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California Opinion Letter on Earned Wage Access, State License Requirements

BY: Lia Coniglio, Esq. | 03/11/22

The California Department of Financial Protection and Innovation (DFPI) responded to a Request for Interpretive Opinion from FlexWage regarding its earned wage access (EWA) product [DFPI, OP 8206, 2-11-22].

The DFPI interpreted FlexWage’s letter as a request for a specific ruling under California Financing Law (CFL) and the California Deferred Deposit Transaction Law (CDDTL). Both are sections of the California Financial Code.

FlexWage described its EWA product as assisting employers in providing employees’ earned but unpaid wages in advance of payday. The money is provided by the employer; FlexWage does not provide the advanced funds itself. The DFPI concluded that FlexWage does not originate or facilitate loans subject to the CFL or deferred deposit transactions subject to the CDDTL. Therefore, neither state law requires the vendor or its employer-partners to obtain a license from the DFPI with respect to the EWA product.

The DFPI expresses no opinion as to whether the product, or any other EWA product, complies with state labor laws.

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Lia Coniglio, Esq., is Managing Editor of PayState Update and Senior Manager of State Payroll Information Resources for the APA.