AB 574

This bill regulates companies that provide earned wage access services in this

state to individuals who reside in this state (consumers) and requires such

companies to be licensed by the Division of Banking (division) in the Department of

Financial Institutions before providing those services.

Under the bill, “earned wage access service” is defined as the business of

delivering to consumers access to earned but unpaid income that is based on 1) the

consumer's representations and the provider's reasonable determination of the

consumer's earned but unpaid income; or 2) employment, income, or attendance data

obtained directly or indirectly from an employer. The bill defines, with exceptions,

a “provider” as a business entity that is in the business of providing earned wage

access services to consumers. “Earned but unpaid income” is defined as salary,

wages, compensation, or other income that a consumer or an employer has

represented, and that a provider has reasonably determined, has been earned or

accrued to the benefit of the consumer in exchange for the consumer's provision of

services to the employer or on the employer's behalf but has not, at the time of the

payment of proceeds, been paid to the consumer by the employer. An “employer”

includes a person who is obligated to pay a consumer acting as an independent

contractor. “Proceeds” are defined as a provider's payment to a consumer based on

earned but unpaid income.

The bill requires a provider, before providing earned wage access services in

this state, to be licensed by the division. This requirement applies even if the

provider is not physically located in this state, such as when the provider conducts

business by means of a website. However, these provisions do not apply to financial

institutions and their affiliates. An applicant for a license must pay a fee to the

division, file and maintain a surety bond, and provide specified information to the

division.

The bill imposes various requirements on a licensed provider, including

requiring a licensed provider to do all of the following:

1. Develop and implement policies and procedures to respond to consumer

questions and complaints.

2. Offer to the consumer at least one reasonable option to obtain proceeds at

no cost and explain how to elect this option.

3. Before entering into an earned wage access services agreement with a

consumer, inform the consumer of his or her rights under the agreement and disclose

all fees associated with these services.

4. Inform the consumer of material changes to the terms and conditions of the

earned wage access services before implementing them.

5. Allow the consumer to cancel use of the provider's earned wage access

services at any time, without incurring a cancellation fee or penalty imposed by the

provider.