Earned Wage Access Act

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Model Bill Info
Bill Title Earned Wage Access Act
Date Introduced July 29, 2022
Type Model Policy
Status Draft
Task Forces Commerce, Insurance and Economic Development

Electric Generation Facility Closures and Reliability Act

Definitions

(1) “Consumer” means a natural person residing in the State of XX.

(2) “Earned but Unpaid Income” means funds that are based on wages, compensation, or income that a Consumer has represented, and that a Provider has reasonably determined, have been earned or have accrued to the benefit of the Consumer but have not, at the time of the remittance of Proceeds, been paid to the Consumer by an Obligor.

(3) “Earned Wage Access Services” means the business of delivering Proceeds to Consumers prior to the next date on which an Obligor is obligated to pay salary, wages, or other monetary benefits to the Consumer.

(4) “Non-Recourse” means that a Provider cannot compel or attempt to compel repayment by a Consumer of Outstanding Proceeds or Non-Mandatory Payments owed by that Consumer to that Provider through any of the following means:

(a) A civil suit against the consumer in a court of competent jurisdiction.

(b) Use of a third-party to pursue collection of Outstanding Proceeds or Non-Mandatory Payments on the Provider’s behalf.

(c) Sale of outstanding amounts to a third-party collector or debt buyer.

The term non-recourse does not preclude the use by a Provider of any of the foregoing methods to compel or attempt to compel repayment of outstanding amounts incurred by a consumer through fraudulent means.

(5) “Obligor” means an employer or another person, including an independent contractor, who is contractually or legally obligated to pay a Consumer any sum of money on an hourly, project-based, piecework, or other basis. Obligor does not include the customer of an Obligor or another third party that has an obligation to make any payment to a Consumer based solely on the Consumer’s agency relationship with the Obligor.

(6) “Outstanding Proceeds” means Proceeds remitted to a Consumer by a Provider but not yet repaid to that Provider.

(7) “Mandatory Payment” means an amount determined by a Provider, which must be paid by a Consumer to that Provider as a condition of receiving Proceeds.

(8) “Non-Mandatory Payment” means an amount paid by a Consumer or an Obligor to a Provider for Earned Wage Access Services, which does not meet the definition of a Mandatory Payment. For purposes of this section, examples of non-mandatory payments include, but are not limited to the following:

(a) A fee imposed by a Provider for delivery or expedited delivery of Proceeds to a Consumer, as long as the Provider offers the Consumer at least one option of receiving Proceeds at no cost.

(b) An amount paid by an Obligor to a Provider on a Consumer’s behalf, which entitles the consumer to receive Proceeds at no cost to the Consumer.

(c) A subscription or membership fee imposed by a Provider for a group of services that include Earned Wage Access Services, as long as the Provider offers the Consumer at least one option of receiving Proceeds at no cost.

(d) A tip or gratuity paid by a Consumer to a Provider, as long as the Provider offers the Consumer at least one option of receiving Proceeds at no cost.

(9) “Proceeds” means the amount of Earned but Unpaid Income that has been remitted to a Consumer by a Provider.

(10) “Provider” means a person who is in the business of offering and providing Earned Wage Access services to Consumers.

(11) “Superintendent of the Department of X” means the head of the XX Department of X.

Registration Requirement

(1) A person, including a person who is not physically located in this state, shall not provide Earned Wage Access Services in this state without first registering as an Earned Wage Access Services Provider with the Department of Financial Services.

(2) The Superintendent of the Department of Financial Services shall promulgate rules regarding all of the following:

(a) Minimum requirements that must be met by applicants for registration as Earned Wage Access Service Providers.

(b) Initial registration fees.

(c) Annual registration or renewal fees.

(3) This section shall be operative on the first day of the first calendar quarter commencing more than 120 days from the date on which the rules described in subparagraph (b) become final.

Provider Operations

(1) A provider that is registered in the State of XX shall be subject to the following requirements:

(a) A Provider shall provide all Proceeds on a Non-Recourse basis and shall treat Non-Mandatory Payments as non-recourse payment obligations.

(b) Before providing Proceeds to a Consumer, a Provider shall inform the Consumer, in writing, of any Non-Mandatory Payments that may be associated with the provision of Earned Wage Access Services by that Provider.

