APA Participates in New Jersey Roundtable on Early Wage Access
APA members and several early wage access vendors participated in a roundtable discussion about provisions in New Jersey S.B. 866 that would prevent vendors from providing early wage access in New Jersey. The February roundtable discussion included the bill’s sponsor, N.J. Sen. Nellie Pou.
Sen. Pou expressed her concerns and aims in proposing the bill, which she said was intended to protect consumers. She was particularly concerned about unreasonable fees.
APA said that the ability for employees to access earnings prior to payday is a significant benefit to countless families nationwide and can help to reduce employee stress and the often-high cost of meeting short-term spending emergencies. Early wage access offers a way for the 67% of the workforce who live paycheck to paycheck to manage volatile cash flow.
Problems With S.B. 866
If passed, S.B. 866 would prohibit vendors from contracting with employees where the advance is repaid directly by the employees to the vendor. The only method of repaying an advance would be through payroll. The bill also characterizes all earned income access services as loans and all fees and optional contributions as interest. This means that vendors would have to comply with state lending and usury laws as well as the federal Truth in Lending Act (TILA), although it is unclear how the TILA would apply to early wage access. Essentially, the bill would force employer-connected providers to become licensed lenders. Vendors that violate the law could be liable for $5,000 per violation.
APA continues to work with Sen. Pou and her staff to improve the proposed legislation.
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Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.