This is the fourth in our five-part Q&A series addressing your questions from our recent seminar with the APA. These questions are related to troubleshooting and special cases with DailyPay.
1) What happens in the event of a same-day employee termination? Can DailyPay only be used for termination pay if an employee has already opted-in and set up a DailyPay account?
For the avoidance of doubt, DailyPay only makes funds available to an employee if the employee has earned the funds by logging in hours with the employer. No action is required in order to “turn off” DailyPay for the user. DailyPay does ask that you inform DailyPay of the termination through the Partner Portal, but if you do not do so, the user will simply not accumulate any additional balance, as s/he is not clocking in and out and reporting hours. If a user does not show up on the User Roster for two consecutive pay periods, the user’s account with DailyPay will be terminated.
As far as the actual processing of the payments, you will either:
(1) Continue to follow the same process you use today, or
(2) Utilize DailyPay’s new off-cycle payments product
DailyPay is rolling out a new off-cycle payments product that enables termination pay to be “pushed” via employer instruction, as opposed to being accessed via an employee’s DailyPay balance. The partner may use this tool to satisfy termination pay and the funds will be processed same-day.
2) Is there a troubleshooting feature or an alert within the DailyPay app when an error occurs and an employee isn’t paid by the payroll company?
DailyPay pre-funds all payments from our own balance sheet, so payroll company errors would not be related to our offering. With DailyPay, your payroll team runs payroll the same way they always have and employees will receive their funds on payday from DailyPay, not from the payroll company. DailyPay is repaid through the ordinary payroll process, so a payroll company error would be an issue for DailyPay to deal with, not the employee. However, through the file exchange process, DailyPay mitigates this risk.
If there are any system errors on our end, we will notify your employees in accordance with their communications preferences (e.g., SMS, email, etc.).
3) How does DailyPay account for missed hours, such as an employee being late to a shift?
Because DailyPay receives information from the employee time clock at least once a day, our technology would be aware that an employee was late or that a shift was missed before that employee had a chance to request a transfer for that day’s earnings. At the end of the day, when that employee went to check her available balance, she would see that it was short the funds for the amount of time she had missed.
4) How does DailyPay work if the employee has multiple accounts registered for their direct deposit?
Once the employee has opted-in to DailyPay, s/he has the opportunity to manage multiple accounts through the DailyPay system, not through the employer’s payroll system. In the employer’s payroll system, 100% of the net pay will be directed to the user’s DailyPay account. The user can then manually allocate funds to whatever accounts they would like within their DailyPay app. However, users typically choose to send their funds from DailyPay to one account each time.
5) What if the employee requests too much money before payday and does not have enough to cover all the mandatory/non-mandatory deductions?
In order for an employee to overdraw their DailyPay account:
1) A time clock error in favor of the employee must have been made
2) The employee must draw out more than they are owed
3) The employee must not take the opportunity to work the hours to make up for the negative balance
If an error is made, the employee will have the opportunity to work the necessary amount of hours to make up for it and rectify the issue.
6) How is it possible for an employee to “double-dip” using DailyPay?
DailyPay has a safeguard called Vault Check to ensure that the DailyPay account is on file for a DailyPay user in your payroll system, or else funds will not be made available to that user. If a user withdrew money from their DailyPay account and then changed their direct deposit account with their employer to a different account, it may be possible for them to “double-dip” or overdraw. However, users are warned against this practice in their user agreements, both to make them aware that constitutes fraud and to ensure that they won’t do it accidentally.
7) The Direct Deposit model seems to take a lot of control away from the employer in terms of time and attendance management. Is there anything in place to ensure what the employee is requesting is valid?
The employer will still enjoy full control over time and attendance management. DailyPay works together with your existing time and attendance system, so there is no change required in that respect.
As far as verifying the time that employees are reporting, there are some safeguards in place. DailyPay’s model detects anomalies in data and does not make suspicious earnings available (for example: an employee will not be able to transfer any funds after accidentally being clocked in for a 24-hour shift). This way, it is easier for an employee to realize they’ve missed a punch in or out and go to the payroll team to correct the error. Also, because employees will quickly become aware that missed punches will result in their not being able to make a transfer that day, many companies report increased time clock compliance as another positive effect of implementing DailyPay.
8) Does Daily Pay provide auditing tools for the payroll teams to audit employee transfers?
Payroll teams can access information about employee transfers and hours reported at any time through the Partner Portal. DailyPay also provides payroll reports to confirm usage and payments.
9) Do you need to have the pay rates in the time clock system to use DailyPay? Our system isn’t set up that way because some managers only need to approve time without seeing rates.
For this exact reason, pay rates do not have to be in the time clock system. DailyPay can work with partners to create a Gross Earnings File based on hours worked only and collect the pay rate from the User Roster. That way, salary information can be kept private.
10) When using the alternate direct deposit model, does the DailyPay account need to be set up in our employees’ records as part of their payment elections? We use a self-service system and this seems like it could be an issue.
Yes, DailyPay updates an employee’s payment elections in your self-service system on an automated basis. The employee’s personal bank account information is housed within the DailyPay system once the employee has enrolled and initiated their first on-demand payment. DailyPay has a safeguard called Vault Check to ensure that the DailyPay account is on file for a DailyPay user in your payroll system, otherwise funds will not be made available to that user.
11) We don’t currently export time between our bi-weekly payrolls. Is there a separate program that will gather that information?
There is no need for a company to export time. DailyPay functions through a simple data exchange from your current time management system (“TMS”). There is no systems integration or new software implementation required, and the necessary information will be fed to DailyPay automatically. Here’s how it works:
1) DailyPay receives raw employee timekeeping data from your company
2) DailyPay converts this data into an available balance for the employee
3) DailyPay allows the employee to access and use these funds instantly (24/7/365)
4) DailyPay is repaid when your company runs payroll as usual with no changes to your company’s current process
For companies whose employees are salaried or who only fill out their timesheets once at the end of the pay period, there is a DailyPay product option that does not involve receiving time clock reports. For that option, employers report how much an employee would earn in a set earning period, such as two weeks, and then their daily rate would be 1/10 of that total, for example.