other fees to employees, likely are subject to TILA requirements. With the Trump Administration now in office, however, that CFPB proposed position, which never went into effect, is on hold, with a high probability that it will be rescinded. A more lenient regulatory position, one that treats EWA as possibly not a loan, could be part of the new administration’s policy shift on consumer financial issues. Other states are taking up the issue in this year’s legislative sessions. A bill (AB 258) introduced in the New York legislature, if passed, could also take a non-loan approach on the status of EWA. However, the New York Attorney General filed a lawsuit in a state court on April 14, accusing a nationwide Earned Wage Access (EWA) provider, DailyPay, LLC, of being a payday loan operation that pretends “to simply be advancing ‘earned’ wages.” DailyPay is an employer- integrated program that bases its ability to provide funds on substantiated accrued earnings monitored through payroll during a pay cycle.
But some view the programs differently. They claim that EWA is not access to earned wages, but simply a unique way of providing loans to cover individuals until payday.
New York separately is suing a direct-to-consumer provider, MoneyLion, a firm that does not monitor with the employer for earnings like DailyPay, for similar usury violations and for requiring “tips” in addition to fees for access to funds before payday. Why Loan Status Matters Being declared credit could negatively impact employees benefitting from the existing EWA arrangements, according to DailyPay, a market-leading New York-based EWA provider for the past ten years. If declared a loan subject to the regulatory requirements of state and federal law, the requirements to allow employees to participate would dramatically change from
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ISSUE 11 GLOBAL PAYROLL MAGAZINE
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