How Wonolo Facilitates Daily Pay for W-2 Workers with Zeal's Payroll Built for Shift Work
During last month’s Shift Work Summit Kirti Shenoy, co-founder and CEO of Zeal and Ivan Sathianathan, Product Manager at Wonolo discussed their partnership. Their session covered how Wonolo leverages Zeal's technology to streamline payments for W-2 workers. In this wide ranging conversation a variety of shift work topics were addressed. From Zeal’s ability to automate payments and compliance to Wonolo’s focus on making payments easy for workers, this session showed the breadth of the solutions being developed to support a future where shift work becomes a greater share of the workforce.
Watch the video and read the edited transcript below, following the highlights listed below.
Wonolo Makes Pay Easy for Shift Workers
How Wonolo Leverages Zeal to Facilitate Faster Payments
From the Shift Worker Perspective: Getting Paid with Wonolo
Payment Challenges for Shift Work Marketplaces
Automated, Flexible, Native Payroll
Location Data and Payroll Compliance
HR Solutions for Shift Work Companies: I9, Digital Wallets and Health Insurance
Gaurav Deshpande: Welcome to the next session of Shift Work Summit. I'm your host, Gaurav Deshpande.
Gaurav Deshpande: We have had an amazing day with speakers from Sunderstorm and Checkr Pay.
Gaurav Deshpande: Now we come to one of the most exciting case studies that we have for you today.
This session is a case study with Wonolo and Zeal. In the previous session we looked at payments for 1099 gig workers; in this session we are going to be focusing on paying the W-2 workers on a daily basis.
Gaurav Deshpande:
Ivan Santianathan of Wonolo and Kirti Shenoy of Zeal, will present a case. study on how Wonolo pays W-2 workers daily using a system that's built for shift work. Some of you will remember Kirti from last year's summit.
I'm delighted to welcome her back, over to you. Kirti.
Kirti Shenoy:
Awesome. Thank you guys so much for taking the time, and I'm super excited to introduce some new faces to the Zeal platform, and of course, to mainly talk about our amazing customer, Wonolo, who's done some amazing things in shift work over the past decade, but it continues to be that industry innovative leader. Maybe we'll just kick it off. Ivan, maybe you can kick it off. Give an introduction on yourself, and we can dive into the Winol0 piece of the presentation to start.
Ivan Sathianathan:
Thank you, Kirti. Hi, everyone. My name is Ivan. I'm a staff product manager at Wonolo, and I'm going to talk to you about a feature that we have built in partnership with Zeal.
So if you move on to the next slide, please, Kirti, cool just a quick Intro to Wonolo, where it's a tab, we're known as a talent app. We provide extremely fast access to relevant, reliable, and highly rated workers.
Wonolo Makes Pay Easy for Shift Workers
We have a large talent supply across most of the major metropolitan areas in the States. And you can deploy one of those across almost any type of work engagement. Be that short term, long term 1099, W-2, low volume, or high volume.
Ivan Sathianathan:
That's the pitch moving on. This is how fast the pay works. So you'd have heard about the typical payment UX for 1099, or gig work. When a job is approved, a job is paid. So a Wonoler or worker, someone works a shift, once the customer agrees, says, yes, this shift has been fulfilled. I'm happy that that shift gets approved. Then the payment for that shift gets initiated and paid out in due course. That can be instantaneous. It can be one to two days.
With regular W-2 payroll. The experience is slightly different. We have the concept of a payroll period that can be one week, two weeks by or monthly. In this example the payroll period is a week. So someone is working shifts over the course of week one.
But they only get paid for those shifts in week two when we run payroll around. 18 months ago, Wonolo introduced W-2 jobs onto its marketplace. We, previous to that, only had 1099 jobs on the platform, and we partnered with Zeal to facilitate payroll platform.
To facilitate this, we created a subsidiary company called Frontline, and any W-2 jobs that were posted in the marketplace were fulfilled by employees of our subsidiary called Frontline.
Now, this introduced a problem for the workers, because the folks who are used to 1099 jobs were used to getting paid soon after the job was approved.
Ivan Sathianathan:
But now, if they were taking on W-2 jobs, they were experiencing this slower payment cadence where they had to wait a week or so to get paid for the jobs.
