GLOBAL PAYROLL MAGAZINE
69
xible Wage Access Would Be Raised by Watchdog Agency A rapidly growing pay practice in the United States, earned wage access, could be significantly altered under the Consumer Financial Protection Bureau’s proposed interpretive rule that generally would group the programs as consumer loans.
By Michael Baer
Within the past decade, the use of earned wage access (EWA), also called on-demand pay or daily pay, has grown exponentially; 90% from 2021 to 2022 alone, according to the CFPB. The voluntary programs are set up by employers with third-party vendors to provide at least some already-earned
This would mandate that providers of these services follow criteria for providing a consumer loan when allowing early access to wages already earned. Contrast this position with the five states that have passed laws defining EWA as different from a loan, allowing providers to avoid the costlier, more burdensome requirements associated with consumer loan practices like payday loans. (Without passing any law, California and Connecticut have determined most EWA programs are loans.).
pay to workers on-demand before payday—if they want it that way.
In the July 18 proposal, after years of a relatively hands-off approach to EWA programs, the Bureau announced it intends to characterize many of the arrangements as covered by the Truth in Lending Act.
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