Bitwise may be experiencing more financial hardship.
Documents sent to GV Wire show that an affiliate company told Bitwise employees that it is not offering direct deposit paychecks. Instead, employees will receive paper versions, at least for this payroll period. Sources say this is at least the third time in a year the company has made such a move.
Some company employees who did not want their names used publicly are concerned.
“I would like to move on from this experience of Bitwise,” one employee said.
Another said, “They were weeks late in paying most of their employees recently as well as issuing paper checks and messing up people’s direct deposits as well as what they are putting in their checks not being reflected in their payroll system.”
In an email sent from Bitwise’s payroll to employees, the company said that “due to our recent bank changes and the process that comes with that, we are needing to run paper paychecks as a precautionary measure and to avoid any snag with payroll.”
The company acknowledged this would be an inconvenience.
Several employees reported having problems depositing today’s check, through Bitwise’s AlphaWorks company. They were told funds on those checks would not be available until June 7.
Bitwise, for at least its AlphaWorks unit, uses First Republic Bank for its paychecks. The bank — recently taken over by JPMorgan, which also invested in Bitwise — did not respond to an email requesting comment on Friday afternoon.
However, Bitwise did respond.
“The company has created new processes that are being implemented. At this time we are leveraging the most efficient and immediate route to have employees payroll met without cumbersome stopgaps,” a Bitwise spokeswoman told GV Wire.
The company said it has used this process “several instances in the last 10 years.”
Asked whether a check has ever bounced, the company said “In the history of the company we can’t speak on every check issued but I can say that we’ve never left an employee without compensation.”
While Bitwise is working to pay its employees on time, it is late in paying its Fresno County property tax and is actively selling three of its properties in downtown Fresno and Bakersfield.
In an exclusive interview with GV Wire earlier this week, Bitwise co-CEO Jake Soberal said the company is in good financial health.
Watch: GV Wire’s David Taub Interviews Bitwise co-CEO Jake Soberal
Why Switch to Paper Checks?
Why would a company like Bitwise switch from direct deposit to paper checks?
Raj Sodhi-Layne, a Fresno banker for 40 years, says paper checks could buy a company time.
When a company uses direct deposit, Sodhi-Layne said, funds must be deposited in the bank two days before payday.
“I’ve also noticed here in the Valley that some people hold onto their (paper) paychecks for months and months. I’m not quite sure why that is,” Sodhi-Layne said.
Holding on to checks means the money can stay in Bitwise’s account longer.
“I think perhaps they would like to take advantage of that float,” Sodhi-Layne said.
Better to Cash Checks at Banks Than at Stores
In an email to employees, Bitwise recommended that employees cash the check at their bank, then deposit those funds.
Rodhi-Layne says using your own bank is a better option than a cash checking store.
“It is very expensive to cash a check at a liquor store. Check cashing place? No, no, no, no. Because they take a percentage of the check which … that’s their business to make money, but that does break my heart,” she said.