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Nasir and Matt discuss the trend of employers providing loans to employees and answer the questions, "I know I need to pay some of my employees more to prevent them from leaving but I won't have the revenue for another 6 months, what else can I do to keep them in the mean time?" Full Podcast Transcript NASIR: Welcome to Legally Sound Smart Business. This is Nasir Pasha. MATT: And this is Matt Staub. NASIR: And welcome to our podcast where we cover business in the news with our legal twist and also answer some of your business legal questions that you, the listener, submits to ask@legallysoundsmartbusiness.com. I wanted to slow it down there for the listeners writing it down. MATT: It sounds too candid at this point. I feel like you sounded like a robot. I mean, your voice isn’t robotic but it sounds like a recording almost. NASIR: I do. I just play a recording at the beginning of every episode. I don’t even record it live. MATT: Yeah, those five seconds that you spend, it’s really taxing. You want to save your voice for the actual substance of the episodes. NASIR: Exactly. You understand me. MATT: So, speaking of the substance of the episodes, I do want to get into the story for today because I think we might have some differing views. I don’t know why I think this but, reading through it, I just thought we did for some reason. We’re talking about workplace loans. This primarily deals with employees that are living paycheck to paycheck. What it is is more or less what they can be labeled as a short-term, high-fee loan. You know, an employee needs some money and the employer is lending them this money. The only problem being for the employee is these extremely high interest rates in the fees that are being involved. I think in one study they said the effective annual percentage rate attached to the loan is 100 percent to 165 percent. In my opinion, this is just digging them into a bigger hole. I mean, I understand that they need the – well, it’s not an advance – the loan but, at the same time, I feel like you almost get situations where employees are taking these loans out to pay their previous loans or maybe they went through some third party in the past and they’re paying for that. NASIR: Yeah, and I think we talked about how most people seem to live paycheck to paycheck, whether they’re low-wage workers or not. But let’s compare this to wage advances and I think we answered a question regarding that a while back. I think this is a little bit different because, in a wage advance, the employer is basically giving the loan themselves and there are all these rules regarding that – like, for example, in New York, you have to have it in writing, especially if you’re going to be withdrawing any money from their weekly paycheck or biweekly paycheck. In California, there’s restrictions – like, if it’s the last paycheck, then you can’t withdraw any money from that and you can’t terminate an employee – and I think this is both in New York and California as well – you can’t terminate an employee because they don’t pay back the loan, for example, if it’s not deducted from their paychecks. Those are some issues with that. But this is different because we have third-party payday lenders that are working with employers and, now, I hear you. Of course, these payday concepts, they have high interest rate and, frankly, what other loan are you aware that automatically all of a sudden they can garnish your wages? For example, if you default on another loan, then they have to get a judgment and then take that judgment into your workplace and actually attach it. that requires some kind of effort. This is a little bit different. All of a sudden, your paycheck could be garnished from the get-go. MATT: Yeah, to me that’s a problem. I just don’t know what the solution really is for these people that need that. I guess the problem I have is with the employer. They’re the ones paying the employees, obviously. And then,