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Bill would create regulations for short-term pay advance providers
KEITH ARNOLD
Special to the Legal News
Published: April 22, 2025
A West Chester lawmaker said he believes Ohioans who are paid on-demand via an employer’s agreement with an earned wage access provider or who seek a short-term advance in pay through a smartphone app would benefit from some regulation of these services.
Republican Sen. George Lang said the state currently has no oversight of the consumer service that now operates in every state.
Earned wage access services are a financial tool by which a provider advances the consumer earned income that has yet to be paid, according to Ohio Legislative Service Commission analysis of the bill Lang has proposed.
“EWA services allow consumers to receive their pay on-demand, rather than waiting for their next paycheck,” OLSC attorney Logan Briggs wrote. “Such an advance may include income earned for services performed on an hourly, project-based, piecework or other bases, or even income earned as an independent contractor. Once the consumer receives their paycheck, they or their employer are generally required to repay the EWA provider.”
Lang said consumers often can access their wages on the same day they worked “for a small fee of around $3.”
“Most EWA providers also offer a free option, usually including next-day deposit into the worker’s bank account,” the lawmaker continued. “This model is much different and more consumer friendly than ‘payday’ lenders, which often charge exorbitantly high interest rates to mostly low-income individuals.”
Lang’s Senate Bill 117 would establish a framework in which those service providers may operate in the state.
In addition to requiring EWA providers to register with the Division of Financial Institutions within the state Department of Commerce, the legislation would establish a licensing process for providers.
Other provisions of SB 117 include:
• A requirement that providers disclose the fees and terms associated with such transactions to consumers;
• Authorization of the superintendent to investigate alleged violations of the law, including imposing fines and filing civil actions to obtain an injunction or other appropriate relief; and
• A requirement that providers offer at least one free option to access funds early.
According to SB 117, an applicant registering as an earned wage access service provider must maintain a net worth of at least $50,000, alongside assets of at least $50,000, either in use or readily available for use as part of conducting business for each certificate of registration.
Lang said he expected to attach a technical amendment to the bill to clarify that earned wage access providers may comply with Fair Credit Reporting Act reporting requirements after receiving feedback from the consumer data industry.
“I strongly believe for Ohio to be the most business-friendly state in the country, we must allow the free markets to operate, but with reasonable regulations, when necessary,” he said during a Financial Institutions, Insurance and Technology Committee hearing at the Senate. “This bill accomplishes just that.”
SB 117 awaits further consideration by the committee.
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