Solveig Singleton
Earned wage access (EWA) programs allow employees to access their already-earned wages before payday. Employer-sponsored EWA programs are typically funded by fees paid by the employee, the employer, or both. Fintech-sponsored direct-to-consumer programs are typically funded by fees for expedited advances and/or tips and usually offer a free option for advances made within one or two days. The programs are a popular and helpful service, letting workers cover bills without waiting for payday.
Multiple states have issued rulings that affect EWA or have passed or are considering EWA-related statutes. As of December 2025, three states treat EWA advances as loans (or “credit”), and nine states have passed EWA laws providing that EWA advances are not loans. Whether the law should treat EWA advances as loans is doubtful: resolving the legal issue (so far) depends on details of state law. As a policy matter, treating EWA as lending is problematic because lending is so heavily regulated.
When EWA advances are treated as loans, lender licensing laws and interest rate caps may apply, reducing EWA availability. In Connecticut, for example, a 2024 ruling that employers offering EWA must be licensed discouraged employers from offering EWA. State laws limiting the assignment of wages may also restrict EWA offerings. When EWA programs are unavailable, workers resort to higher-cost options or struggle to pay bills.
A draft federal bill now offers a national regulatory framework for EWA. It would preempt state laws that treat EWA advances as loans. Consumers will lose if state policymakers continue to discourage EWA offerings, and the bill enjoys bipartisan support, so many view federal preemption as a win.
But there are reasons to be wary of a national approach.
EWA laws boil down to regulation of private-sector arrangements to move up the date on which workers receive their wages. This should not be a federal issue. Indeed, it is not clear why state statutes displacing contractual arrangements are needed, either.
Furthermore, comprehensive EWA statutes ossify EWA offerings but leave the legal status of similar services unclear. For example, the federal bill stipulates that EWA programs 1) must include a free option and 2) must be non-recourse—that is, the payer may not sue the worker for repayment of the funds if it fails to collect the payment due.
Where does this leave business models that offer access to advances but fall outside the statutory description? Suppose a provider designed a subscription-only program without a free option. Or limited recourse under some circumstances? Would such a variation be illegal? If so, the bill would freeze EWA as it exists today, making it hard for any provider to innovate or differentiate its offerings. Alternatively, contractual variations on current EWA models might remain legal: there’s no reason to think they should be illegal. But these near-EWA variants would enjoy no protection from overzealous state regulators. Thus, it is not surprising that some fintechs embrace statutory regulation: it would offer an advantage over competing business models—some as yet unknown, and some (such as payday lending) more familiar.
Still, fintechs should be careful what they wish for.
First, the federal bill contains elements of price regulation—as do many state EWA laws. There is no more reason to support price regulation of any financial service than price regulation of cabbages or car parts. In all cases, price controls tend to do more harm than good.
Second, the national bill gives the overpowered Consumer Financial Protection Bureau authority to spell out details such as EWA providers’ disclosures to consumers. The CFPB is given to overreach. It has been described as a “watchdog” or the “cop on the beat,” casting financial services as burglars. A past CFPB sought to classify EWA advances as loans, an overstep corrected in 2025. The Bureau has leveraged its power in one area to exert authority over others—such as auto dealerships, which the law explicitly states are outside the Bureau’s authority. The CFPB should not be given a toehold to exercise authority over Target, Walmart, or other employers. The Federal Trade Commission, which has experience designing disclosures and enjoys more institutional trust, would be a better choice—if a national bill is essential.
The main justification for EWA bills (state or federal) is the need to limit the application of paternalistic state-level rules. And there’s little doubt that better policy outcomes would result from relieving financial services from excess regulation at the state level
Stakeholders are tempted to give short shrift to state-level debates: each state is only one of 50, after all. But this means that ill-considered state laws become precedents for problematic federal laws. This tendency has been an issue for privacy law and looms large for financial service regulation.
A good alternative to federal preemption would be to do more work on model state EWA laws to minimize problematic elements. Model law development enriches debate at the state and federal levels, furthering important conversations about the harmful effects of restrictive licensing and price controls on financial services. Preemption feels important to national providers, but it matters much less to providers (such as small employers) that serve customers on a smaller scale. The old idea of the 50 states serving as policy laboratories for EWA has merit.