| Update Applicable to: | Effective Date |
| All Licensed EWA Providers Serving Connecticut Workers | October 1, 2025 |
What happened?
On July 8, 2025, Governor Ned Lamont signed Senate Bill (SB) 1396 (Public Act 25-155), which establishes comprehensive regulations for earned but unpaid wage or salary income advances (commonly known as earned wage access or EWA) in Connecticut.
Overview:
The law classifies EWA advances as small loans and requires providers to obtain a small loan license under the Connecticut Small Loan Act, introducing strict consumer protections, limits on fees, and operational requirements for providers offering advances to Connecticut workers.
Summary of Provisions
Section 1 – Definitions (§36a-555)
- Defines earned but unpaid wage or salary income advance as a small loan of less than $750, not exceeding the worker’s earned wages for the pay period.
- Adds definitions for EWA provider, Connecticut borrower, and clarifies that finance charges include any related fees or tips.
Section 2 – Small Loan Requirements (§36a-558)
- Treats EWA advances as small loans subject to:
- Finance charge caps: $4 per advance or $30 per month.
- Repayment: Due on next payday, within 34 days.
- Prohibits prepayment penalties, adjustable rates, and class action waivers.
- Non-compliant loans are void and unenforceable.
Section 3 – Provider Obligations
- No-Cost Option: Offer at least one free option per transaction and disclose how to elect it.
- Disclosures: Finance charges, cancellation rights, and complaint link to the Department of Banking.
- Verification: Confirm earned wages using payroll data or approved methods.
- Repayment Rules: Single repayment on next payday; up to 3 installments if rescheduled.
- Consumer Protections:
- Allow cancellation anytime without fees.
- Reimburse overdraft fees caused by provider error.
- Provide 12-month transaction history electronically.
- Anti-Stacking: Prevent multiple advances on the same wages through policies and periodic reviews.
Prohibited Practices:
- Charging above allowed caps
- Setting default voluntary finance charges above $0
- Sharing fees with employers
- Accepting credit card payments
- Charging late fees, interest, or penalties
- Using credit reports for eligibility
- Aggressive collections (lawsuits, calls, third-party collectors)
- Reporting nonpayment to credit bureaus
Source References
Resources
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