Vermont committee reviews bill to license earned-wage access providers

The Vermont House Committee on Commerce and Economic Development on Jan. 30 heard a detailed walkthrough of H.99, a bill that would create a state licensing regime and consumer protections for earned-wage access (EWA) services in Vermont.

The bill would require any person offering earned-wage access services in Vermont to obtain a license from the Department of Financial Regulation and would set disclosure, data-privacy and collection rules for licensed providers. Legislative counsel Rick Sabol told the committee, “So H.99 is, a bill that would regulate earned wage access services in Vermont.”

H.99 defines key terms, including “earned wage access services,” “provider,” and “obliger” (typically an employer). The draft requires licensees to offer a basic level of service that provides a reasonable option for consumers to receive proceeds at no cost. Sabol summarized that requirement: “A licensee shall make available to each consumer a basic level of service that provides a reasonable option to, receive proceeds at no cost to the consumer.” The bill also allows optional paid services such as expedited delivery or membership bundles, but makes the no-cost basic service the default.

The bill would bar certain practices. Licensees could not charge fees for the basic service, condition access on optional services, or require security interests or use of a consumer’s credit report for access. The draft expressly prohibits selling or sharing a consumer’s biometric data or precise geolocation data to an obligor or other third parties without the consumer’s affirmative consent.

On collections, H.99 would treat EWA disbursements as nonrecourse in most cases: providers would generally be prohibited from suing consumers or using third-party debt collectors to obtain repayment. A licensee may pursue repayment only by methods listed in the draft, such as payroll deduction under written agreement or electronic transfer with consumer consent. The bill limits collection attempts in some repayment channels to four tries and requires reimbursement to a consumer for any bank fees or penalties caused by a provider’s violation of transfer procedures.

The draft gives the commissioner of the Department of Financial Regulation (DFR) rulemaking authority to adopt requirements and to collect annual reports from licensees; the commissioner would collate and report aggregated information back to the Legislature. Sabol noted the commissioner may “adopt rules and orders and issue specific rulings, demands, and findings as are necessary for the administration and enforcement of this chapter and for protection of consumers.”

The draft sets application and license fees. The committee was shown a suggested application/investigation fee of $1,000, a $1,000 license fee, and a $1,200 annual renewal fee; committee members asked staff to confirm those figures against existing fee schedules. The bill would add earned-wage providers to the statutory definition of a financial institution for some purposes, a change staff warned could have collateral consequences.

The bill includes a phased implementation and a limited grace period: as drafted, licensing requirements begin Jan. 1, 2026; a provider operating in the state as of Jan. 1, 2025 that files a license application before Jan. 1, 2026 may continue to operate through Dec. 31, 2025 or until a license is denied. Staff described the draft as also taking effect July 1, 2025 for some provisions and advised members to check timing language in revision rounds.

During the walkthrough committee members raised questions about how gratuities work in practice, how employer-paid models are differentiated from direct-to-consumer models, whether banks would be exempt from licensing while still subject to the chapter’s requirements, and the treatment of payroll tax withholding and other deductions when consumers request partial pay early. Committee members also asked about federal preemption and whether future federal rules could affect state rulemaking; Sabol noted that if a federal law preempts state law that could limit Vermont’s authority, but state rules that are more protective of consumers could survive unless Congress explicitly preempts the area.

No formal motion or vote on H.99 occurred during the Jan. 30 walkthrough; the committee planned to hear testimony from providers and other stakeholders in a later session.

Looking ahead, DFR staff told the committee the agency would be involved in drafting administrative rules that define terms left broad in the bill and in setting the details of reporting and compliance; committee members asked DFR to confirm fee amounts, licensing terms and any unintended consequences of adding EWA providers to the statutory list of financial institutions.

The committee paused the discussion to take testimony later that afternoon from industry representatives and other interested parties.