Everything You Need to Know about Restaurant Earned Wage Access Technology

DISCLAIMER: This content is provided for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. You should contact your attorney or other relevant advisor for advice specific to your circumstances.

More than half of American consumers (57%) said they are living paycheck to paycheck, according to recent trends shared in PYMNTS.com based on trends measured by PYMNTS and LendingClub, and restaurant employees are no exception, many of whom have limited or no emergency savings. Due to the COVID-19 pandemic, restaurant workers faced unemployment, restaurant closures, and inconsistency in hours, which further hurt their personal finances. According to a survey completed by QSR Magazine in August of 2020, 84% of restaurant workers had less than $500 saved for an emergency, a 6% increase from 2019, and over half (51%) had nothing saved, an 11% percent increase. 

Financial stress is a significant mental burden that can lead to mental health issues, burnout, absenteeism, and employee turnover, but earned wage access can help alleviate these issues for restaurant workers.  

Offering earned wage access can improve the restaurant employee experience, increase financial stability, and improve retention. According to a 2021 PwC employee financial wellness survey, 63% of respondents shared that their financial stress has increased since the beginning of the pandemic — and of that 63% who are more financially stressed, 45% said they were distracted at work by financial issues. 72% of them also shared they’d be more attracted to a company that cares more about employee financial wellness than their current company. And 57% of them said they’d avoided addressing a medical issue because of fear about the cost. Basically, the financial reality of many restaurant workers is precarious at best, and there are ways that employers can help mitigate this issue.

By providing earned wage access, employees can reap the benefits of greater financial flexibility and stability. 

What is Restaurant Earned Wage Access?

Earned wage access (EWA) products, which may, depending on the features, include products known as early wage access, on-demand pay, and instant pay, refers to products that give an employee the ability to access their earned wages prior to their scheduled payday. This is a relatively new concept, but it’s not just a trend from the gig economy, and it can be beneficial to offer permanent staff more flexible pay. With earned wage access, employees can withdraw a certain amount of their earned pay after every shift, providing them with unprecedented flexibility and control over their personal finances.

With early access to their earned wages, restaurant employees can close the gap between paychecks, pay bills on time, avoid late fees, overdraft fees, and high-interest payday loans. They can also be prepared to pay unexpected expenses, like emergency medical bills and car repairs, which can help reduce financial stress and increase financial health. 

Benefits of Earned Wage Access for Restaurant Employees

1. Flexible Pay Schedule: Employees can control when they are able to access money they’ve earned and better align their pay dates with their personal financial commitments. 
2. Financial Security: Employees can access emergency funds if a sudden bill or expense arrives, without incurring more debt and pay bills on time to avoid late or overdraft fees. 
3. Increased Savings: Employees have more visibility into their wages and spending, helping them monitor their spending and increase savings
4. Feeling More Supported at Work: Employees can feel the benefits of flexible pay, and according to a Mercator Advisory Group study in 2021, stay in their jobs for 27% longer.

Benefits of Earned Wage Access for Restaurant Owners

According to the Mercator Advisory Group study in 2021 and a 2020 KPMG Study earned wage access can:

1. Attract Employees: Earned wage access is a differentiator in a competitive labor market and can nearly double the pool of applicants and increase the speed of hiring.

2. Retain Employees: Reduce turnover as employees who take advantage of earned wage access benefits may be less likely to leave and seek other opportunities as they will feel more secure with reduced financial stress.

3. Increase Employee Productivity: Eliminating financial burdens will increase employee focus and productivity and help employees feel more valued as a result of this benefit. 

Keep Employees Happy with Earned Wage Access

Earned wage access is a prized benefit for restaurant employees, providing them with more flexible pay and increased financial security. As a restaurant owner, this is a no to low-cost benefit to offer. When employees feel valued at work, they are more productive, happier, and more reliable. As the restaurant industry recovers, retention is going to be a key to solving the labor challenges ahead, and offering benefits like health insurance and earned wage access will be a differentiator to attracting and retaining restaurant workers.  

Choose the Right EWA Provider for your Employees

Make sure you’re setting your team up for financial success with good pay, solid benefits, and a pay card with EWA. 

Offer Toast Pay Card & PayOut at your restaurant. 

Toast Pay Cards are issued by Sutton Bank, Member FDIC, pursuant to license by Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated. Toast PayOuts are funded by a 0% line of credit issued to employers by Toast, Inc. or WebBank, as set forth in the employer's Credit Agreement. Toast and WebBank each reserve the right to change or discontinue this program at any time. Toast Pay Card and PayOut is not available in all jurisdictions and is available to Toast Payroll customers only.

Toast PayOuts may be limited to a portion of pay to help account for estimated taxes, withholdings, and deductions. Tip PayOuts are not available at restaurants that tip pool without using Toast Tips Manager. Employees must receive wages via their Toast Pay Card in order to access Toast PayOuts. Tips will be paid to employees on their Toast Pay Card as though they were receiving them in cash. Wages will be advanced by employers during the pay period and deducted from their total wages paid to them on payday.

This article is for informational purposes only; product features may vary by provider and/or service.