(c) Every time a Provider provides Proceeds to a Consumer, the Provider shall inform the Consumer when the Provider will make its first attempt to seek repayment of those Proceeds from the Consumer.

(d) A provider that seeks repayment of Proceeds from a Consumer’s depository institution account shall comply with applicable National Automated Clearinghouse Association rules.

(2) A provider that is registered in the State of XX shall not do any of the following:

(a) Require a Consumer to make a Mandatory Payment.

(b) Charge a late fee or any other penalty charge for failure to repay Outstanding Proceeds.

(c) Condition the amount of Proceeds provided to a Consumer on the size of a Non-Mandatory Payment made by that Consumer to that Provider. This prohibition shall not be construed to prohibit a Non-Mandatory Payment equal to a percentage of Proceeds provided, as long as the percentage applied does not vary based on the amount of Proceeds provided.

(d) Condition the frequency with which Proceeds are provided to a Consumer on the size of a Non-Mandatory Payment made by that Consumer to that Provider. This prohibition shall

(e) not be construed to prohibit a Non-Mandatory Payment equal to a percentage of Proceeds provided, as long as the percentage applied does not vary based on the amount of Proceeds provided.

(f) Report a Consumer’s payment or failed repayment of Proceeds to a consumer credit reporting agency or a debt collector.

(g) Require a credit report or credit score to determine a Consumer’s eligibility for Earned Wage Access Services.

(h) Provide, sell, or otherwise disclose to any third party, including an Obligor, any non-public personal information collected from or about a Consumer, except as necessary to provide Earned Wage Access Services to the Consumer and as allowed by applicable federal and state law.

(3) Proceeds provided to a Consumer by a Provider in accordance with this section shall not be considered credit, the Provider of those Proceeds shall not be considered a creditor, and Non-Mandatory Payments paid to that Provider shall not be considered finance charges, for purposes of the federal Truth in Lending Act.

(4) Proceeds provided to a Consumer by a Provider in accordance with this section shall not be subject to the State of XX’s Lender’s Law, and the Provider of those Proceeds shall not be required to be licensed under the State of XX’s Lender’s Law.

Annual Reporting

(1) On or before [insert month and day] of each year, a Provider shall submit an annual report to the Superintendent that includes all of the following information for Earned Wage Access Services provided by that Provider in the state during the prior calendar year:

(a) Gross revenue attributable to Earned Wage Access Services.

(b) The total number of transactions in which Proceeds were remitted to Consumers;

(c) The total number of unique Consumers to whom Proceeds were remitted.

(d) The total dollar amount of Proceeds the Provider remitted to Consumers;

(e) The total dollar amount of Non-Mandatory Payments the Provider received from Consumers;

(f) The total number of transactions in which Proceeds were remitted to Consumers for which the Provider did not receive repayment of any Outstanding Proceeds.

(g) The total dollar amount of transactions described in paragraph (6).

(h) The total number of transactions in which Proceeds were remitted to Consumers, for which the Provider received partial repayment of Outstanding Proceeds.

(i) The total dollar amount of transactions described in paragraph (8) and the total dollar amount of unpaid, Outstanding Proceeds attributable to those transactions.

(j) The total number of transactions in which Outstanding Proceeds were repaid after the original, scheduled repayment date.

(h) The total dollar amount of transactions described in paragraph (10).

(2) Failure of a Provider to submit a report on a timely basis in accordance with this section may constitute grounds for disciplinary action by the Superintendent of the Department of Financial Services.

Enforcement

(1) If, upon inspection, examination, or investigation, the Superintendent has cause to believe that a Provider is violating any provision of this division or any rule or order thereunder, the Superintendent or his or her designee, may issue a notice to the Provider in writing, describing with particularity the basis of the alleged violation.

(2) The Superintendent shall have enforcement authority over Earned Wage Access Service Providers that is consistent with the Superintendent’s enforcement authority over other types of financial service providers regulated by the Superintendent.

Remaining Enforcement Provisions Shall Be Based on Enforcement Provisions

Common to Laws of the Particular State in which the Model Law is introduced