Employers are often called upon to make special or individual paycheck cuts for employees. Reasons can include a new employee who can’t make it until the first normal payday or an extraordinary financial demand. Employers are finding that these requests are becoming more common today than ever before. Many workers cannot make ends meet between pay periods.

Most employers have a firm policy against payroll check advances or any pay practice outside of the normal weekly, bi-weekly or semi-monthly payroll schedule. ASE’s 2015/16 Michigan Policies and Practices Survey reports all but 4% of Michigan employers pay on these schedules  Only one company reported they pay on a daily basis. There are many reasons for an unyielding pay schedule, but most employers blame the administrative cost of cutting a separate check as the primary one. But due to advances in automated debit/credit systems, cost may no longer be an issue.  Employers in some industries are now considering on-demand pay as another progressive employee relations practice.

Driven by the gig economy, innovative on-demand pay practices are not only being driven by a different type of work environment, but also by the fact that many lower paying jobs present a personal financial challenge that compels paycheck to paycheck living.  Initially, pay-on-demand came out of the ride sharing industry where companies like Uber and Lyft use instant-pay technology for ride payments.

Companies offering daily pay administrative services are starting to appear.  One new service is DailyPay and charges $1 to $1.50 a day to use the service. Other companies include PayActiv and FlexWage, who reportedly partners with payroll giant ADP.

This pay feature is not limited to the gig economy, the New York Times reports that Goodwill of Silicon Valley installed an A.T.M. machine in its workplace that allows employees to withdraw up to half their earned wages from the machine. A limit of $500 has been set on the “advance”.

Besides providing more liquidity to employees hit with tight financial/cash situations, this pay practice is a better choice for employees than paying overdraft fees on a bounced check or going to a payday lender that would charge excessive interest on the loan.

Source: New Payday Options for Making Ends Meet. New York Times 7/4/2016