Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Utah becomes seventh state to enact law regulating earned wage access services, (Apr 1, 2025)

Law Firms Mentioned:Goodwin Procter

Organizations Mentioned:Goodwin Procter, LLP

By Alexander J. Callen of Goodwin Procter LLP

Utah has become the seventh state (and the second in 2025) to enact a law that establishes a financial services oversight regime for earned wage access services, also known as on-demand pay services, which allow workers to access earned but unpaid income before payday. The governor approved the legislation (HB 279) on March 25, 2025. Utah's law imposes registration and other substantive requirements on providers. Utah joins six other states (Arkansas, Kansas, Missouri, Nevada, South Carolina, and Wisconsin), each of which has enacted similar legislation. California has also adopted regulations (but not laws) for earned wage access services.

Registrations and Exemptions

The law prohibits a person from engaging in the business of offering earned wage access services to a consumer who resides in Utah (i.e., acting as a "provider") without registering with the Utah Department of Commerce's Division of Consumer Protection, Utah's consumer protection agency. Among other details, an applicant must submit to the division information that includes a copy of the services agreement the applicant uses with consumers and other information the division requires by rule. A provider's principal must also submit to fingerprinting and criminal background checks. Registrations are renewable annually. The initial registration fee and renewal fees will be determined by rule of the division. The term "provider" does not include persons regulated under Title 7 of the Utah Code (e.g., banks, industrial banks, credit unions, check cashers, deferred deposit lenders, or money transmitters).

Division's Powers

The division may enforce the new law through administrative and judicial action against persons violating it, including imposing penalties and taking other disciplinary actions.

Conduct Requirements

The law imposes substantive conduct requirements on providers, including:

No credit scores. Providers may not use credit reports or credit scores to determine a consumer's eligibility for earned wage access services.
Free option. A provider must offer at least one no-fee option to receive funds and clearly and conspicuously disclose how to select that option. A provider may not condition the receipt of funds based on fees or tips.
Delivery methods. Providers may provide funds to a consumer by any method agreed upon by the consumer and provider.
Compliance with other laws. Providers must comply with all local, state, and federal privacy and information security laws.
Transaction disclosures. At the time a consumer requests funds, a provider must disclose, and require the consumer to acknowledge receiving the opportunity to view the disclosure of, the following information:
- The anticipated timeline in which the consumer will receive the requested funds
- The amount of funds the consumer has requested
- The amount of the fee charged
- The amount of funds the consumer will receive
- The account that will receive the funds
- The date the provider is authorized to withdraw funds from the consumer's account, including fees and voluntary payments
Tip practices. Providers who solicit, charge, or receive tips must:
- Before entering into an agreement for earned wage access services with a consumer, clearly and conspicuously disclose any tip opportunities
- Clearly and conspicuously disclose the voluntary nature of tips and that the availability and terms of earned wage access services are not contingent upon the payment of tips
- Refrain from misleading consumers about the voluntary nature of tips
No interest or penalties. Providers may not charge interest, fees, or other penalties for a consumer's nonpayment of outstanding proceeds, fees, or tips.
No credit card payments. Providers may not accept payments via credit card or charge card.
Overdraft fees. A provider must reimburse the consumer's overdraft or nonsufficient-funds fees caused by the provider in certain circumstances.
No debt reporting or collection. Providers may not compel a consumer to repay funds by (1) using or threatening to use civil lawsuits, outbound calls, third-party collections, or debt sales; (2) reporting or threatening to report nonpayment to consumer reporting agencies; or (3) charging or threatening to charge interest, finance charges, late fees, or other penalties for nonpayment.
Complaints. Providers must inform consumers how to file a complaint with the division.

Relation to Other Laws

The law clarifies that earned wage access services offered or provided by a provider do not violate Utah laws governing deductions from payroll or assignments of earned but unpaid income; are not loans if the provider is not a creditor, debt collector, or lender; and are not money transmission if the provider is not a money transmitter. Further, fees (including expedited delivery fees and subscription or membership fees) and tips for such services are not considered interest or finance charges, and providers are exempt from the state's collection agency statute. Providers are not eligible for an exemption from the Utah Consumer Sales Practices Act for credit terms otherwise subject to that act.

Compliance Timelines

The law becomes effective May 7, 2025. The law includes a grandfathering provision for persons acting as a provider on May 7, 2025 if the person applies for registration on or before October 6, 2025 and complies with the other requirements of the new law, allowing the provider to continue operating without a registration until the division grants or denies their application. The law anticipates that the division will prescribe the manner that will be used by providers to register.

Next Steps

Providers should promptly evaluate their systems, procedures, and disclosures for compliance with Utah's new requirements. Providers should also be prepared to register promptly once the division releases registration instructions. Familiarity with Utah's law is also important for industry participants because it, along with the laws and regulations in Arkansas, California, Kansas, Missouri, Nevada, South Carolina, and Wisconsin, may shape similar actions pending in other states.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Alexander J. Callen

Goodwin Procter LLP

The New York Times Building

620 Eighth Avenue

New York

NY 10018

United States

Tel.: +1 212 813 8800

E-mail: rmertz@goodwinlaw.com

URL: www.goodwinlaw.com/

Attorneys: (Goodwin Procter).

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