Utah Follows Arkansas as More States Regulate Earned Wage Access

Utah is the latest state to regulate earned wage access services being provided to state residents, under a bill that will go into effect May 7.

Providers of earned wage access services pay provide funds to individuals based on their earned but unpaid income, under HB 279. Earned but unpaid income includes salary, wages, or other forms of income that is earned and accrued by an employee or independent contractor but has not yet been paid to them by their employer or hiring party.

Earned wage access services allow employees and independent contractors to receive compensation in advance of their scheduled payday that represents remuneration they already earned, said House Rep. Cory Maloy (R), the sponsor of HB 279, on Feb. 24. Over 550 Utah employers offer earned wage access services to employees, and over 115,000 employees in the state have used those services, Maloy added.

HB 279 requires providers to register with the Utah Department of Commerce’s Division of Consumer Protection. However, if a provider is active in the state on May 7, it may continue to operate as long as it applies for registration by Oct. 6 and the application is not denied by the division.

The registration application contains several components, including an application fee, a copy of the earned wage services agreement that the provider intends to use, a fingerprint card, and a criminal background check, under HB 279. Specific details of the application, such as the fee amount, are to be determined by the division.

Providers may charge fees and solicit tips or donations from customers, but they must be clearly disclosed before entering into any earned wage access services agreement, under HB 279. Employees and independent contractors must also have at least one free method for receiving earned wage access funds.

HB 279 contains several consumer protections for employees and independent contractors, such as prohibiting providers from checking individual credit reports or charging fees, interest, or penalties for failure to repay outstanding amounts owed. However, providers may prohibit users from requesting earned wage access services if they have outstanding unpaid proceeds from a previous transaction.

Failure to comply with requirements under HB 279 could result in a $2,500 penalty, relief payments, court costs, and the revocation or denial of a provider’s registration. An additional $5,000 civil penalty may apply if a provider fails to abide by an administrative or court order.

Gov. Spencer Cox (R) signed HB 279 into law on March 25.

Other states currently regulating earned wage access services include California, Kansas, Missouri, Nevada, South Carolina, and Wisconsin. Last week, Arkansas enacted its own law to regulate earned wage access services, although it has yet to go into effect.