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a relatively simple sign-up process to a drawn-out credit application and approval protocol, delaying the ability to get much-needed funds into the hands of those requesting a payout. And that is if the company chose to modify its business model to continue to operate and adhere to loan servicing requirements. In addition, employees using such programs would possibly be subject to negative credit disclosures, a practice currently banned in several states with EWA laws. DailyPay and other providers currently disclose fee amounts in dollars. Should the New York Attorney General’s initiative to label DailyPay’s program a loan succeed, it would mean a much greater burden in providing conversions to interest rates when presenting the costs under the law. Converting into an interest rate a small, flat one-time fee, which DailyPay applies for near-instant draws on pay (next business day requests are free), is incredibly complicated. Claims and Counterclaims DailyPay anticipated the lawsuit from the New York’s Office of Attorney General (OAG) and filed suit April 7 in a federal court to
circumvent what they claim is an effort by the New York Attorney General to unilaterally declare their program a loan operation (DailyPay LLC v. James, S.D.N.Y., No. 25-02849, April 7, 2025). According to the DailyPay claim, “the OAG has elected to designate itself as both legislator and regulator in the absence of applicable laws and regulations and, in effect, has declared all EWA products to be illegal regardless of their business model.” The EWA provider denies that it provides loans and asserts that the small flat fees it requires for near- instant payments of wages are not interest-bearing. The employees receiving the payments are not subject to credit reporting, and there is no recourse for DailyPay should there be a mistaken payment. New York, in its suit, claims that while DailyPay promises non- recourse for addressing payment mistakes, there can be rare instances where payments are made by employers to employees outside of the program, and employees can be obligated to notify DailyPay and hold amounts in trust for the company. DailyPay says the fees charged are done at the option of employees
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GLOBAL PAYROLL MAGAZINE ISSUE 11
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