Briefing at a Glance

  • John Gronen, CFO of Yooz, an accounts payable software company based in Dallas, Texas, has decided not to offer employees instant wage access next year. The decision came after he explored the potential new benefit and determined there wasn't enough interest to move forward.
  • The finance chief told CFO Dive in July that he was weighing the advantages, costs, and potential unintended consequences of offering the new benefit, also known as earned wage access. At the time, Gronen admitted he personally had reservations that earned wage access tools could undermine the budgeting support provided by traditional monthly or semi-monthly payroll.
  • "We've decided to hold off on earned wage access for next year. No one here is excited about it because most people are fairly well compensated," Gronen said in a recent email response. "If the market changes, or if there's more demand from existing employees, we might revisit it in 2027."

Deep Dive

Since 2023, a growing number of states have passed legislation favorable to earned wage access providers, although the industry has also drawn controversy over fees associated with some services, CFO Dive's sister publication Payments Dive has reported.

Since the early 2010s, earned wage access companies have served employees directly or partnered with employers to let workers access a portion of their earned wages before payday. According to a June 2023 report from the Harvard Kennedy School, the benefit has been especially popular among hourly workers in high-turnover industries like retail and hospitality.

The report noted that advantages of the benefit include access to liquidity "with minimal hassle," while disadvantages include fees that can resemble payday loan products and the potential risk that "overuse leads to a cycle of dependency that leaves workers worse off than when they started." Advances carry an average annual interest rate of about 100%, but lower than many payday loans, whose rates can exceed 400%, The New York Times reported last year.

Gronen told CFO Dive in the summer that if he offered earned wage access, he believed the company should bear the cost. But he acknowledged facing a moral dilemma as he considered the matter.

"As a CFO, you want to make sure you're doing the right thing for employees and helping them avoid getting into trouble," Gronen said. "There are a lot of benefits, but the downsides scare me, because some people get $1,000 or $100 today and go spend it right away, and then at the beginning of the month, they don't have money for rent."

Gronen also said he continued reviewing the option despite his personal reservations because he believes benefits and employee satisfaction lead to higher retention rates.