What happened?

On April 19, Kansas Governor Laura Kelly signed House Bill (HB) 2560 to regulate earned wage access (EWA) products and services, requiring EWA providers to be licensed by the state bank commissioner and comply with certain disclosure rules. 

What are the details?

General Bites:

• Establishes oversight for Earned Wage Access services (EWAs), allowing workers to access unpaid income before payday.

• Exempts bank holding companies regulated by the Federal Reserve and depository institutions regulated by a federal banking agency and their subsidiaries.

• EWA providers are not subject to the uniform consumer credit code.

• EWA services are not considered a loan or money transmission, and fees and gratuities are not considered finance or interest charges.

• Applies to both direct-to-consumer and employer-integrated EWA services. The provided amount must be earned by the consumer at the time of the advance.

• EWA providers must be licensed to offer services in the state.

• EWA providers operating as of January 1, 2024, may continue if they apply for a license within three months after the form is prescribed by the commissioner.

Key Bites:

• Registrations: registrants must post a surety bond and be submitted annually, at least 30 days before expiration. Registrations will expire annually on December 31.

• Notices of Changes: a report to the commissioner must be submitted within 15 days of any of certain events.

• Annual Report: on or before April 1 of every year, a registrant must submit an annual report to the commission relating to the EWA services provided the previous year.

• Conduct Requirements: a licensed EWA provider must adhere to substantive conduct requirements standards.

• Prohibitions: providers must comply with the Conduct Requirements and not perform certain conducts.

Business Considerations

• Employers should promptly evaluate their systems, procedures, and disclosures for compliance with Kansas’s new requirements.
• Employers who are providers should be prepared to register promptly once the commissioner releases a registration form unless they decide to opt-out. 
• If employers decide to offer EWA services, they should ensure that they partner with providers who are licensed under the new law or develop a plan to comply with the requirements. Employers should ensure that the EWA provider they partner with is transparent about all fees and charges associated with the service.
• Employers should communicate with their employees about the availability of EWA services, how they work, and any associated fees.
• Employers should obtain explicit consent from their employees before enrolling them in an EWA program.
• Employers should ensure that they or their EWA provider of choice comply with all relevant privacy and data security laws to protect employee information.
• Multi-state employers should try to maintain consistent policies across states to the extent possible, helping to simplify administration, avoid confusion among employees, and familiarize themselves with the laws in each state where they operate.

Source References

• KS HB 2560

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