And knowing the makeup of our workforce, we identify this as an issue for some of them. They're living paycheck to paycheck or day to day, and they really rely on the faster payment that you get from typical gig work.
Ivan Sathianathan:
So moving to the next slide. So this. So the way we address this was through a feature called Faster Pay for W-2 jobs.
How Wonolo Leverages Zeal to Facilitate Faster Payments
"...we have found that the folks who are used to 1099 pay. They really love this feature of being able to work W-2 jobs having access to the largest set of jobs that are on our marketplace, and still get paid at a similar cadence."
Ivan Sathianathan:
What we did was when a job was approved. We then made a call to Zeal's API using their payroll Preview feature.
And we would say, Okay, this job was to work from 9 to 5, and it was $20 per hour. Can you give us an estimate for the net pay for that particular shift, and this was done instantaneously. As soon as the job was approved, we'd get this immediately back from Zeal, and what we would do was then advance 80% of that estimate of net pay to the worker. So they were receiving the pay for that shift in a similar cadence to what they would be expecting if they were working at a 1099 job.
And then the following week, when we ran the payroll process, we would do a reconciliation between the net pay that had been advanced to them. The actual net pay and a true up the Wonoloer, so that everything reconciled.
This was one extra benefit of this is, there's no there's no fees to the worker for this feature.
Ivan Sathianathan:
So now I'm going to talk a bit about the UX that we had to build to complement this feature.
Ivan Sathianathan:
What you're seeing. Here is the Wonolo app UX when a shift has been completed for on a w 2 basis, and you can see that we've got the estimate of the net pay from 0, which is $154, and we're explaining this to the worker. We're advancing you 80% of this $123, and you'll receive the remainder in your next paycheck. So this is a view on a per shift basis.
Moving on to the view on a weekly payroll basis the following week, when we run payroll. We had to then explain to one of those , you know, who had to explain the slightly different concept of understanding their paycheck. So, as you can see here, the amount of the net pay for the whole week was $439, but we were only advancing the remaining $48.54 when we ran payroll. And we had to build a UX that showed “Okay, you're only receiving $48 here, but we've advanced you the pay from the previous week for the jobs that you worked within that payroll period.”
We still have issues with this. Some workers are used to the weekly pay, and they find it hard to budget, but we have found that the folks who are used to 1099 pay. They really love this feature of being able to work W-2 jobs having access to the largest set of jobs that are on our marketplace, and still get paid at a similar cadence. And our customers and our workers love it, too. So one of our workers I love to emphasize here the triple usage of [the word] huge. When they were talking about this, the benefits to one of their workers.
From the Shift Worker Perspective: Getting Paid with Wonolo
And one of our workers, one of the early workers who we were on this feature. He's a guy from New York called Tevin. He used to work in 1099 jobs on Wonolo. And he picked up a W-2 job. And he was, you know, experiencing this issue of not getting paid daily, as he'd previously experienced.
So we asked him the question like, if we could do one thing to improve your experience of getting paid, would it be? And he said, You know you're doing good by paying me every day. And that's actually the best. So it was really gratifying to see how this feature really made a benefit for our workers.
Over to you, Kirti, to explain a bit more about how this works.
Introduction to Zeal
Kirti Shenoy:
Absolutely. Thank you so much, Ivan, I really appreciated hearing that story about the Wonolo end user, something that I just wanted to highlight, that I actually just read recently is, you know, 90% of staffing jobs in the market are actually W-2. So I think you know, to Ivan's point. You know, so many of us have innovated on the 1099 side.
And I've sort of figured out a way to approve jobs and pay out these workers on different rails. But as we think of staffing companies, either expanding into the W-2 market, you know, accepting those demand side deals where we are going to staff these W-2 workers we have to think about. You know, how are we going to stay innovative? How are we going to take those opportunities from those legacy staffing companies?
And it can really come through in what I would say is the real EWA, is what Wonolo has built, with previewing the payroll from their real payroll provider to get that accurate view, and then giving those workers access to their wages in advance of the actual pay cycle.
So thank you so much for sharing that.
