Unexpected life expenses happen to us all. Whether it’s a medical bill, car issues or some other legitimate expense, these unforeseen bills can be stressful and difficult for any employee to take care of. When employees are put in this position, it helps if their employer can assist with loan advances.
The concept of a loan advance is simple enough: an employee asks his or her employer for a sum of money, agreeing to pay it back from an upcoming paycheck or paychecks. An employee should only ask for a loan advance when they are in need of money right away and need it for an ethical reason. If the employer deems it suitable and are able to financially afford it, they can offer their employees the option of a loan advancement.
But how does it work? What does your company need to do to handle them correctly? As the employer, your company cuts the employee the check when needed, and then you deduct the appropriate amounts from the following paycheck(s). According to federal law, an employer can withhold no more than 25% from any given paycheck. This means that the advance repayment, depending on the amount of the loan and the amount of the paycheck, might require multiple pay periods in order to deduct the full amount.
It is important, of course, to understand the nitty-gritty details of the process to ensure proper handling of advances and remain in compliance with the laws when withholding. This is where LCAF Payroll comes in. We take away the headache that compliance can bring, assessing each case individually, and holding to the letter of the law.
When you bring LCAF Payroll on board, you can leave the loan advances for our team to handle. Simply notify us of the loan amount and the date the payroll deductions should start, and we will take it from there!
To learn more about LCAF Payroll’s services, contact us today.