Gusto Enables Employees to Choose Their Own Payday

Gusto announced today the launch of Flexible Pay, a new feature that allows employees to choose their own pay schedule. Employees will no longer have to adjust their finances around employers’ typical twice monthly payments.

“My kids have a better payroll system than I do,” said Josh Reeves, CEO of Gusto, in reference to kids who babysit or mow lawns and get paid immediately after the job is done.

With Flexible Pay, employees can get paid weekly or for work they did the previous day. Gusto gives an advance to the employer to pay the employee. Since this service is brand new, Gusto will be making these loans and keeping them on their own balance sheet. But Gusto spokesperson Rick Chen told deBanked that they are currently in talks with banks.  

“Employees are essentially giving loans to their employers,” Chen said regarding the current system.

While Gusto is a payroll company, it is trying to disrupt the payday lending industry and other online lenders that focus on short-term lending. So far, this service is free. Gusto charges neither the employer nor the employee. The only catch is that the employer has to use Gusto’s payroll system in order to get this perk for its employees. The hope is that this program will incentivize employees to ask their employers for this perk and Gusto will gain new clients, according to Chen.

Founded in 2011, Gusto has over 60,000 payroll customers nationwide and offices in San Francisco and Denver.

Todd Stone was a reporter for deBanked.