- Tesla has announced a new employee loan benefit to help workers better manage their debts and expenses, according to a CNBC story. The goal is to help retain financially strapped employees who might otherwise leave in search of higher pay or regular schedules; employees can "borrow money at relatively affordable rates and pay it back directly out of their paychecks," according to the report.
- Current and former Tesla employees told CNBC "that they are happy to have another financial benefit, but view employee loans as a Band-Aid solution." Instead, they would have preferred predictable income from a fixed 40-hour workweek or "better wages and meaningful raises."
- Some Tesla workers have, in recent months, been sent home early following production glitches or told not to come in at all during unexpected cleaning and maintenance, according to CNBC. The outlet also reported that raises at Tesla are typically capped at 2% even for top performers, according to current and former Tesla employees.
Despite the reported complaints about pay, the median Tesla employee earned $56,163 in 2018 — 81% more than the median American that year, according to a report in Business Insider. And there's no question that people want to work there: According to Indeed.com, Tesla was the hottest company among job applicants in 2018, with an average of 47% more interest from site users over other employers.
Nonetheless, stagnant pay and unpredictable schedules can certainly pose a retention problem. But employee loans as an answer to those issues can be problematic, and employers may want to carefully consider the potential pitfalls before adopting such benefits. A blog post from small business loan marketplace Fundera points out that employees may fall behind on their payments — or, worse still, fail to pay the loan back at all. And collections become particularly difficult after an employee leaves the company.
The complications don't stop there, according to Dana S. Fried of CohnReznick LLP. In a 2017 blog post for the firm, he advised that failing to comply with all relevant tax rules could change the transaction from the intended loan to a pay advance or deferred compensation, both of which would be considered taxable income to the employee.
If an employer opts to loan workers money, formal agreements are key, Fundera noted. And pay advances can be a better bet that loans. They're often simpler and limit the employer's risk to the amount of the advance, typically one paycheck or less, it said.
According to the Society for Human Resource Management's 2018 Employee Benefits Report the percentage of employers offering payroll advances has held reasonably steady over the past few years, hovering between 17% and 19% from 2016 to 2018.