Lambert Wage Access Bill Exempts Providers From Lending Laws

The text as introduced · 1,960 words

89R4859 PRL-F

By: Lambert
H.B. No. 2043

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of earned wage access services;

providing an administrative penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 14.251(a) and (b), Finance Code, are

amended to read as follows:

(a) The commissioner may assess an administrative penalty

against a person who knowingly and wilfully violates or causes a

violation of this chapter, Chapter 394, Chapter 398, or Subtitle B,

Title 4, or a rule adopted under this chapter, Chapter 394, or

Subtitle B, Title 4.

(b) The commissioner may order the following businesses or

other persons to pay restitution to an identifiable person:

(1) a person who violates or causes a violation of this

chapter, Chapter 394, or Subtitle B, Title 4, or a rule adopted

under this chapter, Chapter 394, or Subtitle B, Title 4;

(2) a credit access business who violates or causes a

violation of Chapter 393 or a rule adopted under Chapter 393;

(3) an earned wage access services provider who

violates or causes a violation of Chapter 398; or

(4) [ (3) ] a person who violates or causes a violation

of Subchapter B, Chapter 1956, Occupations Code, or a rule adopted

under that subchapter.

SECTION 2. Title 5, Finance Code, is amended by adding

Chapter 398 to read as follows:

CHAPTER 398. EARNED WAGE ACCESS SERVICES

Sec. 398.001. SHORT TITLE. This chapter shall be known and

may be cited as the "Texas Earned Wage Access Services Act."

Sec. 398.002. DEFINITIONS. In this chapter:

(1) "Consumer" means an individual who resides in this

state.

(2) "Consumer-directed wage access services" means

offering or providing services directly to a consumer based on the

consumer's earned but unpaid income.

(3) "Earned but unpaid income" means salary, wages,

compensation, or income that:

(A) a consumer represents, and a provider

reasonably determines, has been earned or has accrued to the

benefit of the consumer in exchange for the consumer's provision of

services to an employer or on the employer's behalf; and

(B) has not, at the time of the payment of

proceeds, been paid to the consumer by the employer.

(4) "Earned wage access services" means the business

of providing:

(A) consumer-directed wage access services;

(B) employer-integrated wage access services; or

(C) both consumer-directed wage access services

and employer-integrated wage access services.

(5) "Earned wage access services provider" or

"provider" means a person who is in the business of offering and

providing earned wage access services to consumers. The term does

not include:

(A) a service provider, including a payroll

service provider, whose role includes verification of the earned

but unpaid income but who is not contractually obligated to fund

proceeds delivered to a consumer as part of an earned wage access

service; or

(B) an employer that offers a portion of salary,

wages, or compensation directly to its employees or independent

contractors before the scheduled pay date.

(6) "Employer" means a person who employs a consumer

or a person who is contractually obligated to pay a consumer earned

but unpaid income on an hourly, project-based, piecework, or other

basis, in exchange for the consumer's provision of services to the

employer or on the employer's behalf, including to a consumer who is

acting as an independent contractor with respect to the employer.

The term does not include a customer of the employer or a person

whose obligation to pay salary, wages, compensation, or other

income to a consumer is not based on the consumer's provision of

services for or on behalf of that person.

(7) "Employer-integrated wage access services" means

delivering to consumers access to earned but unpaid income that is

based on employment, income, or attendance data obtained directly

or indirectly from an employer.

(8) "Fee" includes an amount charged by a provider for

expedited delivery or other delivery of proceeds to a consumer and

for a subscription or membership fee charged by a provider for a

bona fide group of services that includes earned wage access

services or an amount paid by an employer to a provider on a

consumer's behalf that entitles the consumer to receive proceeds at

reduced or no cost to the consumer. The term does not include a

voluntary tip, gratuity, or donation paid to the provider.

(9) "Outstanding proceeds" means proceeds remitted to

a consumer by a provider that have not been repaid to that provider.

(10) "Proceeds" means a payment to a consumer by a

provider that is based on earned but unpaid income.

Sec. 398.003. DETERMINATION OF CONSUMER'S RESIDENCE. A

provider may use the mailing address or state of residence provided

by a consumer to determine the consumer's state of residence for

purposes of this chapter.

Sec. 398.004. APPLICABILITY OF OTHER LAW. A provider is not

considered to be engaging in lending, money transmission, or debt

collection in this state, or in violation of the laws of this state

governing deductions from wages or the purchase, sale, or

assignment of or an order for earned but unpaid income, if that

provider complies with the requirements of Sections 398.005 and

398.006.

Sec. 398.005. REQUIREMENTS. (a) Before entering into an

agreement with a consumer for the provision of earned wage access

services, an earned wage access services provider shall provide the

consumer with a disclosure that:

(1) may be in written or electronic form;

(2) may be included as part of the contract to provide

earned wage access services;

(3) uses a font and language intended to be easily

understood by a layperson;

(4) informs the consumer of the consumer's rights

under the contract; and

(5) fully and clearly discloses each fee associated

with the earned wage access services.

