The era of the traditional biweekly paycheck is coming to an end.
As cost of living rises, more than half of employees are living paycheck to paycheck, according to a Bank of America survey, and employers are responding. In 2019, only 22% of employers rated financial well-being as a concern. In 2025, it reached an all-time high of 48%, according to CNBC.
Given these trends, flexible pay — also known as on-demand pay or earned wage access — is gaining traction, as 75% of Millennials say they’d factor earned wage benefits into a job decision.
Flexible pay isn’t one thing. It’s an umbrella term for different solutions that break the traditional, rigid paycheck schedule. It includes both employee-initiated payments and employer-initiated payments. But regardless of who initiates it, the result is the same — employees get paid faster without waiting for the next payday.
Earned wage access — sometimes called on-demand pay — is the employee-initiated form of flexible pay. It allows employees to withdraw a portion of their earned wages through a third-party solution that integrates with their employer’s payroll system. These solutions use real-time data to show employees how much they’ve accrued, so they’re only accessing wages they’ve already earned.
Because of this, EWA isn’t a loan or an advance. And for employees living paycheck to paycheck, that distinction matters. There’s no debt involved, and nothing to pay back.
To use EWA, employees typically need to enroll and download an app. In some cases, wage transfers come with per-transaction fees.
EWA can be offered on its own, but some solutions take it further. When paired with other benefits like interest-bearing savings accounts, payroll bill payments, and real-time visibility, employees have even more control and flexibility at their fingertips.
Employer-initiated payments flip the model. Instead of employees requesting early payment, the employer initiates the payment, typically for compliance reasons or to fix a mistake, like when an employee is underpaid.
The most common reason for an employer-initiated payment is to issue a terminated employee’s final paycheck. Employers in states like California, Colorado, and Massachusetts, among others, are required to pay terminated employees on their last day of work. For organizations with employees in multiple states, manually cutting checks and coordinating wire transfers creates operational headaches and compliance risks.
For Workday customers, a native solution can help automate these kinds of payments without adding vendors or complexity to existing processes.
Financial stress is widespread and not limited to lower-income workers. Half of U.S. households have less than $500 in savings, and 48% of six-figure earners are living paycheck to paycheck.
It's no surprise, then, that 77% of employees report being financially stressed. And that stress doesn't stay at home. U.S. employers lose $183 billion annually in lost productivity to financial stress, according to BrightPlan.
Giving employees more control over their wages can ease that strain without pushing them toward high-interest payday loans or credit cards. Meanwhile, organizations that implement EWA have seen turnover and absenteeism drop by more than 20%.
As more states require same-day or next-day final pay for terminated employees, employer-initiated instant payment solutions can help organizations meet those requirements without manual workarounds.
The mechanics of flexible pay vary by solution, but a few components are critical.
First, payroll integration. Any flexible pay solution needs access to payroll data — specifically, real-time visibility into hours worked and wages earned. Without that, the system can’t calculate how much an employee is eligible to access.
For Workday customers, native solutions that operate within Workday offer a significant advantage because they pull directly from existing payroll data without requiring separate integrations or file transfers.
Then there’s the payment infrastructure. Moving money quickly requires access to modern payment rails. Traditional ACH transfers can take days, but real-time payments (RTP) and push-to-debit options can deliver funds in seconds.
This matters for both employee-initiated access (where speed is a key benefit) and employer-initiated payments (where compliance deadlines may require same-day delivery). Adoption of instant payment infrastructure is accelerating, with 68% of businesses planning to adopt RTP within the next two years, according to PYMNTS.
Finally, there’s the back-office work that makes it all run smoothly: funding management, reconciliation, transaction tracking, and compliance reporting. A strong solution handles these automatically, keeping payment data in sync with your system of record. Security is also critical — look for PCI compliance and tokenization to protect sensitive payment information.
For Workday customers, the cleanest path is a solution built for Workday that brings together payroll integration, modern payment rails, and operational visibility without adding vendors or complexity.
Choosing the right flexible pay solution starts with understanding both what your employees need and what will work best for your existing system.
For employees, accessibility is critical for adoption, especially with EWA. If people can't use it from their smartphones, they're not going to use it. A large majority of consumers (77%) prefer to manage their banking through an app or a computer, according to the American Bankers Association. People expect that kind of convenience, and EWA is no exception.
For employers, how flexible pay integrates into your existing system is key. Workday customers should prioritize maintaining Workday as their system of record. That means choosing solutions that work natively within Workday.
It's also worth thinking about what problems you're actually solving. If employees need early access to earned wages, EWA makes sense. If you're dealing with same-day final pay requirements or urgent payroll corrections, you need an employer-initiated solution. Some organizations need both — and the right partner can help you address each without layering on complexity.
The goal is a solution that complements your existing payroll processes, not one that complicates them.
While it's hard to say exactly where flexible pay is headed, a few trends stand out.
The first is a move toward native solutions. Instead of adding another vendor, organizations want solutions that work within the systems they already use. For Workday customers, that means partners who deliver services directly within Workday, with no separate integrations, file transfers, or extra reconciliation required.
The second is the growth of instant payment infrastructure. RTP payments surged 38% in 2024, and the number of financial institutions on the RTP network grew 67%, according to Payments Dive. As more banks adopt instant payment rails, flexible pay becomes faster and more reliable.
The third is innovation in employer-initiated payments. Early flexible pay solutions focused on employee-initiated access. But employers also need to handle compliance-driven payments, like same-day final pay and urgent corrections. Newer solutions can handle both without adding complications.
Flexible pay is changing how companies think about payroll. Instead of rigid schedules, organizations are moving toward options that offer greater freedom and flexibility for employees and employers.
For Workday customers, the best option will be a Workday-native solution that fits your existing setup and leverages modern payment rails.
If you're exploring flexible pay, start with two questions: What do your employees need? And what do your compliance requirements demand? The right solution should address both.