89R20571 PRL-F
By: Lambert H.B. No. 2043
Substitute the following for H.B. No. 2043:
By: Bumgarner C.S.H.B. No. 2043
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of earned wage access services;
requiring an occupational registration; imposing fees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 4, Finance Code, is amended by
adding Chapter 355 to read as follows:
CHAPTER 355. EARNED WAGE ACCESS SERVICES
Sec. 355.001. SHORT TITLE. This chapter shall be known and
may be cited as the "Texas Earned Wage Access Services Act."
Sec. 355.002. DEFINITIONS. In this chapter:
(1) "Consumer" means an individual who resides in this
state.
(2) "Consumer-directed wage access services" means
offering or providing services directly to a consumer based on the
consumer's earned but unpaid income.
(3) "Control" means the power to:
(A) directly or indirectly vote at least 25
percent or more of the outstanding voting shares or voting
interests of a provider or person in control of a provider;
(B) elect or appoint a majority of key
individuals; or
(C) directly or indirectly exercise a
controlling influence over the management or policies of a provider
or person in control of a provider.
(4) "Earned but unpaid income" means salary, wages,
compensation, or income that:
(A) a consumer represents, and a provider
reasonably determines, has been earned or has accrued to the
benefit of the consumer in exchange for the consumer's provision of
services to an employer or on the employer's behalf; and
(B) has not, at the time of the payment of
proceeds, been paid to the consumer by the employer.
(5) "Earned wage access services" means the business
of providing:
(A) consumer-directed wage access services;
(B) employer-integrated wage access services; or
(C) both consumer-directed wage access services
and employer-integrated wage access services.
(6) "Earned wage access services provider" or
"provider" means a person who is in the business of offering and
providing earned wage access services to consumers. The term does
not include:
(A) an entity that offers or provides earned wage
access services and reports to a consumer reporting agency
described by Section 603(p), Fair Credit Reporting Act (15 U.S.C.
Section 1681a(p)), a consumer's payment or nonpayment of:
(i) outstanding proceeds of the earned wage
access services; or
(ii) fees, voluntary tips, gratuities, or
other donations in connection with the earned wage access services;
(B) a service provider, including a payroll
service provider, whose role includes verification of the earned
but unpaid income but who is not contractually obligated to fund
proceeds delivered to a consumer as part of an earned wage access
service; or
(C) an employer that offers a portion of salary,
wages, or compensation directly to its employees or independent
contractors before the scheduled pay date.
(7) "Employer" means a person who employs a consumer
or a person who is contractually obligated to pay a consumer earned
but unpaid income on an hourly, project-based, piecework, or other
basis, in exchange for the consumer's provision of services to the
employer or on the employer's behalf, including to a consumer who is
acting as an independent contractor with respect to the employer.
The term does not include a customer of the employer or a person
whose obligation to pay salary, wages, compensation, or other
income to a consumer is not based on the consumer's provision of
services for or on behalf of that person.
(8) "Employer-integrated wage access services" means
delivering to consumers access to earned but unpaid income that is
based on employment, income, or attendance data obtained directly
or indirectly from an employer.
(9) "Fee" includes an amount charged by a provider for
expedited delivery or other delivery of proceeds to a consumer and
for a subscription or membership fee charged by a provider for a
bona fide group of services that includes earned wage access
services or an amount paid by an employer to a provider on a
consumer's behalf that entitles the consumer to receive proceeds at
reduced or no cost to the consumer. The term does not include a
voluntary tip, gratuity, or donation paid to the provider.
(10) "Key individual" means an individual who is
ultimately responsible for establishing or directing policies and
procedures of a provider, including an executive officer, manager,
director, or trustee.
(11) "Outstanding proceeds" means proceeds remitted
to a consumer by a provider that have not been repaid to that
provider.
(12) "Proceeds" means a payment to a consumer by a
provider that is based on earned but unpaid income.
Sec. 355.003. DETERMINATION OF CONSUMER'S RESIDENCE. A
provider may use the mailing address or state of residence provided
by a consumer to determine the consumer's state of residence for
purposes of this chapter.
Sec. 355.004. APPLICABILITY OF OTHER LAW. A provider is not
considered to be engaging in lending, money transmission, or debt
collection in this state, or in violation of the laws of this state
governing deductions from wages or the purchase, sale, or
assignment of or an order for earned but unpaid income, if that
provider complies with the requirements of Sections 355.008 and
355.009.
Sec. 355.005. FINANCIAL STATEMENTS. (a) A provider shall,
not later than the 30th business day after the date of a request
from the commissioner, file with the commissioner:
(1) a financial statement, audited or unaudited, dated
as of the last day of the provider's fiscal year that ended in the
immediately preceding calendar year; and
(2) any other information as the commissioner may
reasonably require.
(b) An audited financial statement filed with the
commissioner under Subsection (a)(1) must be prepared:
(1) in accordance with United States generally
accepted accounting principles; and
(2) by an independent certified public accountant or
independent public accountant who is satisfactory to the
commissioner.
(c) An audited financial statement filed with the
commissioner under Subsection (a)(1) must include or be accompanied
by a certificate of opinion of the independent certified public
accountant or independent public accountant that is satisfactory in
form and content to the commissioner. If the certificate of opinion
is qualified, the commissioner may order the provider to take any
action the commissioner finds necessary to enable the independent
certified public accountant or independent public accountant to
remove the qualification.
