[US] Regulation of earned wage access expands to South Carolina

Formal recognition of earned wage access (EWA) - the payroll practice of providing at least some pay to workers on-demand before payday - continues to grow with South Carolina passing legislation (SB 700) that becomes effective on November 21.  

The state joins Nevada, Missouri, Wisconsin, and Kansas in applying specific criteria for organisations with programs that provide EWA, also known as on-demand pay, daily pay, or early wage access, to employees.  

These states exclude qualified EWA programs from having to follow state consumer loan requirements if the programs meet the law’s criteria.  

Instead, a less-rigid registration process, coupled with provisions limiting recourse for collecting back on payouts that were made generally are laid out in these laws.   

Similar to the other states’ requirements, South Carolina categorises EWA providers either as an employer-integrated earned wage access provider, a consumer-directed earned wage access provider, or both. Regardless, all covered providers need to register with South Carolina, providing a surety bond.  

Employer-integrated earned wage access providers are loosely defined by South Carolina as “delivering to consumers access to earned but unpaid income that is based on employment, income, and attendance data obtained directly or indirectly from an employer.”  

Consumer-directed EWA providers under the statute, offer or provide “earned wage access services directly to consumers based on the consumer's representations and the provider's reasonable determination of the consumer's earned but unpaid income.” 

Providers need to disclose all fees (or “tips,” as some providers request) and any ability to access pay without a fee applied. 

Registration must be renewed annually, and there are reporting requirements. 

Under the South Carolina law, registered providers must report annually, by June 30, the following: 

• gross revenue attributable to earned wage access services;  
• a copy of each complaint that has been filed by a consumer against the provider with the Better Business Bureau or a state or federal agency other than the department and a description of the resolution, if any, of each such complaint;  
• the total number of transactions in which the provider provided proceeds to consumers; 
• the total number of unique consumers to whom the provider provided proceeds;  
• the total dollar amount of proceeds the provider provided to consumers; and  
• the total dollar amount of fees, voluntary tips, gratuities, or other donations the provider received from consumers.  

Consumer protections listed under the law prohibit providers from, among other things: 

• sharing with employers any fees, voluntary tips, gratuities, or other donations charged to employees for EWA services; 

• charging late fees, interest, or any other penalty or charge for failure to repay outstanding proceeds; 
• charging deferral fees;  
• requiring a credit score from participating employees to access, and reporting outstanding proceeds to a consumer credit reporting agency or a debt collector; and 
• filing lawsuits or using debt collectors to compel employees to pay any outstanding amounts. 

The law also covers programs providing payments made to non-employee contractors. 

Formal recognition of earned wage access (EWA) - the payroll practice of providing at least some pay to workers on-demand before payday - continues to grow with South Carolina passing legislation (SB 700) that becomes effective on November 21.  

The state joins Nevada, Missouri, Wisconsin, and Kansas in applying specific criteria for organisations with programs that provide EWA, also known as on-demand pay, daily pay, or early wage access, to employees.  

These states exclude qualified EWA programs from having to follow state consumer loan requirements if the programs meet the law’s criteria.  

Instead, a less-rigid registration process, coupled with provisions limiting recourse for collecting back on payouts that were made generally are laid out in these laws.   

Similar to the other states’ requirements, South Carolina categorises EWA providers either as an employer-integrated earned wage access provider, a consumer-directed earned wage access provider, or both. Regardless, all covered providers need to register with South Carolina, providing a surety bond.  

Employer-integrated earned wage access providers are loosely defined by South Carolina as “delivering to consumers access to earned but unpaid income that is based on employment, income, and attendance data obtained directly or indirectly from an employer.”  

Consumer-directed EWA providers under the statute, offer or provide “earned wage access services directly to consumers based on the consumer's representations and the provider's reasonable determination of the consumer's earned but unpaid income.” 

Providers need to disclose all fees (or “tips,” as some providers request) and any ability to access pay without a fee applied. 

Registration must be renewed annually, and there are reporting requirements. 

Under the South Carolina law, registered providers must report annually, by June 30, the following: 

• gross revenue attributable to earned wage access services;  
• a copy of each complaint that has been filed by a consumer against the provider with the Better Business Bureau or a state or federal agency other than the department and a description of the resolution, if any, of each such complaint;  
• the total number of transactions in which the provider provided proceeds to consumers; 
• the total number of unique consumers to whom the provider provided proceeds;  
• the total dollar amount of proceeds the provider provided to consumers; and  
• the total dollar amount of fees, voluntary tips, gratuities, or other donations the provider received from consumers.  

Consumer protections listed under the law prohibit providers from, among other things: 

• sharing with employers any fees, voluntary tips, gratuities, or other donations charged to employees for EWA services; 

• charging late fees, interest, or any other penalty or charge for failure to repay outstanding proceeds; 
• charging deferral fees;  
• requiring a credit score from participating employees to access, and reporting outstanding proceeds to a consumer credit reporting agency or a debt collector; and 
• filing lawsuits or using debt collectors to compel employees to pay any outstanding amounts. 

The law also covers programs providing payments made to non-employee contractors.