Indiana Becomes Latest State to Regulate Earned Wage Access

Indiana has become the third state in 2025, after Arkansas and Utah, to regulate earned wage access, under a bill that will go into effect Jan. 1, 2026.

Providers of earned wage access services allow employees to receive income that they have earned but remains unpaid by their employer, under HB 1125. The law provides an exemption for employers that pay a portion of wages or income to employees before their normally scheduled payday.

Indiana distinguishes between consumer directed and employer directed wage access services. If wage access services are employer directed, the provider pays employees based on employment, income, and attendance data provided by the employer, under the bill. In contrast, consumer directed wage access services base payment on an individual’s representation of their own earned but unpaid income.

Providers must be licensed by the Indiana Department of Financial Institutions before they can provide earned wage access services. The licensing process includes an initial license fee, an annual renewal fee, examination fees, background checks, credit histories, and surety bonds, under the bill.

HB 1125 clarifies that earned wage access services offered by licensed providers will not violate state wage deduction laws.

Once licensed, a provider must maintain records for at least two years to show their compliance with the law. Additionally, they will be required to file a quarterly report with the department that lists all earned wage access service transactions made during the quarter, under the bill.

Providers may charge certain fees and solicit tips but they may not share these amounts with employers, under the bill.

HB 1125 also contains consumer protections for employees, such as prohibiting certain types of fees and preventing providers from sending unsolicited advertisements to users. Additionally, providers may not have software that gives them access to a user’s location unless it is only used to verify that a user is in Indiana at the time an account is created.

Gov. Mike Braun (R) signed HB 1125 into law May 6.