Wages on Demand Gives Employees Access to Earned, But Unpaid, Wages

In August, President Trump issued an Executive Memorandum permitting U.S. businesses to defer the withholding, deposit, and payment of certain payroll taxes for September 1 through December 31, 2020. Employees making less than $4,000 biweekly are eligible for the payroll tax deferral. The memo’s intent was to put more money back in employees’ pockets at a time when many Americans are still struggling with the COVID-19 pandemic. The caveat is that payroll taxes must be repaid in full by April 30, 2021.

Looking ahead to next year, this means that employees’ payroll taxes would essentially double January through April. Any unpaid taxes as of May 1, 2021 will begin to accrue interest and penalties. Another sticking point is that employers may be on the hook for unpaid taxes if an employee leaves in the first quarter of 2021. This risk, combined with the burden on employees to pay double their portion of payroll taxes in early 2021, makes the prospect of deferring payroll taxes now somewhat untenable.

There is still the very real need that many U.S. workers are facing a financial crunch. Among lower-income households, many still feel worse off financially compared to before COVID-19, struggle to pay basic expenses, and have skipped or made partial payments and used up savings to get by. Americans making less than $75,000 per year were also the hardest hit when it came to job losses.

Another, lesser-known alternative to the federal payroll tax deferral puts employees in control of accessing wages before payday without employer involvement or government intervention.

Wages on Demand: An Alternative to Payroll Tax Deferral

Adams Brown’s payroll software provider has the capability to offer wages on demand, which permits employees to access a portion of their earned, but unpaid, wages before payday. It only costs (the employee, not the employer) $5 per transaction, up to $200.


  • Per-employee basis
  • Flexible timing
  • No government or employer intervention
  • No income restriction
  • Funds are available 365/24/7

One of the advantages of wages on demand is that the employee can choose if extra funds are needed. It’s not a payday advance; the extra money is simply early access to the regular paycheck. It’s not a loan, either, so employees don’t pay interest. They can request early access at any time, for any reason, and the funds are deducted from their next paycheck. It’s estimated that more than 10 percent of American workers already use alternative options like private payday advances, which often come with strict repayment terms and high interest rates. An employer-sponsored option to access wages is safer, more secure, and easier.

Another benefit for employers is that there is no risk involved. Employees create an account and sign in on their phone or computer and can access earned funds any day of the year, at any time of day. There’s no call to HR, no transaction to approve, and nothing to maintain in payroll records. Unlike the payroll tax deferral, which puts risk on the employer for any unpaid taxes, wages on demand is a transaction that stays with the employee. There are no income restrictions; once an employer opts into the wages on demand system, it’s available to every employee if they decide they need it.

For employees, accessing funds is quick. If they choose direct deposit, funds are available within one to two business days. When employees choose a supported debit or pay card option, funds can be transferred in real-time.

When are Wages on Demand a Good Strategy?

There is virtually no risk to an employer that wants to offer wages on demand. It can be used as a tool to attract and retain staff, and the app’s built-in financial wellness portal also gives employees more information about their overall financial health. It can be useful for any industry, especially hard-hit sectors like retail and restaurants.

Anytime that employers can find a way to provide customized benefits to help their employees, it’s a good thing. Especially in a post-COVID economy, such gestures – whether financial or otherwise – help to foster loyalty and morale. And when most companies are still working remotely or have limited in-person interactions, finding ways to create value for employees can be harder. Wages on demand is a very tangible, effective way to help employees who need it the most, without any extra employer involvement.

How to Do It

Employers that want to consider this option for their employees need to work with a payroll service provider that offers it. Wages on demand is one of the solutions that Adams Brown offers in certain outsourced payroll packages. Contact us anytime and we can discuss how to best utilize wages on demand and other options as part of your overall payroll service.