Amid blasts of arctic air and record snow, we are beginning to see state legislatures emerge from their winter hibernation and introduce new legislation. Regarding Earned Wage Access (EWA), the first to leave the cave in 2021 is South Carolina, which earlier this week introduced S. 532, which would authorize EWA providers to operate in the state.
The legislation focuses exclusively on business models integrated with the employer. It uses the term “access to earned income” instead of “access to earned income” because it covers employers and others who are contractually obliged to pay consumers for labor or services (called “debtors”). This means that the bill covers independent contractors and the “gig” economy, as well as traditional employees. According to the proposed law, EWA’s provision of services would not be considered a form of loan.
To qualify for invoice protections, the provider must enter into a contractual relationship with the debtor and must verify the wages or income earned by the consumer based on the data provided by the debtor. The consumer must consent to data sharing in advance. The provider delivers the wages or earnings earned before the next scheduled payment day and the advance is recovered through a deduction on the next scheduled payment.
The invoice allows the provider to calculate a fee for the service, provided the fee is disclosed in writing to the consumer and the consumer consents to the advance and fee being deducted from their next payment. Consumers should also be informed that they are entitled to receive the full amount of their wages or earnings if they wait for the next scheduled payment date.
Providers operating in South Carolina will have to register with the Department of Consumer Affairs and post bail. Consumers dissatisfied with a provider can file a complaint with the Department.
Overall, this is a very simple and straightforward bill. It would authorize suppliers integrated with the employer to operate in the state and allow them to collect fees and recover advances through deduction from the payroll. Law enforcement providers would not be subject to state consumer loan laws.
With this legislative initiative, South Carolina joins New Jersey as the two states with active EWA legislation in preparation. Bills introduced last year in California and New York died with the end of these legislative sessions. As the weather warms up, daffodils emerge and cherry trees bloom, we hope to see more EWA legislation bloom in the states.
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