5,000 in emergency savings. 30% of those have less than $1,000.
• Retirement plans are changing due to financial stress. Over 50% of employees think they’ll have to use their retirement funds early in order to survive.
• The expense of doing nothing increases. Accounting for hiring, onboarding, lost productivity, and institutional knowledge, replacing an employee could cost anywhere from 50% to 200% of their yearly compensation.
• The cost of employer health benefits is expected to climb by 6.7% in 2026 which is the largest increase in 15 years due to premiums in insurances and cost sharing.

This doesn’t mean employees are managing money poorly. It means that daily spending, healthcare costs, and take-home income are becoming more and more disconnected from the conventional biweekly or monthly pay cycle. Although early paycheck access alone can’t close that gap, it does provide employees with a means of managing it without resorting to high-interest.

Benefits of early paycheck access for employees

1. Better cash flow management - Instead of falling behind, workers can use their pre-earned wages to pay a utility payment or pay their rent on time.
2. Fewer high-interest debt traps - Not being able to access earned money early can lead to using methods that trap employees into loans and debt. Having access to earned wages before the next payday becomes a tool employees can use avoid prolonged cycles of debt.
3. Less daily financial stress - Employees can be at ease knowing that a cash shortfall doesn’t always indicate a disaster, both immediately and in terms of how they plan for the remainder of the pay period.
4. Increased productivity - There are less distractions at work and employees may concentrate better on their work rather than worrying about which bill to pay late when an unforeseen expense happens.
5. Financial independency - Instead of seeking assistance from a manager or company, employees could handle a shortage in private and on their own terms.

Benefits of early paycheck access for employers

• Supports retention - Employees are more likely to stay within a company when they’re supported through their financial stress. Having a benefit that could reduce day-to-day stress avoids potential turnover, it isn’t just an “extra-feel good” perk. ‍
• Protects productivity - Financial stress and worries impact directly into productivity. Having the benefit brings security and allows employees to continue focusing on the job in front of them without worry.‍
• Doesn’t disrupt payroll - A payroll-native earned wage access model sees from data in payroll and timekeeping systems rather than having payroll teams change how payroll runs and when. Your payroll process will run the way it’s been, the right provider will take care of the backend. ‍
• Strengthens recruiting - Candidates seeing financial wellness benefits can make the job application more appealing and feel a sense of security if chosen for it. This shows the company understands the reality of pay cycles and costs of living.‍
• Builds supportive culture - Having financial wellness benefits provide trust and support especially in moments of need. Engagement and loyalty comes in return.

What to look for in an early paycheck access provider

There are differences in EWA providers, the question is what would fit best for your payroll and employees. Here’s what you should consider:

1. Easy payroll and timekeeping integration –  See providers that directly integrate with your payroll and timekeeping systems to ease. See how Tapcheck integrates with payroll systems here.
2. Transparent pricing – Find and confirm exactly what the employer side would be paying and what fees an employee would get charged per transfer if any.
3. Regulatory compliance – Check any regulatory compliances with early paycheck access and earned wage access laws as they differ between U.S. states.
4. Financial tools and employee experience – The app should be intuitive to users, easy to navigate and use, as well as provide any tools such as for budgeting.
5. Support and implementation – Confirm how long setup would take, how it would be managed, and what ongoing support looks like moving ahead after the benefit is launched live.

Tapcheck supports over 250 payroll and timekeeping systems, leaving less work for your payroll teams. There is dedicated account management, setup, and support for our clients with no hidden costs. Learn more about how Tapcheck works here.