Washington committee hears bill to license earned-wage access providers, defers action

The Washington State House Consumer Protection & Business Committee on Jan. 22 heard public testimony on House Bill 1063, which would create a new licensing chapter for earned wage access services and give the Department of Financial Institutions oversight beginning July 1, 2026. The committee held an extended public hearing but did not take executive action and deferred further action to a later date.

Proponents of the bill — including employer-integrated and direct-to-consumer providers — said EWA lets workers access wages they have already earned without interest or credit checks. Representative Christine Reeves (R-30), the bill sponsor, told the committee she used EWA herself and that the product is distinct from payday loans because “it does not require interest payments” and “you can only access wages you have already earned.” Industry witnesses PayActiv, DailyPay and Earnin described employer-integrated models and direct-to-consumer apps as options that can reduce late payments and reliance on higher-cost credit.

Opponents and consumer advocates urged stronger protections. Molly Gallagher of the Statewide Poverty Action Network and others warned that direct-to-consumer EWA products can resemble electronic payday loans and urged tighter limits on frequency and fees. Andrew Kushner of the Center for Responsible Lending called the bill “an industry wishlist” and recommended stricter caps and limits, citing research that some users take dozens of advances per year. Sam Leonard, a consumer-protection attorney, illustrated how small flat fees translate to very high annualized rates and called for treating direct-to-consumer EWA as small-dollar lending where appropriate.

DFI Director of Policy Drew Bowden told the committee the Department supports establishing a standalone chapter but recommended remaining neutral on whether EWA are loans to avoid creating regulatory loopholes. Bowden said the Department proposed amendments to keep EWA outside the Consumer Loan Act while preserving the ability to address money-transmission or loan activity if providers expand their product lines.

Key provisions discussed in the bill include licensing requirements (application, background checks, surety bond), DFI oversight powers (examinations, subpoenas, cease-and-desist authority), record-keeping for three years, an annual July 1 report of gross revenue/transactions, and a statutory cap on delivery fees of $7 per transaction. The bill would prohibit charging late fees, using credit reports for eligibility, reporting consumers to debt collectors for unpaid advances, and certain employer-sharing of tips or fees.

Committee members asked about consumer harm, employer-integrated versus direct-to-consumer differences, how providers make revenue, and whether state regulation is needed if the federal Consumer Financial Protection Bureau (CFPB) finalizes a rule classifying EWA as loans. Industry witnesses said many employers voluntarily offer EWA as a benefit and that providers typically earn revenue from interchange on cards and small instant-transfer fees.

The committee took public testimony from workers who said they used EWA to cover emergencies, and from consumer groups and former regulators who urged either more robust consumer protections or classification as a loan depending on the product model. Representative Reeves said she expects amendments, particularly to clarify access for government employees.

The committee closed the public hearing and deferred executive action on HB 1063 to allow time for more stakeholder discussion and proposed amendments.

Ending: The committee did not vote on the bill. Members signaled continued interest in shaping consumer protections, distinguishing employer-integrated products from direct-to-consumer offerings, and reconciling state licensing with potential federal guidance.