Recent technological advances and an increase in the number of workers in the gig economy have fueled interest in faster payment methods like earned wage access (often referred to as on-demand pay). With earned wage access (EWA), workers are able to access their pay when they want, rather than according to a scheduled determined by the employer. This interest has spread beyond those involved in the gig economy to employers and employees in "traditional" businesses, allowing employees to gain access to wages earned before payday. However, the concept of EWA raises many questions for employers, including when the actual date of payment occurs for employment tax withholding, depositing, and reporting purposes.
APA Report: Understanding Earned Wage Access and Payroll
Earned wage access (EWA) programs have moved from the early adoption phase to become a more established business practice and part of the benefits package offered to employees. When EWA programs are used effectively, employees can gain greater financial security. These programs can help employees with the misalignment of expenses between paydays but are not a complete solution to employees' financial problems.
The American Payroll Association (APA) set out to understand the advantages and disadvantages of EWA technology and potential impacts on payroll management. The Understanding Earned Wage Access and Payroll report contains everything you need to know about employer-integrated earned wage access. This EWA report helps to breakdown the information for payroll professionals and government decision-makers.
Key topics include:
- A step-by-step guide to selecting an EWA provider
- The legal and regulatory framework for EWA
- Payroll Currently, Issue 5, Vol. 30, "Treasury Proposes Clarifications for On-Demand Pay": the article discusses the U.S. Department of the Treasury's proposal to clarify the tax treatment of on-demand pay arrangements by providing a standard definition and payroll period.
- APA News, Treasury Proposes Clarifications for On-Demand Pay (4-15-22)
- Inside Washington, March 2022, "APA Offers CFPB Recommendations on Earned Wage Access": the article discusses APA's recommendations to the federal Consumer Financial Protection Bureau on EWA.
- Inside Washington, January 2022, "APA Supports Employer-Integrated EIA in New Jersey": the article discusses APA's support for earned income access legislation in New Jersey.
- Inside Washington, April 2021, "APA Supports States' Earned Wage Access Bill": the article discusses APA's support for proposed EWA legislation in Nevada and South Carolina.
- Inside Washington, February 2021, "APA Supports New Jersey Bill on Earned Wage Access"
- Payroll Currently, Issue 1, Vol. 29, "CFPB States Most Earned Wage Access Programs Are Not Credit": the article analyzes the CFPB's Advisory Opinion on Earned Wage Access.
- Consumer Financial Protection Bureau, Compliance Assistance Sandbox (CAS) approval order to a service provider regarding specific aspects of some of its earned wage access (EWA) products, (12-30-20)
- Consumer Financial Protection Bureau, Advisory Opinion on Earned Wage Access (11-30-20)
- Internal Revenue Service Advisory Council (IRSAC), 2019 Public Report. IRSAC recommends that the IRS provide guidance concerning on-demand pay and identifies 18 issues for the IRS to consider as guidance is developed (11-2019, see pages 82-85).
- PAYTECH, July 2019, "Gig Economy, On-Demand Pay Big at the 2019 Capital Summit" (pages 32-33)
- PAYTECH, June 2019, "The Future of Work Requires Instant, On-Demand Payouts" (pages 22-23)