(b) An earned wage access services provider must notify a

consumer of any material change to the information provided in a

disclosure statement under Subsection (a) to that consumer, using a

font and language intended to be easily understood by a layperson,

before implementing the particular change with respect to that

consumer.

(c) At the time that a provider charges a fee or solicits a

tip, gratuity, or donation from a consumer, the provider is

required to offer the consumer at least one reasonable option to

obtain proceeds at no cost to the consumer and clearly explain how

to elect that no-cost option.

(d) Each contract for the provision of earned wage access

services to a consumer by a provider may be in writing or electronic

form and must:

(1) be dated;

(2) include the written or digital signature of the

consumer; and

(3) use a font and language intended to be easily

understood by a layperson.

(e) Each contract must disclose that:

(1) fee obligations are subject to the limitations on

compelling or attempting to compel repayment under Section

398.006(a)(6);

(2) proceeds will be provided to the consumer using a

method agreed to by the consumer and the provider;

(3) the consumer may cancel at any time the consumer's

participation in the provider's earned wage access services without

incurring a cancellation fee;

(4) the provider is required to develop and implement

policies and procedures to respond to questions asked and concerns

raised by consumers and to address complaints from consumers in an

expedient manner;

(5) if a provider seeks repayment of outstanding

proceeds, a fee, or another payment from a consumer, including a

voluntary tip, gratuity, or other donation, from a consumer's

account at a depository institution, including through an

electronic funds transfer, the provider must:

(A) comply with applicable provisions of and

regulations adopted under the federal Electronic Fund Transfer Act

(15 U.S.C. Section 1693 et seq.); and

(B) unless the payment sought by the provider was

incurred by the consumer using fraudulent or unlawful means,

reimburse the consumer for the full amount of any overdraft or

non-sufficient funds fees imposed on the consumer by the consumer's

depository institution if the provider attempts to seek any payment

from the consumer on a date before, or in a different amount from,

the date or amount disclosed to the consumer for that payment;

(6) the provider is required to comply with all local,

state, and federal privacy and information security laws; and

(7) if the provider solicits, charges, or receives a

tip, gratuity, or donation from the consumer, the provider:

(A) must clearly and conspicuously disclose to

the consumer immediately before each transaction that the tip,

gratuity, or donation is voluntary and may be set to zero by the

consumer;

(B) must clearly and conspicuously disclose in

the contract and other service contracts with consumers that any

tip, gratuity, or donation from a consumer to a provider is

voluntary and the offering of earned wage access services,

including the amount of proceeds a consumer is eligible to request

and the frequency with which proceeds are provided to a consumer, is

not contingent on whether a consumer pays any tip, gratuity, or

donation or on the size of any tip, gratuity, or donation;

(C) may not mislead or deceive the consumer

regarding the voluntary nature of the tip, gratuity, or donation;

and

(D) may not represent that the tip, gratuity, or

donation will benefit a specific individual.

(f) An earned wage access services provider shall make

available to the consumer a copy of the completed contract, when

receipt of the document is acknowledged by the consumer.

Sec. 398.006. PROHIBITIONS. (a) An earned wage access

services provider may not, in connection with providing earned wage

access services to consumers:

(1) share with an employer any fees, tips, gratuities,

or other donations that were received from or charged to a consumer

for earned wage access services;

(2) accept payment of outstanding proceeds, a fee, or

a tip, gratuity, or other donation from a consumer through use of a

credit card or charge card;

(3) charge a late fee, deferral fee, interest, or

other fee or charge for failure to pay outstanding proceeds, a fee,

or a tip, gratuity, or other donation;

(4) report any information regarding the provider's

inability to receive repayment of outstanding proceeds, or receive

a fee or a tip, gratuity, or other donation, from a consumer to a

consumer credit reporting agency or a debt collector;

(5) require a consumer's credit report or credit score

to determine the consumer's eligibility for earned wage access

services;

(6) compel or attempt to compel payment by a consumer

of outstanding proceeds, a fee, or a tip, gratuity, or other

donation to the provider by:

(A) repeatedly attempting to debit a consumer's

depository institution account in violation of applicable payment

system rules;

(B) making outbound telephone calls to the

consumer;

(C) filing a suit against the consumer;

(D) using a third party to pursue collection of

the payment from the consumer on the provider's behalf; or

(E) selling the outstanding amount to a

third-party collector or debt buyer for purposes of collection from

the consumer;

(7) make or use a false or misleading representation

or statement to a consumer during the offer or provision of earned

wage access services; or

(8) directly or indirectly engage in a fraudulent or

deceptive act, practice, or course of business relating to the

offer or provision of earned wage access services.

(b) An earned wage access services provider is not precluded

from using any of the methods described by Subsection (a)(6) to:

(1) compel or attempt to compel repayment of

outstanding amounts incurred by a consumer through fraudulent or

unlawful means; or

(2) pursue an employer for breach of the employer's

contractual obligations to the provider.

SECTION 3. Sections 398.005 and 398.006, Finance Code, as

added by this Act, apply only to a contract for earned wage access

services entered into on or after the effective date of this Act.

SECTION 4. This Act takes effect September 1, 2025.