Just as the word “natural” may appear on household items that aren’t so healthy for us, so too can the term “financial wellness” appear in connection with services that don’t actually help your workforce become more financially stable.
Earned wage access (EWA) is one of the more popular financial wellness offerings today. It allows employees to access a portion of their earned wages ahead of their regular payday. This improved cash flow helps them handle unexpected expenses without dipping into their savings or taking out high-interest loans.
However, not all earned wage access providers are created equally.
You want an EWA provider that encourages responsible use; one that’s aligned with current government regulations and makes your job simpler—not one that may require you to put out additional fires. Yet some of the biggest EWA names out there do just that. This is largely due to the fact that they rely on wage assignment.
What is wage assignment?
There are different methods of funding an employee’s advance. Some EWA providers get those funds through a process called wage assignment. Wage assignment requires employees to deposit their entire paycheck into a separate, third-party bank account that’s controlled by the provider.
This differs from Branch’s standard deduction model, which only deducts the amount of the advance—and no more.
What are the consequences of wage assignment?
ILLEGAL
In many states, wage assignment is considered unlawful. This is because with wage assignment, you are mandated to send all wages (via direct deposit) to an account that technically belongs to the EWA provider—and certain states require that direct deposit must be made to accounts that belong to your employees. In those states, using wage assignment would put your company at risk for being deemed as “not having paid” your employees.
💡Branch uses the standard deduction model of EWA, meaning we don’t take all of your employees’ pay—just the advance they request up to 50%. Plus, the money is put into an account that your employee owns—not some third-party—giving your employees flexibility to keep their money in their Branch account or easily transfer it to another account.
RISKY
Wage assignment puts your company at risk in other ways, too. EWA providers that use wage assignment take control over the entire paycheck of each of your employees, as we’ve said. They’re mandated to have their direct deposit sent to that third-party account. That means that if there are any errors or discrepancies, your employees’ entire pay is compromised.
💡 Why take the risk of having someone's entire paycheck be inaccessible if something goes wrong? At Branch, we only advance the amount an employee requests (up to 50%)—and the funds go directly to an account in your employees' name.
TIME-CONSUMING
You likely don’t have time to add “putting out more payroll fires” to your to-do list. But with employee wages now in a third-party account, adding more time to deal with payroll hassles makes that a real possibility. You deserve an EWA tool that actually makes your job simpler, by being easy to use and granting your employees access to only a portion of their earnings at a time.
💡At Branch, we’re here to make your life easier—not add extra hours to your day! Our standard deduction model that only advances the wages they request (up to 50%) can save you time that would be spent putting out payroll fires.
IRRESPONSIBLE
Those same EWA providers that use wage assignment also boast that they allow employees to request an advance of 100% of their earnings. At Branch, we don’t think that’s anything to boast about—we think that’s irresponsible. True financial wellness isn’t just a short-term fix. We only allow employees to access up to 50% of their wages ahead of time if needed, and that’s for a very specific reason: to ensure people don’t advance their whole check and can manage their money appropriately.
💡Branch's guardrail of 50% is in place to protect your employees, but also to protect you. As an employer, you have a responsibility to comply with court and agency issued wage garnishment orders, which can show up at any time for any employee. Capping EWA at 50% leaves room for you to comply with those orders and still give your employees access to their funds.
Can You Spot a Fake?
Before you sign on with an EWA provider, read their agreement. Do they use wage assignment? Will your CFO or other higher ups really want to put their payroll in a company’s hands they don’t know very well? Will you want to deal with the potential for risk and irresponsible use?
The standard payroll deduction method we use at Branch doesn’t come with that risk. We are the fee-free, trusted choice—and we have the track record to prove it, working with major names across all industries. We also don’t require your employees to switch their direct deposit to Branch. Best of all, we won’t add more admin hours for anyone on your team—the average time payroll spends using Branch is just 10 minutes per week.
Click below to learn more about how we differ from our competitors.
