MD officials, legislators continue efforts to regulate ‘earned wage access’

Maryland labor officials and legislators are seeking to regulate “earned wage access” products and better protect the hundreds of thousands of workers in the state who rely on the cash advances to cover expenses in the days before they receive a paycheck.

Earned wage access providers like DailyPay, EarnIn, Immediate and ZayZoon, and their paid Annapolis lobbyists, have contended that their products aren’t loans and shouldn’t fall under the state’s lending laws.

The products offer cash ahead of payday for a fee that’s typically a few dollars, or for a “tip.”

Some companies have reported that more than 100,000 of Marylanders rely on their products. State officials are looking to bring providers under state lending regulations and provide more transparency for users, including about what they’re paying to get cash.

“It’s important for the department to regulate this industry because we know many Marylanders are using these products,” state Labor Secretary Portia Wu said in a phone interview Tuesday. “We need to make sure that we’re protecting Maryland workers’ hard-earned paychecks and their pay, and also regulate in a way that’s consistent with Maryland’s mission of strong consumer protections.”

Union members have also thrown their support behind the state’s efforts to regulate the services as loans.

Donna Edwards, president of the Maryland State and DC AFL-CIO, wrote that “unregulated earned wage access products that skirt Maryland’s consumer lending laws are not the temporary financial solution that workers need,” saying they shouldn’t have to pay “egregious” tips, fees or interest to be paid.

While the House of Delegates passed a bill regulating earned wage access during the session that ended April 8, the measure stalled in the Senate.

Top Democrats have asked the Department of Labor to refrain from enforcing state lending laws on earned wage access services beyond the status quo that existed before the 2024 session. They plan to revisit proposals next year.

“It’s not going to pass if we can’t get their blessing,” Senate Finance Committee Vice Chair Katherine Klausmeier said of the Department of Labor in a phone interview. “We have to get something passed or these companies can’t continue working here.”

The House’s proposal capped transaction costs at $3.50 as part of what Economic Matters Committee Chair C.T. Wilson said was a bill to regulate the products but not chase the providers out of the state.

“To me, it’s something that’s necessary,” Wilson said in a phone interview Tuesday. “It’s not about protecting the industry. When hundreds of thousands of people use it, you got to understand it’s necessary. … I was very frustrated that this bill died.”

Regulating earned wage access has been a part of the Department of Labor’s push to increase people’s access to banking while ensure the safety of the products and services they’re using.

Earned wage access services can be especially vital to low-wage hourly workers, and providers have contended that their products help people avoid high-interest loans and predatory lending practices.

Ryan Naples, director of public policy at DailyPay, wrote to House members that their bill would “in effect limit access to earned wage access, removing an important lifeline for Marylanders, and impacting the employers in the state who have come to use this product as an important tool to retain and grow their workforce.”

Some employers contract with an earned wage access provider to offer the service directly to their employees. People can also access the products through third-party providers, which directly withdraw the loan amount from a user’s bank account after they get paid.

Labor department officials have said that earned wage access products are functionally loans under Maryland’s laws, and they should be subject to the same rules and regulations as other consumer and payday loan products. The earned wage access providers operating in the state aren’t currently licensed.

State officials and legislators are expected to hash out their differences in the months leading up to the 2025 lawmaking session that begins in January.