Arkansas is the latest state to regulate earned-wage access (EWA), a benefit that allows workers to tap into money they’ve earned ahead of their scheduled payday.
The legislation, which was signed into law by Arkansas Gov. Sarah Huckabee Sanders on Mar. 20, applies to EWA providers, but not the employers that work with them. It requires EWA providers to offer at least one option at no cost, disclose all fees associated with their services, and allow consumers to cancel the services without being charged.
EWA providers are also barred from sharing any portion of fees, tips, or gratuities with employers under the Arkansas law.
Benefit draws regulatory scrutiny. Some 12% of employers offer EWA, according to a 2023–2024 report from Sapient Insights Group, with organizations such as the Nashville Predators and Dayforce touting the benefit. Supporters of the benefit have suggested it can have positive effects on the workforce, boosting businesses’ ability to recruit and retain talent, as well as foster loyalty among workers.
The benefit has drawn scrutiny from consumer advocates, however, due to fees that employees can incur from using the services. A Consumer Financial Protection Bureau (CFPB) analysis of eight companies partnering with employers on EWA found workers often incur fees to get their wages early, with more than 90% of workers paying at least one fee in 2022 when their employer didn’t cover them.
The CFPB proposed an interpretive rule last July that stipulated many EWA products fall under the Truth in Lending Act, which requires lenders to disclose charges and fees associated with a loan. Members of the fintech industry pushed back on the rule, with one EWA provider, DailyPay, arguing its offering “does not have the hallmarks of a loan,” such as origination fees, late fees, or reporting to consumer credit agencies, HR Brew previously reported.
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This rule is still pending, but it’s likely President Donald Trump’s administration will take a different approach to regulating EWA. During his first term, the CFPB issued an advisory opinion that indicated EWA products could operate without being subject to lending laws, so long as they’re offered at no cost to employees.
EWA provider applauds law. Arkansas is the seventh state to enact legislation regulating EWA, in addition to California, Nevada, and Wisconsin. Utah’s legislature recently passed a bill in the same vein.
The Arkansas law doesn’t go as far as some other states have gone in regulating EWA; Nevada, for example, requires providers to be licensed in the state before offering EWA to residents. It also doesn’t require EWA providers to adhere to lending laws.
DailyPay voiced support for its decision to classify the benefit as a “financial product,” rather than a type of credit. “This is a victory for businesses in Arkansas that can benefit from utilizing earned wage access solutions,” Ryan Naples, VP of public policy, said in a statement.