With COVID-19 sweeping the globe, businesses everywhere are taking action to not only keep their workforce safe and healthy, but to also alleviate anxiety around the financial implications for their teams.
What if post offices close? With so much uncertainty, how can I be sure I'm paid on time? These are all questions that the coronavirus is forcing into the minds of today's workforce. And it's up to employers to do what they can to ensure employees receive their paychecks as scheduled.
Here’s how transitioning from paper to electronic paychecks can help during the COVID-19 situation and beyond.
The benefits of paperless pay during coronavirus and beyond
As we all know, there are certain things we simply cannot control. Today that’s COVID-19. With COVID-19 forcing many businesses and services to temporarily close or move the majority of their workforce to remote operations, it’s important for business leaders to put safeguards in place to prevent unnecessary pay delays for their employees.
At Payroll Data, we’ve been in contact with all of our paycheck print and delivery vendors and are currently processing paper payrolls as we always have. We’re hopeful that will remain the case. But, with that said, we recommend that everyone that’s not already operating in a paperless capacity (Payroll Data client or not), move to an electronic payment solution.
Swapping paper paychecks for electronic payments has a bevy of benefits for employees and employers alike, especially during uncertain times like these. A few advantages include:
- Reliability: Electronic payments are automated, which reduces reliance on humans, postal services, banks and businesses to print, process, deliver, deposit, and pick up paychecks. With the volume of businesses closing, adjusting hours, and moving to remote operations, minimizing the number of touchpoints required to connect employees to their paychecks is increasingly important.
- Safety: With “social distancing” in full effect, the more you can limit human interaction, the better. Ensuring employees don’t need to interact with a bank teller or unnecessarily leave their homes only helps to slow the spread of the virus.
- Efficiency: Employers and employees are learning to navigate a new day-to-day. This takes time, making it more important than ever for businesses to maximize efficiency where they can. With electronic, automated pay solutions, employees save time otherwise spent depositing checks at the bank (and waiting for available funds). And employers save time by eliminating manual paycheck processing each pay period.
- Reduced costs: Employees avoid check-cashing fees and employers save on expenses associated with paper checks, paycheck production, and lost or stolen checks. Although electronic pay methods may have associated fees, the overall cost is typically lower and more predictable. With financial stress at an all-time high, this is one less worry on the books.
- Security: Employees don’t need to stress about losing their paychecks since funds are automatically deposited into their accounts; employers eliminate concerns of fraudulent cashing of duplicate checks in the event of a lost or stolen check.
- Financial management: Electronic payment methods, such as direct deposit, offer employees an easy way to set aside a predetermined amount of money for checking and savings. While always a beneficial practice, it’s especially important now, as many employees (like their employers) work on their own contingency plans to ensure they can weather current and future times of uncertainty.
- Eco-friendly: Paperless pay doesn’t contribute to paper waste. Not only that, but it eliminates trips to the bank, which means less gas consumption and carbon emissions. Hey, there’s got to be a silver lining to this whole COVID-19 thing, right?
While moving to paperless paychecks is particularly important now, it’s also a worthwhile change to make for the long run. Outside of COVID-19, there’s a lot of circumstances that could impact the reliability of paydays that are not automated. Inclimate weather that shuts down roads or delays postal services. A national holiday that snuck up on the calendar and delays payroll runs. Government shutdowns. Human error. And more. You can never be too prepared.
So, what are the options — sans paper?
Electronic payment options
There are a variety of paperless payment options for employers to consider, two of which include direct deposit and payroll cards (aka “paycards”). Here’s a high-level overview of each:
- Direct deposit: Over 90 percent of employees are paid via direct deposit, making it the most widely used payment option by far. Direct deposit allows you to transfer funds directly from your bank account to your employees’ bank accounts using the Automated Clearing House (ACH) network. The ACH coordinates payments among financial institutions. On paydays, employees receive funds via direct deposit, and their account balance automatically increases.
- Paycards: A newer and increasingly popular alternative to direct deposit, paycards provide an electronic payment option for “unbanked employees,” (employees without a bank account). With paycards, you can deposit employees’ net wages directly into a paycard account on paydays. Employees have access to their account funds with a prepaid card, which they can use like a debit card to get cash, make purchases and pay bills.
Direct deposit is more popular, but depending on your industry, it may make more sense to offer paycards. Some industries, such as food service, hospitality and agriculture tend to have higher percentages of unbanked employees, so paycards are a good option. Before you make a decision on which payment form to offer, check with your bank on associated fees for each option and ask your employees which method they prefer.
Can employers require electronic payment?
As an employer, you’re responsible for paying your employees accurately and on time. Considering this, you may want to transition all employees to an electronic payment method.
In some states, employers can make direct deposit mandatory for their employers. If you’re in Wisconsin, for example, you can mandate direct deposit if you comply with specific state guidelines. In other states, such as Illinois, it’s voluntary. Check your state law to see if mandatory direct deposit is an option for your business.
How to move to a paperless payday?
Employers that already offer their workforce paperless pay options have taken the first step. However, there’s more to it. Encouraging — and in some cases requiring — employees to participate in electronic pay solutions might just be the next, best step for you and your workforce.
Already a client? Reach out to your client service representative (CSR) or account executive. Whether you’re new to direct deposit, want to boost employee participation (hint: you’re one authorization form away), or are interested in our paycard offering, we are here to help.
Not yet a client? We’re still here to help. Send us a note today to discuss your needs and learn about our electronic pay options.