And it's been amazing to partner with you guys and see, you guys build that out. I want to transition into a little bit of the Zeal side. So for those of you who don't know me, I'm Kirti. I'm the CEO and a co-founder here at Zeal.
We've been primarily partnering with gig, staffing, shift work, and employer-of-record service providers for many, many years, and we really aim to be that modern payroll platform to allow them to do the best shift work, payroll, compliance, and onboarding for their end users as possible.
In a nutshell, you know, in my job I talk to hundreds of staffing companies, new staffing companies each and every year, and I think, especially within the shift work market segment. I'm seeing these 4 as the core pillar challenges that shift work companies are dealing with.
Payment Challenges for Shift Work Marketplaces
Kirti Shenoy:
First and foremost, we have flexibility, which is, you know, we have some of the most amazing mobile apps product managers that are building and really thinking through these beautiful workflows for their users. You want to be flexible to your clients needs. You want to be flexible to what your workforce needs, and you want to do that and build those processes with as little manual intervention as little manual ops as possible for your workers.
Kirti Shenoy:
The second challenge that I see for these shift work companies is scaling. I think a lot of us here on this webinar. We're part of hyper growth companies. You are constantly closing new and new clients. You're onboarding thousands or tens of thousands of workers each and every year.
And the manual processes that might have worked in year one, year two, year three may not work when you're now onboarding and paying out this large volume of workers. So how can we think through reducing those manual processes and increasing automation within our companies?
The third pillar is compliance, and especially in the W-2 market, which we primarily specialize in.
You know compliance is difficult. Your demand team is closing sales and closing these partnerships in new Territories, and with those new Territories come their own set of compliance problems. In the United States in particular, we have 11,000 tax jurisdictions that each govern their own laws around FISA changes and taxation changes. So how are you keeping up with those compliance changes in all those territories while your demand team is closing those new deals and enrolling with those punches?
And then, last, but not least, I see with these shift work companies top of mind for us is worker retention. That's what we have over the traditional legacy staffing companies. Zeal will detect the overtime rules, the minimum wage rules the taxation rules, and we will allow you to auto update all of your checks in an automated fashion without needing any manual intervention. And that is, I think the dream of all of us is shift work companies.That sets us apart from those staffing companies. So how do we create that really exciting worker retention loop where they're more excited to work with your platform than maybe the legacy staffing companies they're used to working with in the past.
Automated, Flexible, Native Payroll
“You can advance those payouts to your workers, and they're happy because they're getting paid daily, or most of their wages daily, instead of once a week or every other week.”
Kirti Shenoy:
And really, what we've done at Zeal is we've come up with this solution. And that is really automated, flexible, and native payroll, you know. If you could have your dream sort of payroll and compliance partner, that will allow you to keep that entire onboarding experience.
Pay experience all in your mobile app, instead of sending your users to 3rd party portals like Adp instead of, you know, building in spreadsheets and doing lots of manual intervention. How can you partner with a provider that's really built for your use case that allows you to automate everything from onboarding to invoicing all in one place, and that's what we really aim to provide to our customers.
Kirti Shenoy:
So to dive right in want to, you know. First and foremost share the example of what is Wonolo doing to do real daily payroll? So I think Ivan showed you the Wonolo side of what the workers see, but wanted to show you the back end side. And hopefully, there's enough PM's here that have read many, many API docs and can digest this a little bit. But what Wonolo basically does with Zeal is they pass us around the hours and the wage for these particular workers.
Location Data and Payroll Compliance
“What shift work companies can do is partner with a company like Zeal. All you have to do is tell us the rate. Send us the work location. If you don't know the work location, you can use someone like HyperTrack to get that work location for you tell us the time in which these workers are working and put your entire compliance experience on autopilot(...)”
They pass us the work location and the time as a bonus. If you guys are having trouble capturing time, you can use someone like HyperTrack that will make it a little bit easier, but but nonetheless, when all those passing us the time, they're passing us the wages and using Zeal as a system of record for that what they end up doing is using our preview payroll endpoint.
That's the endpoint that Ivan was highlighting before where they're basically running a mock payroll scenario with Zeal. So they're saying, Hey, Zeal! This is what the worker is getting. They're getting $200 gross pay. What do we think these workers are going to get as their net pay, based on their withholding details based on the work location based on compliance.
