Payday loans

January 23, 2014

A Workplace Perk that Could Payoff!

Filed under: Benefits,Compliance,General HR Buzz,Legal Issues11:04 am

A recent article caught my eye the other day. reporter, Will Yakowicz, wrote an article about Lending Club, a peer-to-peer lending marketplace, who is in talks with Google to offer employees a new employment perk, low-interest rate loans.  The idea is that a company could lend from their treasury reserves, which only pays them one or two percent interest and the employee could use those monies at the rate of two to four percent interest.  Thus, a greater yield for the company and a great perk for the employee who needs some fast cash.

So, I got to thinking what would happen if Google decides to do this.  Like many other trends, if one company offers a new benefit, word gets around, and other companies feel the pressure to enrich their own benefits and they follow suit.  The argument is that it could be a good recruiting and retention tool.   But, what about HR?  Come on, put on your HR thinking caps and let’s see what some of the hurdles could be that an employer may have to clear.

  1. Would there be regulatory requirements for an employer that is not a financial institution to enlist the services of another entity to engage in lending?
  2. What HR policy would need to govern this new perk?  Is it a benefit?  Is their tax reporting involved?  Payroll deductions?
  3. What if the employee quits or is terminated prior to paying the loan off?
  4. How will this conflict with the possibility of new laws restricting an employer’s use of credit reports in employment decisions?
  5. Who is the decision maker as to whether the employee is eligible for a loan?  And, will loans be made to an employee on a personal improvement plan?
  6. How many loans can an employee have at one time?
  7. Will the employer be responsible for having a loan loss reserve to cover uncollected debt?

I’m sure you can probably think of a few other things worth consideration.  No decision by Google has been made, but what if . . . ?


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