On May 28, Maryland Governor Wes Moore signed House Bill 1294 into law, establishing a comprehensive regulatory framework for Earned Wage Access (EWA) providers operating in the state. Effective October 1, the new law provides for licensing of both employer-integrated and consumer-directed EWA providers under the Maryland Consumer Loan Law, while also introducing a host of new consumer protection requirements.
The law is a response to prior regulatory guidance that restricted EWA services in the state and prompted many providers to exit the market. Like previous bills passed by other states, the bill codifies permissible EWA practices by formally defining employer-integrated and consumer-directed models (previously discussed here), clarifying that these services are not loans if providers do not charge interest and comply with specific statutory conditions. It also creates a special licensing framework that enables complaint providers to legally reenter the Maryland market while adhering to detailed operational requirements designed to protect consumers.
To address compliance and consumer protection concerns, the law includes the following key provisions:
- Mandatory licensing of EWA providers. All EWA providers must be licensed under Maryland’s Consumer Loan Law unless exempt, and are subject to oversight by the Office of Financial Regulation (the “OFR”). In addition, there is annual reporting to the OFR.
- Non-recourse obligations. EWA transactions are non-recourse and a user can cancel their EWA transaction at any time.
- Coverage of both EWA models. The law applies to both “employer-integrated” and “consumer-directed” EWA models. Employer-integrated models involve arrangements where the provider contracts directly with the employer and receives payroll data from the employer or its processor. Consumer-directed models rely on employment and income data provided by the worker without any employer relationship.
- No-cost option requirement. Providers must offer at least one “reasonable” no-cost method for consumers to access their earned wages, regardless of whether fee-based options are available.
- Fee limitations for expedited delivery. Fees for expedited delivery are capped at $5 for transfers of $75 or less and $7.50 for amounts above $75.
- Tip regulation. Providers that solicit tips must treat them as voluntary, set default amounts to zero, ensure they do not influence access or terms, and refund any portion that would result in impermissible interest charges.
- Prohibition on traditional lending practices. Providers are prohibited from charging interest or late fees, conditioning service on tipping, using or furnishing credit reports, or enforcing repayment through litigation, collections, or debt sales.
- Disclosures and consumer rights. Providers must disclose all fees and changes clearly, explain how to select the no-cost option, allow users to cancel without penalty, and reimburse overdraft fees caused by failed repayment attempts, unless due to fraud.
Putting It Into Practice: Maryland becomes the latest state to adopt EWA-specific regulations (previously discussed here, here, here, and here). Maryland’s framework affirms that EWA products are not loans when structured in compliance with statutory safeguards. As more states implement similar statutes, EWA providers should continue to monitor evolving regulatory trends and adapt their compliance practices accordingly.