Kirti Shenoy:
What do we think the worker is actually going to get as their net pay, and Wonolo can, constantly ping this endpoint throughout the day, every day, multiple times a day to understand the net pay for this worker, and Zeal will provide them a number like, Hey, we think that this worker, based on what they've performed so far, will get $183.58 cents from net pay.
Kirti Shenoy:
Now, what a staffing company can do with that number is. Decide how much of that money they want to advance to the customer? Is it 50%? Is it 80% is a hundred percent that number can really vary based on how much cash flow. You have to float to these users, and also what your comfort level is. But Zeal gives you that approximation. You can advance those payouts to your workers, and they're happy because they're getting paid daily, or most of their wages daily, instead of once a week or every other week.
Kirti Shenoy:
Now, the best part of this entire solution is, as Wonolo, for example, is advancing this pay to their particular workers. They're really using Zeal as that system of record to track what is happening in the ecosystem.
Kirti Shenoy:
So if on Monday the worker is getting $100, and on Tuesday the worker is getting $100, and on Wednesday, the worker is getting $100. We are that ledger that's tracking all the deductions of these advanced payments that we are giving out to the workers, and at the end of the work week, as Ivan mentioned, what we do at Zeal is, we run the real payroll, the real pay cycle.
And we look through all the work that the worker has performed, we run the gross to net calculations, and we get that final net pay value and that final net pay value is going to take into consideration the taxes as well as the advances that the Staffing company has sort of provided to that worker, and then we'll reconcile all of that. We'll give the pay stubs to Wonolo. They can post that right in their mobile app, and that's just one, I guess comprehensive example of how customers can really partner with a more tech enabled programmatic vendor to do some pretty amazing things for their users, and how they can do that, you know, again, in the most automated fashion possible, and with a single vendor.
Another example that I want to provide to a lot of the folks on the line is a compliance example. So you know, there's a lot of people talking about pay and how we can make faster pay happen in this market, and I think Zeal has solutions for that. But we also have a lot of solutions related to the compliance issue that happens in shift work.
Kirti Shenoy:
So I wanted to start off with this example right here on what happens in the compliance market without shift, specific locations.
Kirti Shenoy:
So typically, if you look at industries like legacy staffing. What do they say to their workers? They say to their workers, Hey, you're a worker, you onboarded. I allow you to work in this particular zone. Let's say it's Bullhead City, Arizona.
Kirti Shenoy:
Now, what staffing companies do is they prohibit these workers from working for multiple different clients, multiple different locations because they don't know how to automatically keep up with the compliance requirements that are happening in the market. So they say, you one worker is provisioned to work for this one client, and if I want to move you and move you into a different ship, I'm going to take you off that role. And I'm going to put you into a new role. That's what legacy staffing thinks of the market.
Kirti Shenoy:
Now, what shift work companies do, which is super super cool is, you are closing tons of different clients across different markets. And you're allowing these workers, usually on a mobile app to sign up for shifts across different locations.
Kirti Shenoy:
So what ends up happening when you allow your workers to sign up for shifts in different locations is, you may notice that those workers are working in different states. If they're in a border state, different taxable locations just within the same county. And what ends up happening at that place is different. HR. Rules start triggering. So, for example, in the Arizona case, maybe you know in Arizona only that one shift on a Sunday actually qualified for overtime. But now, when we introduce this variable of whether this worker is doing shifts across different locations, we notice that California, Nevada, Arizona, just a few miles away from each other, have different HR rules in place, and you have to keep up with that as a staffing company.
Kirti Shenoy:
So now we see oh, California shift, and this Nevada shift triggers overtime, and we layer in another HR scenario, which is minimum wage, which also varies based on the work location. So now, not only do you have to remember that there was an overtime rule, but you also have to remember that minimum wage is different in each and every one of these jurisdictions.
And then, lastly, the icing on the cake is in the United States. We have 11,000 tax jurisdictions, and what that means is, you have to tax your workers on the individual work location, not just the state, not just who they are, not where they live, but actually where they're performing the work.
