South Carolina recently became the fifth state to enact a law regulating earned wage access (EWA) providers. The new law, signed by Governor Henry McMaster, takes effect on November 21, 2024.
The Rise of Earned Wage Access
Earned wage access allows employees to access wages they have already earned before their next payday. This helps employees meet unexpected expenses without having to pay late fees, overdraft fees, or resort to predatory payday loans.
As EWA grows in popularity, some states and the federal government have considered enforcing stricter regulations that would classify it as lending. However, the industry has successfully advocated for laws like those in South Carolina that provide oversight without the burdens of lending laws.
Key Provisions Of The South Carolina EWA Law
- EWA is not considered a loan under the law
- EWA providers must register annually with the SC Department of Consumer Affairs (DCA)
- EWA providers must offer employees at least one no-cost option to access earned wages
- Employees can discontinue EWA services at any time without penalty
- EWA providers must disclose all fees associated with the service
- Providers must report annual data like revenue, complaints, and transaction volume to the DCA
South Carolina joins Kansas, Missouri, Nevada, and Wisconsin in implementing EWA regulations that avoid treating these services as loans subject to lending laws.
EWA Benefits For Small Businesses
EWA provides valuable financial flexibility for employees while helping small businesses attract and retain top talent. EWA is a beneficial tool that small businesses can leverage to foster a financially healthy, engaged, and loyal workforce. By providing employees with the financial flexibility they need, employers create a supportive and attractive work environment. With GMS' payroll and human resources expertise, we can provide resources to integrate an EWA solution for your workforce.
GMS stays up to date on rapidly evolving regulations like South Carolina's new EWA law. We ensure your business remains compliant while offering benefits that give you a competitive edge in recruitment and employee satisfaction. Contact our team of HR experts today to learn more about how we can support your small business needs.