As an employer, compliance is paramount in everything you do. When it comes to employee benefits, particularly in financial wellness, compliance needs to be considered in the context of both regulations and employee impact.
With the Payactiv earned wage access (EWA) solution, you can rest easy. Payactiv is not only compliant but has your employee’s best interest as the cornerstone of our wellness platform.
We wanted to share a few more details with respect to how we operate compared to other solutions.
There are multiple models under which earned wage access operates. We pioneered the first one, which is compliant. Other models may have compliance issues, which is why we decided against them.
The Payactiv model encompasses all three.
Our price and value is unmatched, i.e. $1 for a day with unrestricted access to wellness offerings.
If the user decides to access earned wages we do not impose restrictions or pre-requisites with respect to where they direct their earned wages. Payactiv can settle funds into a user’s existing bank account, debit card, prepaid card, and payroll card.
If the user does not have any of these accounts, or needs cash, they can simply pick-up funds at Walmart.
We also offer our users to access their earned wages through the Payactiv-issued Visa debit card.
When payroll is processed, the amount of earned wages already accessed is adjusted from net pay, and the employee receives their paycheck just as they always do. The already-earned wages accessed by the employee appears on the employee’s paystub. This clearly shows how much was earned, accessed, and the amount of net pay disbursed on payday.
Other providers have embraced what we view as a “Forced Account” model. In this model, employees are required to use a bank account that sits in between the employee and the employer – hence the term “Forced Account”. The provider controls this Forced Account, not the Employee.
Some providers require that 100% of employee’s net wages are deposited into this Forced Account — whether or not the employee even accesses earned wages.
On payday, the Forced Account provider is the first to get access to employee’s net pay. The remaining wages are then directed to the employee’s personal account — after the previously-accessed wages and fees are deducted.
Payactiv does not support this model. We do not believe employees should be placed in a provider-controlled environment with no control over their income. Nor does this approach align with our view of proper compliance. It also contrasts with our values as a Public Benefit Corporation and Certified B-Corporation.
Payactiv also embraces Responsible Access. This means that employees should not have a $0 paycheck on payday. Payactiv offers user’s access to a portion of their net wages so that employees aren’t left with that $0 payday. This puts a cap on the total amount that can be accessed. With this feature, Payactiv and our employer-partners can make certain that an employee always has part of their paycheck available on payday.
Why does Payactiv do this? EWA providers are not payroll processors. Without Responsible Access, there is a strong possibility that users may get access to more funds than their net pay. This not only results in that $0 paycheck, but the employee now must pay back the over-advanced wages to the service provider.
In fact, we know that payroll and HR staff needed a service that didn’t complicate things.
With Payactiv, the worker always comes first, and always has the right to receive unpaid, earned wages directly from the employer. The Payactiv EWA deduction shows up on the employee’s paystub, so the employee knows exactly how much was received in EWA payments, and how much remains.
The Payactiv model is transparent and straightforward, and has been reviewed by multiple regulators. No regulator has raised a concern about the Payactiv deduction model.
And, of course, Payactiv always lets employees decide how, and where, they want to receive their paycheck.
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* The Payactiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.
** Central Bank of Kansas City is the issuer of the Payactiv Visa Prepaid Card only and does not administer, endorse, nor is liable for the Payctiv App.
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