Kirti Shenoy:
So what is the solution to all of this? Right? With staffing companies? They can't keep up with this. So they just say, you are one nurse. You can only work in this location if you take another location. I'm going to delete all the information about you, and I'm going to add you to this client and add you to this location. What shift work companies can do is partner with a company like Zeal.
All you have to do is tell us the rate. Send us the work location. If you don't know the work location, you can use someone like HyperTrack to get that work location for you tell us the time in which these workers are working and put your entire compliance experience on autopilot Zeal will detect the overtime rules, the minimum wage rules the taxation rules, and we will allow you to auto update all of your checks in an automated fashion without needing any manual intervention. And that is, I think the dream of all of us is shift work companies. We want these workers doing any shifts that they can get their hands on. We want our demand teams to close those sales, expand to clients in new territories without our compliance team hating us.
And in order to do that we need to work with some of these more modern solution providers in the market that allow us to have that automated fashion of processing payroll and managing compliance. So hopefully that wasn't too technical of an example, but more of an interesting example of what shift work companies really bring to the market, and what needs to happen behind the scenes in order to, you know, process this pay and get these workers on the right track.
HR Solutions for Shift Work Companies: I9, Digital Wallets and Health Insurance
“Zeal will detect the overtime rules, the minimum wage rules the taxation rules, and we will allow you to auto update all of your checks in an automated fashion without needing any manual intervention. And that is, I think the dream of all of us is shift work companies.”
Kirti Shenoy:
Last, but not least, you know. I think a lot of you on this call. Hopefully, we've shared a little bit about how we can do faster pay with Zeal. We've shown how you can automate compliance with Zeal, but we've also built a whole plethora of modules on top of our core payroll module, and our core HR module at Zeal and wanted to feature some of those other solutions in case you're running into those problems today as a company.
Kirti Shenoy:
You know, one example of this is our remote, I9 with e-verify. When I talk to staffing companies. This is the part of the onboarding experience that is the most painful for your end users for those of you who don't know, I9 the ability for you to authorize that the worker is qualified to work in the United States, and because it requires, you know, a part 2 person to review another person's id. This typically is a very, very time consuming process in the onboarding process. And what we've done is we've built an embeddable component. You could throw it into your mobile app. You could do I9 in under 5 min and activate those users for your demand.
Another example of this is custom paperwork, you know. Sometimes workers can't work for some of your end clients because they have a waiver. They have a labor poster. They have a form that they need to sign again. Embeddable components embed these custom document collections right in your mobile app so that you can activate that talent, get them working at the shifts where you need them most. And you're not held up on admin processes.
Kirti Shenoy:
If you want to combine our daily, you know, payroll preview with another product. We also have pay cards and digital wallets. So you can say, Zeal preview payroll. 80% of the wages. I want to now disburse those wages not on the ACH rails, which are very time consuming. I want to disperse them onto a pay card product.
We can help you to connect that to our new pay card program with digital wallets. And we can also help you to start to make money off of the pay cards and wallets which could be huge, for of course, you shipwork companies where? Where payroll and that is your largest line. Item expense. You know, we can really help you turn payroll and onboarding from a cost center into a profit center with some of these new revenue streams from these products.
Kirti Shenoy:
And then, last, but not least, healthcare insurance. So in the staffing market, if you have more than 50 full-time equivalent workers, that could be 100 part-time equivalent workers. You need to, unfortunately, or fortunately, provide a minimum viable plan of health insurance to those end workers.
And we have an amazing program for healthcare insurance. Where you can create these minimum viable programs, you can track the audit trail of the workers opting out of insurance or opting into insurance. We'll capture deductions. We'll make sure that's reported properly. We'll do cobra compliance, and we'll manage that with our partner broker. So this is again, another pesky little thing, pesky little nuance in the staffing industry that I see coming up. But we can really help you to take care of that with our integrated solution.
Kirti Shenoy:
So that is a wrap on my segment. I know we covered a lot of things, but hopefully this was helpful, or a little bit of a food for thought for some of my shift work companies out there. If you're interested in learning about payroll, thinking about faster payments, thinking about compliance, I'd love to have a personal chat with you.
Q&A led by HyperTrack CMO, Gaurav Despande
Gaurav:
Thank you, Kirti. We have multiple questions here. Let.
Kirti Shenoy:
Right.
