Selecting the best Earned Wage Access (EWA) benefit provider is a critical decision with far-reaching implications.
Estimated reading time: 5 min
Why Selecting The Best EWA Benefit Provider Matters
Earned Wage Access (EWA), or OnDemand Pay, provides a low-cost, responsible cash flow management solution for more than 60% of Americans living paycheck to paycheck.
State legislators have begun to roll out new laws and licensing requirements for EWA Providers. At the same time, the market awaits potentially competing and far-reaching Federal regulatory announcements.
To demystify the EWA landscape, FlexWage empowers you with this set of 22 essential questions to effectively navigate the world of EWA providers.
A reputable provider ensures that your EWA program provides policy guardrails and transparent and capped fees to protect your employees and also complies with relevant regulations, safeguarding you from legal issues and potential fines.
By selecting the best EWA provider, employers like you mitigate risks and provide a valuable benefit that enhances workers’ financial stability and well-being, fostering a stronger and more loyal workforce.
Use the following 22 questions to evaluate and compare your current or prospective EWA Provider and ensure they offer a compliant, responsible, and transparent EWA solution.
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The Best EWA Benefit Provider: Five Critical EWA Elements
We have organized the 22 EWA Provider evaluation questions into the following five elements. These five elements ensure your EWA program is regulatory compliant, responsible, and transparent.
I. EMPLOYER-funded EWA program.
II. DATA ACCURACY in EWA calculations.
III. TRANSPARENT and capped EWA fees.
IV. PAYROLL DEDUCTION of EWA within the current pay cycle.
V. INSTANT FUNDING to the employee’s account of CHOICE.
I. Employer-Funded
Employees and EWA Providers should remain separate and independent of each other. An EWA solution that the employer funds achieves this separation. Alternatively, a licensed Provider may offer a line of credit to assist the employer in funding the EWA solution.
There is no need for any EWA Provider to fund an employee’s account, directly debit an employee’s bank account, or require employees to assign their wages to the Provider.
Insulating the employee from the EWA Provider differentiates the EWA solution from payday lenders and other direct-to-consumer products claiming to be EWA.
Any unlicensed third party standing between an employer and their employee’s pay creates trust and compliance issues.
1. Do you require EWA transfers and payroll to be deposited into a provider-owned account/card/wallet? If so, how is this not mandating payroll? Do you have any regulatory opinions approving this?
2. Are you licensed as a lender or money transmitter in any state? If so, please list those states.
3. Do you require a legally binding agreement (like a wage assignment) with my employees? If so, why?
4. Do you convert my employee’s direct deposit to your account? If so, how and why?
II. Data Accuracy
Connecting the EWA program to an employer’s payroll and time reporting systems ensures the accuracy of data used to calculate the employee’s accrued wages. It also negates the need for estimation algorithms or guesstimation of earned wages.
FlexWage owns the patent on accurate accrued wage calculation and is recognized by state regulatory bodies in their guidance and opinions.
5. What are your data requirements to ensure the accuracy of the data used to calculate earned wages?
6. Do you have a patent that covers this data flow process? If not, are you licensing technology from a third party with a patent?
7. Do you use AI tools or algorithms to calculate the available earned wage amount? Why?
III. Transparent and Capped Fees
Charging a per EWA transfer transaction fee and then capping those fees per pay cycle and month (based on the frequency of usage) is the most transparent and responsible way to provide a true financial wellness benefit and minimize employee fees.
8. What are the fees for all delivery options to my employees? Please include fees for any expedited delivery, subscriptions, tips, etc.
9. Do you cap those fees? If not, why not?
10. Do you memorialize those fees in our contract agreement so they cannot be increased during the contract term? Please provide copies of the fee schedules for EWA usage and any Paycard or wallet you offer.
11. What is the average amount of each employee’s EWA transfer? What is the average percentage of wages accessed per employee per pay period?
IV. Payroll Deduction
Deducting EWA transactions and any fee amounts from an employee’s payroll and showing them as line-item deductions on the pay statement keeps everything fully transparent, differentiating an employer-based solution from other direct-to-consumer or hybrid options.
When deductions are made post-payroll processing, differences between the paystub and net deposit create questions and compliance issues.
Trusting a third-party EWA Provider with accurate and on-time payment of an employee’s direct deposit is not the best and safest decision.
12. Do you use a payroll deduction to recoup EWA funds or fees? If not, why not?
13. If an employee is overpaid, do you attempt to collect the overpayment? Do you suspend their use of the EWA program until the overpayment is repaid? How many attempts do you make to recoup those funds?
V. Instant Funding To The Employee’s Account of Choice
In some EWA models, employees must send EWA transfers to a Provider-owned card or account first. Then, for additional varying fees, the employee can instantly transfer EWA funds to their preferred bank account. This extra step creates unnecessary and non-transparent steps and fees for the employee. EWA users should be protected from these non-transparent add-on fees with real-time EWA funding to the employee’s account of choice.
14. Are the employee’s EWA funds deposited immediately into the employee’s account of choice?
15. What other account options are available to the employee?
Policy Controls and Guardrails
Employers should have administrative visibility into the EWA program and policy controls for earned wage access transfer amounts and frequency. These policies, along with transparent and capped fees, ensure that the EWA program is not abused by employees and that employees are not taken advantage of by the EWA Provider.
16. How many EWA transfers per pay period do employees average on your platform?
17. Who establishes the percentage of the earned wages my employees can access? If you do, why?
18. Who establishes the frequency of usage? If you do, why?
Additional Questions To Help Select The Best EWA Benefit Provider
These additional questions help you discern the EWA Provider’s data access rules, their EWA model acceptance by state and federal regulators, their longevity, and their possible future legal risk.
19. Do you, or a data aggregator, access employee information? Please provide the list of all data you access and from where you gain this access.
20. Have you received state opinion letters regarding your EWA solution?
21. How long have you been in business?
22. Are there any lawsuits filed against your business?
Download the EWA Provider Selection Guide Now
FlexWage OnDemand Pay
FlexWage OnDemand Pay is an employer-based EWA solution that integrates with the employer’s HR, payroll, and time and attendance data to provide employees with accurate, accrual-based wage calculations.
Employees use a free mobile app to get instant access to EWA funds that are deposited directly into the employee’s preferred account — they choose where their money goes.
The FlexWage solution gives the employer administrative visibility into the EWA platform. It allows employer-level policy controls for earned wage access transfer amounts and frequency.
FlexWage EWA does not disrupt the employer’s payroll processes. The funds an employee transfers are deducted from the employer’s payroll deposits and accounted for on their pay statement.
EWA Done Right
FlexWage delivers “EWA Done Right” because it offers the most compliant, responsible, and transparent Earned Wage Access (EWA) solution.
Schedule an introduction call today!
Download the EWA Provider Selection Guide Now
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