The pandemic has exposed extreme vulnerabilities in today’s economy where six in 10 Americans live paycheck to paycheck.
In an interview with PYMNTS, Warren Perlman, chief information officer at global human capital management company Ceridian, said allowing individuals access to their wages in real time — as those wages are earned — could brighten the economic landscape and boost financial wellness considerably.
He said that reimagining how and when employees are paid is long overdue.
“Workers need to be able to access their funds as those funds are available to them, especially in a downturn” and as individuals return to work, Perlman said.
Research shows a clear need for a more modern pay cycle with nearly one in three workers running out of money before payday — even those earning over $100,000. Perlman noted that recent studies have found unplanned expenses of just a few hundred dollars can stretch workers to the point where they would be unable to meet other financial obligations. Real-time access to funds means employees can avoid relying on high-interest payday loans to manage cash flow.
The movement by employers to improve the access workers have to their wages is needed now more than ever. In recent years, the gig economy has underscored the importance of disrupting traditional payroll norms.
The fluidity of today’s workforce has only further heightened the need for companies to pay their people in flexible and innovative ways. Perlman pointed to the May launch of Ceridian Dayforce Wallet, which allows employees real-time access to their pay with no direct fees for employers or workers.
Dayforce Wallet is unique in that it provides real-time pay, based on earned wages, not an approximation of earnings like other on-demand pay solutions. This is enabled by Ceridian’s flagship cloud platform, Dayforce, where net earnings are always continuously calculated.
The announcement of Dayforce Wallet comes on the heels of other significant announcements at Ceridian. That includes the company’s global expansion of Dayforce into new markets, including New Zealand and Mauritius. Further expansion took place this year through the acquisition of Excelity Global Solutions Pte Ltd., an Asia-based HCM service provider from the Everstone Group.
Asked about onboarding with the current digital wallet offering, Perlman noted that once Ceridian’s clients agree to support the on-demand pay solution, they receive a comprehensive toolkit to help educate their workforce. This includes details on how to download the digital wallet and app. A few days later, employees receive a Ceridian-branded reloadable Mastercard linked directly to their account.
“For the employer, when it comes to the [payroll process], nothing changes,” Perlman said, adding that the entire process is completely integrated into the Dayforce platform. “They still fund their payroll exactly the same way they did before.”
A client’s existing payroll process and funding schedule are maintained, including the funding, timing and close-out of pay. This means administrators do not have to spend time reconciling at the end of the pay period.
Perlman said that more than ever before, employers play a critical role in supporting their employees’ financial wellness. He said employers can strengthen their relationships with workers and boost employee engagement and retention by helping alleviate the stresses they face regarding unexpected expenses and how to pay for them.