/>iLouisiana and Connecticut recently passed legislation establishing regulatory frameworks for earned wage access (EWA) providers.
Connecticut’s SB 5140 passed the legislature on June 4 and awaits Governor Ned Lamont’s signature. The bill would introduce EWA services to the state following nearly two years of regulatory uncertainty. It classifies EWA as a loan but establishes a tailored carveout with specific fee caps and exemptions for employer-based models.
In its revised framework, Connecticut:
- Caps fees below all other states. Providers may not charge more than $4 per advance or $30 per month in total fees. These caps apply in lieu of the state’s general 36% APR limit under small loan law.
- Restricts EWA availability. Advances are capped at $750 and limited to once per pay period unless the consumer can access at least 75% of earned wages.
- Requires wage verification. Providers must verify earned wages through payroll data or other Commissioner-approved methods.
- Prohibits default tipping practices. Default tip amounts must be set at $0, and providers cannot allow multiple advances on the same earned wage from different services.
- Restricts enforcement mechanisms. Class action waivers are prohibited, and traditional collection practices—including litigation and debt sales—are banned.
Louisiana’s HB 368 has already been enacted, creating the “Louisiana Earned Wage Access Services Act,” which codifies that EWA providers are not considered lenders, money transmitters, or debt collectors so long as they comply with the statute’s consumer protection requirements.
Under the new law, Louisiana EWA providers must:
- Offer at least one no-cost option. Consumers must have a clear way to access funds without paying fees or tips.
- Allow cancellation at any time. Providers cannot charge fees for cancellation and must clearly disclose all terms upfront.
- Reimburse overdraft fees. Providers must cover any bank fees caused by early or excessive debits, unless fraud is involved.
- Disclose the voluntary nature of tips. Consumers must be informed that tips are not required and will not impact access to services.
- Prohibitions on EWA providers. The act prohibits EWA providers from suing consumers, making collection calls, using third-party debt collectors, or conditioning service levels on tipping behavior. Providers that charge fees must also submit annual transaction, revenue, and complaint data to the Office of Financial Institutions.
Putting It Into Practice: With the passing of both laws, over a dozen states have now adopted EWA-specific frameworks (previously discussed here, here, here, and here). Connecticut’s aggressive fee caps and verification mandates may push some direct-to-consumer models out of the state, while Louisiana’s balanced approach reflects the emerging industry standard.
