Indiana Enacts Earned Wage Access Law
Indiana passed HB 1125, which, among other things, enacts a new code chapter known as the Indiana Earned Wage Access Act. The Act allows certain Indiana consumers to access their earned but unpaid wages, salary, or compensation before their scheduled pay date. Unless exempt, providers offering or advertising earned wage access services need to obtain a license from the Indiana Department of Financial Institutions (DFI) and renew it annually.
The Act provides for both consumer-directed and employer-integrated earned wage access models. For consumer-directed earned wage access, the provider relies on the consumer’s representations when determining the amount of proceeds the consumer is eligible to receive. For employer-integrated earned wage access, the provider determines the amount the consumer is eligible to receive based on data obtained from the employer.
The Act mandates that providers offer at least one reasonable option for a consumer to receive proceeds at no cost, and with delivery no later than one business day after the consumer initiates a transaction with the provider. Otherwise, providers may charge a fee, or solicit a voluntary tip, gratuity, or other donation for their services. If a fee is charged, it may not exceed $5 or 5% of the proceeds delivered to the consumer.
Among other requirements, providers must comply with the Electronic Funds Transfer Act, maintain a surety bond, and develop and implement policies and procedures to respond to consumer questions and complaints. Providers must also maintain records of each transaction for two years from the date initiated and submit quarterly composite reports of all transactions to DFI. To administer and enforce these requirements, the Act confers DFI with rulemaking and examination authority.
Earned wage access services are not small loans, and the fees, voluntary tips, gratuities, or other donations paid by consumers are not considered to be interest or finance charges.
HB 1125 becomes effective on January 1, 2026.