Gaurav Deshpande:
Ivan and Kirti described to us the experience of how it was integrating the payments 0 payment platform into what all those. What is the timeline? What were the steps? Kind of a high level
Gaurav Deshpande: 1 min overview of what it is, how it worked.
Ivan Sathianathan: It was very easy. We had already had our weekly payroll process integrated with Zeal. So that was a previous step that we'd gone through. So we had already gone through the nuts and bolts of payroll processing with Zeal at that point. And then, when it came to the faster pay process, it was just we were using a calling in a new endpoint, the preview payroll endpoint on a different cadence.
Ivan Sathianathan:
So it was all API driven. The documents were there. Documentation was there? It was. It was very easy for us in this use case. Send a, send a different same data on a different cadence, and use it in a different way.
Gaurav Deshpande:
Wonderful. Thank you, Ivan. you mentioned that you're paying out 80% of the payments as a part of the W-2 workers payments?
Gaurav Deshpande:
Do you have a verification of the time that is spent on the shift as a part of it?
Gaurav Deshpande:
How does that work as a part of the payment of W-2 workers?
Ivan Sathianathan:
So the 80% is to form a guard for us, so that we're not overpaying the worker prior to running payroll payroll processing. We don't want to get to a point where we have forwarded them $500 of net pay, and then, when we run payroll the next week we find out. Actually, your net pay was 4 90. And then we have to figure out callbacks and stuff like that. So that's where the 80% comes in. And with verification of shift work
Ivan Sathianathan:
Kirti mentioned this. And we're actually exploring this with HyperTrack. There are some customers who are used to this weekly payroll process where, rather than approving jobs every day they will give you a spreadsheet at the end of the week, and for the past week's timesheet. So we were running into problems with those customers, and we are looking into whether HyperTrack can give us that extra signal of whether someone was there at one Monday, 9 to 5, and we can use that as a signal to advance, pay.
Gaurav Deshpande:
Wonderful, Ivan. And then last question, and this one's for you, Kirti.
As the founder of Zeal as you've been through this journey. What is the most surprising part of building a payment startup?
Kirti Shenoy:
Oh, my goodness! There's so much, I think, for me. What has been so fascinating is I. We work with a large variety of customers, and I think we bring that large variety of perspectives to the companies. You know, we work with some of the most innovative companies like Wonolo, that are constantly trying to think through. You know, how do we pay our workers faster? How do we keep everything on Mobile?
Kirti Shenoy:
How do we do that, you know for some of my other customers. The impact is sometimes on invoicing and thinking about, how do I know? How does my finance team know how to Bill, my workers net 30 faster than net 30 by tagging these shifts accurately. So I think for me, it's just been really fascinating to think through, you know each and every staffing company. What's the opportunity?
What are the problems, and what else can we build around that stack to help you and all of the stakeholders on your internal team and across your workforce to feel that that wonderful experience. So I think I've just been surprised in the staffing industry. The more I learn. I feel like there's more problems to be solved and more opportunities that we have. So I've just been. I've just been a huge learner, and trying to iterate the platform to accommodate for all of that.
Gaurav Deshpande:
Wonderful. And with the last minute I have, I'll ask Ivan the same question.
You guys are leading the light industrial staffing. You're a dominant player as you build it out. Your product at Wonolo. What was a surprising moment? What was most surprising about building out the product for the shift work, marketplaces, industry.
Ivan Sathianathan:
I'm not sure if it's surprising. But for me, the gratifying moments are when you hear these testimonials from not only our our customers, you know how we're helping them with their businesses, but also more so from the workers on the platform, and you hear the stories of I was in a real tight bind, and when I was able to help me that
Ivan Sathianathan:
you hear it frequently, but it never fails to give you a sense of pride in what you're doing. So that's 1 of my favorite things about working in the staffing industry.
Gaurav Deshpande:
And not that a basic note? Thank you, Ivan. Thank you, Kirti, for joining us.
Gaurav Deshpande:
Stay with us for the next session, starting in a minute with Indeed Flex.
Ivan it's so wonderful to have you here, Ivan. Thank you for joining us, Kirti. Thank you for joining us.
Kirti Shenoy:
Thank you. Guys. Take care.