M-RCBG Associate Working Paper No. 214

Earned Wage Access:  An Innovation in Financial Inclusion?

Marshall Lux
Cherie Chung


Since the early 2010s, fintech companies have both gone directly to employees or partnered with employers to provide access to a portion of employees’ earned wages before payday. The growth of these companies, known as Earned Wage Access (EWA) companies, was accelerated significantly during the COVID-19 pandemic. Millions of workers and hundreds of employers are now advancing billions of dollars of wages each year. Despite this rapid growth, jurisdiction over the product remains unclear, and the product sits in a legal gray area. Consumer advocates, regulators on the state and federal level, the EWA industry, and employers have all acknowledged the need for regulatory clarity. This working paper investigates the origins of EWA, provides an overview of the current business models and players, explores the implications of EWA product design with a focus on consumer financial health, and identifies areas of ambiguity in the current regulation. It recommends that moving forward, regulators should outline what constitutes a “Covered” EWA program by focusing on models that contract directly with employers, disallowing tips, and clarifying guidance on subscription models and other allowable finance charges. Beyond this, providers need to be transparent about the fees they charge and the rights they ask consumers to waive while upholding high – and statutory – data usage and privacy standards. Such guidance would ensure the continued benefits of employer-sponsored EWA, delivered in a meaningful and sustainable context that improves employee welfare while preventing unfair harms.

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