Agree with a lot that has been said. Offering overtime is an excellent idea - that is helping people help themselves. But I would not offer more over time than what your company NEEDS. Figuring out how much can be withdrawn from the 401k as a loan is again an excellent way out of a presumable tight situation. Giving one advance paycheck, and subtracting 10% from the next 10 paychecks to recoup that amount is another way to go. I would take this in writing, and of course if this person quits, you reserve the right to subtracting whatever amount is remaining from their last paycheck. But I would put a stop to more free money for an EMPLOYEE. This is not a personal relationship. This is a work place. The above will resolve the urgent need for funds. I would certainly think between these three options this person will be able to pay for any dire need circumstances. You do not know the ins and outs of every detail of this person's life. You do not know their spending habits, you do not know if they are continuing to waste funds.
I do not give money to someone i do not know on a very deep personal level. You could be fueling some very dysfunctional habits.
On a side note, some other thoughts on my end. Sorry these thoughts may be considered ramblings.
1) 4k for a car repair and school supplies is absurd. Assuming this is a crap unreliable car, it's value is probably less than what the repair seems to be costing. A transmission repair or engine repair costs 1.5k, that's probably some of the biggest repair costs that I can think of. That is an absurd amount of money for a car repair. A part of me feels it doesn't add up. I mean really...I could probably buy a used car from craigslist for 2000 dollars that runs okay. Back to school supplies - Visit a dollar store, plenty of stationary can be bought and you can spend little to no money. Most basic school supplies could probably be purchased for 20 bucks maybe at a dollar store. It really comes down to how much this person themselves is willing to push themselves to fix their own issues. Someone who says they are going to spend 4k on a car and school supplies is not attempting to minimize their cost and find cheap solutions to their problems. If the cost is 4K, this person hasn't yet been forced against the wall to come up with a cheaper solution in my humble opinion.
2) I was poor 10 years ago when I moved to this country for college. I lived on a dollar a day roughly for food. Ramen noodles every day - 16 cents. Peanut butter sandwiches - Dirt cheap. Found the cheapest possible living place, rode a cheap walmart bicycle ($79) to work and school (until that got stolen -_- then I just walked). Worked as much as I could while attending a top notch school (top 5 engineering school) and saved as much as possible while taking some 300-400 level courses as a freshmen. I didn't have proper winter clothing, purchased for $3 to 4 per item at goodwill. I didn't ask anyone for money (other than what my parents gave me initially when I moved - $5000 that went towards tuition and a plane ticket to the US). I was poor, and I lived like it. I pushed myself to live within my means, even if it meant a lot of personal sacrifice. I never asked my parents for help - I was willing to starve before asking for a hand out. I don't think this employee of your spouse has yet really pushed themselves to their limit. I don't know them, you don't either, maybe they have cut back on everything they could, maybe they havent? But 4K on a car repair and school supplies suggests they haven't truly sacrified yet from a needs vs wants perspective. They must learn to sacrifice wants before hoping someone will lend/give them money to fix their issue. But then again, I didn't have cancer or ridiculous health care bills, so I don't know this person's situation. Success is a mind set, it takes work and a lot of sacrifice of a lot of desires and sometimes needs in life, some people who live paycheck to paycheck, have a different mind set unfortunately.
3) I've given personal loans/gifts to 2 people in my life. Both I loved and knew inside and out and knew everything about them. The first, took 23 college credits of tough 300-400 level engineering courses, scored 4.0s, worked 40+ hours tutoring while taking those 23-24 semester credits. She never asked for a penny, but as her boyfriend then, when the college accounting department would send her late notices that she was late on tuition payments, I knew about it. I emptied out my savings account when it meant her being kicked out of college. She refused the money several times before I forced it on her. There wasn't much in there, she survived another semester, until eventually she had to take a full semester off, she worked for 80+ hours a week, saved money, came back, finished a chemical engineering degree in 2.5 years, graduated magna cum laude, worked for one of the top consulting groups, then did her MBA from harvard. She paid me back. She was always a rising star, I believed in her, knew her deeply in every way. I genuinely knew she did EVERYTHING and SACRIFICED whatever she could. The other woman I've given money to, we were together also, we've known each other 15 years now. She dropped out of school at 17 (in another country, not the US), and went out and made money to support her family. She came from a dysfunctional family - abusive father, she's been beaten by a belt countless number of times. She helped pay the bills when her mom couldn't for the 3 children after her parents got divorced (mom finally got the courage to leave the abusive relationship). She paid for her younger sister and younger brother's schooling and kept food on the table and a shelter over their head when she was 17-18. She worked like crazy, sacrificed her own education for her family. Today she's on the national news channel most days of the week, hosts a few TV shows here and there and has elevated her family to where her siblings graduated from college and are in the work force. I gave her 5-6k over the years, decent amount in the country where I'm from, when she was on the brink of homelessness. She has tried paying me back now several times, but I've always refused. Anyway, my point is, I knew these people, I loved them, I knew their character, I knew what they were made of. I knew they did every single thing in their power to excel at life. It was a very deep and personal relationship. That's NOT an employer and employee relationship. Your spouse has crossed that boundary, and it needs to be closed in a very professional manner. Support your staff with the above mentioned options, but don't give out free money or gifts, sometimes it enables people to continue bad habits. Unless you truly know everything in this persons life and you trust them with your life (which you probably dont
Sorry this was long and a lot of ramblings.