SALT LAKE CITY — Have you ever wanted access to your paycheck a little earlier than payday? According to the Consumer Finance Protection Bureau, in 2022, more than 7 million workers used so-called "Earned Wage Access Apps" to obtain their paychecks early.
This week, Governor Spencer Cox signed the Earned Wage Access Services Act. The bill, according to the chief sponsor of the bill, Representative A. Cory Maloy, stated on his website that the legislation aims to "... ensures transparency, consumer protections, and fair practices in the growing earned wage access industry while setting up a registration and enforcement system to prevent abuse."
Earned wage access apps allow employees to access a portion of their earned wages before their regular payday and are offered through employer-sponsored or direct-to-consumer models. The Earned Wage Access Services Act enacts provisions related to earned wage access services, including provider registration and renewal, and directs the state's division of consumer protection to administer and enforce the act beginning May 7th.
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Nerd Wallet reports that earned wage access apps can help employees manage unexpected expenses or emergencies by providing access to funds before payday. They can allow employees control over their earned wages, sometimes reducing financial stress. For employers offering EWA, it can be a valuable employee benefit that can attract and retain talent.
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However, Nerd Wallet also notes there are some drawbacks to the applications. Those include unexpected fees. While some EWA services offer free options, others may charge fees for instant transfers or other services. Accessing wages early means a smaller paycheck on payday, which could lead to financial issues if not managed carefully. EWA's could also potentially lead to overspending and financial instability if used irresponsibly.
