What is payroll advance?

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Payroll advance definition and meaning

A payroll advance is a payment in which an employee receives money earlier than their scheduled payday from their employer based on an agreement between the two parties. The money is provided in the form of a short-term loan to be paid back to the employer using future earned wages. Agreements vary, but terms should be clear to both the employer and employee.


More about payroll advances

Sometimes employees use a payroll advance to bridge the gap between paychecks. Their employer can arrange this type of advance — either directly or through a third party — in order to provide workers a portion of an upcoming paycheck. Such advances can be made anywhere from a few days up to sometimes a week or more ahead of time.


A payroll advance is usually initiated by an employee electronically submitting a written request to their employer, which creates a digital and paper trail. The request should also detail a repayment schedule so both parties understand when and how money is being paid back. In addition, both the employer and employee need to sign the agreement.


If the terms of repayment include deductions from the employee’s future paychecks, it’s very important to keep this authorization in writing. Many states do not allow deductions to be taken without the explicit consent of the employee.

“The roof of my house was damaged last month by the storm and my insurance wouldn’t cover the cost of repairs, so I requested a payroll advance from my employer.”

Terms related to Payroll Advance


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