To Retain Workers, Consider Paying Them More Often

You can test out a more frequent payroll schedule or offer on-demand access to earned wages as an employee benefit.
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Written by Rosalie Murphy
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When Kaustubh Deo, president of Washington-based Blooma Tree Experts, bought the company from its retiring owner, he inherited a weekly payroll system and quickly learned to appreciate shorter pay periods.

“If you give somebody a raise, they feel that [increase] like three days after you tell them about it,” Deo says. And payroll errors can be corrected faster, too: “It’s one thing if it’s to wait two weeks or four weeks for that to get resolved, but if it’s next week, employees aren’t that worried about it.”

The bulk (63%) of American workers are paid biweekly or twice a month, according to a February 2023 U.S. Bureau of Labor Statistics survey. But around 27% of workers said they were paid weekly. And technologies like earned wage access are giving more workers the option to draw on their wages between paydays.

For employees, less time between paychecks can increase feelings of financial security, says Karen Burke, a knowledge advisor at the Society for Human Resource Management.

Here are two ways small-business owners can start paying employees more frequently.

1. Shorter pay periods

Weekly payroll is already the norm in many industries. In the same BLS survey, nearly two-thirds of construction workers said they were paid weekly.

It’s common in landscaping, too, Deo says. He found that weekly pay was necessary to compete with other employers, some of whom pay daily rates, occasionally in cash.

"If [workers] are comparing getting paid cash daily to getting paid every two weeks, the math starts to get harder,” Deo says.

Similarly, Burke explains, a $100 deduction from a weekly check may seem smaller than a $200 deduction from a biweekly one.

"It’s the same thing, but it’s all semantics. It’s how the employees see it," Burke says. "They can manage their cash flow better.”

To manage payroll, Deo runs each pay cycle through his payroll software, so taxes and benefit contributions are deducted from each paycheck just as they would be with any payroll schedule.

If you want to pursue more frequent pay, “take time out to pick out the right software,” Burke says. Look for a plan that includes unlimited payroll runs.

If you employ a large number of casual, event-based or short-term workers, a more frequent payroll schedule may also work better for your HR department.

“It’s very efficient for the payroll administrator,” Burke says. “Let’s just do it, get it over with, and we don’t have to worry about running payroll every two weeks and wondering who worked and trying to track those hours worked.”

But for businesses that primarily have salaried employees or more than a few dozen employees, Burke says biweekly payroll is probably the less burdensome option.

2. Earned wage access as an employee benefit

Larger retailers like Amazon, Walmart and Target offer some of their employees earned wage access, a company benefit that lets workers access pay they’ve earned before their paycheck is issued.

Employer-provided EWA platforms integrate with your payroll system. An employee can request a payout of some of the wages for hours they’ve already worked, and the EWA service can transfer funds to them. When the next payroll cycle runs, the worker’s paycheck will be smaller by the amount that was already paid out.

Standard ACH transfers from EWA providers to employees may be free, depending on the platform; getting funds instantly costs a few dollars more. Employers may choose to cover EWA platform fees as part of the benefit.

In 2023, the Financial Health Network found that employees generally used EWA to cover unexpected bills. In general, they preferred it to more expensive options like payday loans or overdrafting on a bank account, or to more socially complex options like borrowing from family or friends.

“For workers that make a living wage, this can be a really good, effective, short-term liquidity solution,” says Matt Bahl, vice president and workplace market lead at the Financial Health Network.

In fact, 79% of workers said they’d consider switching jobs to have access to EWA, according to a 2019 survey commissioned by Visa.

Bahl cautions that EWA isn’t a silver bullet for employees’ financial challenges, however.

“If people are not making enough money to pay their bills at their current income — no matter the schedule, you cannot fintech your way out of that problem,” Bahl says.

The industry is evolving quickly: Several states have implemented EWA regulations, and in late 2023, the Consumer Financial Protection Bureau announced plans to issue guidance on EWA and “income-based advance” products.

If you’re considering offering EWA, see whether one of your existing benefits providers already offers the option — many do.

And there’s a chance your employees are already familiar with a consumer-facing EWA app or the idea of on-demand pay via gig work.

"We have a group of workers in this country who have grown accustomed to receiving pay daily," Bahl says. EWA "could be a path in which to do that."