Sec. 355.006. REPORTS OF CERTAIN EVENTS. (a) A provider
shall file a report with the commissioner not later than the first
business day after the provider has reason to know of:
(1) the filing of a petition by or against the provider
under the United States Bankruptcy Code (11 U.S.C. Sections
101-1532) for bankruptcy or reorganization;
(2) the filing of a petition by or against the provider
for receivership, the commencement of any other judicial or
administrative proceeding for the provider's dissolution or
reorganization, or the making of a general assignment for the
benefit of the provider's creditors; or
(3) the commencement of a proceeding to revoke or
suspend the provider's license in a state or country in which the
provider engages in or is licensed to engage in earned wage access
services.
(b) A provider shall file a report with the commissioner not
later than the third business day after the provider has reason to
know of the occurrence of a felony charge or conviction of:
(1) the provider or a key individual; or
(2) a person in control of the provider.
Sec. 355.007. TIMELY TRANSMISSION. (a) A provider who
receives the proceeds of a paycheck of a consumer for forwarding all
or a portion of the proceeds to the consumer shall forward the
proceeds in accordance with the terms of the agreement between the
provider and the consumer unless the provider has a reasonable
belief or a reasonable basis to believe of the existence of fraud or
that a crime or violation of law, rule, or regulation has occurred,
is occurring, or may occur.
(b) If a provider fails to forward the proceeds of a
paycheck received for forwarding in accordance with this section,
the provider must respond to inquiries by the consumer with the
reason for the failure unless providing the reason would violate a
local, state, or federal law.
Sec. 355.008. REQUIREMENTS. (a) Before entering into an
agreement with a consumer for the provision of earned wage access
services, an earned wage access services provider shall provide the
consumer with a disclosure that:
(1) may be in written or electronic form;
(2) may be included as part of the contract to provide
earned wage access services;
(3) uses a font and language intended to be easily
understood by a layperson;
(4) informs the consumer of the consumer's rights
under the contract; and
(5) fully and clearly discloses each fee associated
with the earned wage access services.
(b) An earned wage access services provider must notify a
consumer of any material change to the information provided in a
disclosure statement under Subsection (a) to that consumer, using a
font and language intended to be easily understood by a layperson,
before implementing the particular change with respect to that
consumer.
(c) At the time that a provider charges a fee or solicits a
tip, gratuity, or donation from a consumer, the provider is
required to offer the consumer at least one reasonable option to
obtain proceeds at no cost to the consumer and clearly explain how
to elect that no-cost option. The no-cost option required by this
subsection must require the provider to initiate transmission of
the proceeds to the consumer not later than one business day after
the date the consumer makes the request.
(d) Each contract for the provision of earned wage access
services to a consumer by a provider may be in writing or electronic
form and must:
(1) be dated;
(2) include the written or digital signature of the
consumer; and
(3) use a font and language intended to be easily
understood by a layperson.
(e) Each contract must disclose that:
(1) fee obligations are subject to the limitations on
compelling or attempting to compel repayment under Section
355.009(a)(5);
(2) proceeds will be provided to the consumer using a
method agreed to by the consumer and the provider;
(3) the consumer may cancel at any time the consumer's
participation in the provider's earned wage access services without
incurring a cancellation fee;
(4) the provider is required to develop and implement
policies and procedures to respond to questions asked and concerns
raised by consumers and to address complaints from consumers in an
expedient manner;
(5) if a provider seeks repayment of outstanding
proceeds, a fee, or another payment from a consumer, including a
voluntary tip, gratuity, or other donation, from a consumer's
account at a depository institution, including through an
electronic funds transfer, the provider must:
(A) comply with applicable provisions of and
regulations adopted under the Electronic Fund Transfer Act (15
U.S.C. Section 1693 et seq.); and
(B) unless the payment sought by the provider was
incurred by the consumer using fraudulent or unlawful means,
reimburse the consumer for the full amount of any overdraft or
non-sufficient funds fees imposed on the consumer by the consumer's
depository institution if the provider attempts to seek any payment
from the consumer on a date before, or in a different amount from,
the date or amount disclosed to the consumer for that payment;
(6) the provider is required to comply with all local,
state, and federal privacy and information security laws; and
(7) if the provider solicits, charges, or receives a
tip, gratuity, or donation from the consumer, the provider:
(A) must clearly and conspicuously disclose to
the consumer immediately before each transaction that the tip,
gratuity, or donation is voluntary and may be set to zero by the
consumer;
(B) must set the amount of any default tip,
gratuity, or donation at zero;
(C) must clearly and conspicuously disclose in
the contract and other service contracts with consumers that any
tip, gratuity, or donation from a consumer to a provider is
voluntary and the offering of earned wage access services,
including the amount of proceeds a consumer is eligible to request
and the frequency with which proceeds are provided to a consumer, is
not contingent on whether a consumer pays any tip, gratuity, or
donation or on the size of any tip, gratuity, or donation;
(D) may not mislead or deceive the consumer
regarding the voluntary nature of the tip, gratuity, or donation;
and
(E) may not represent that the tip, gratuity, or
donation will benefit a specific individual.
(f) An earned wage access services provider shall make
available to the consumer a copy of the completed contract, when
receipt of the document is acknowledged by the consumer.
Sec. 355.009. PROHIBITIONS. (a) An earned wage access
services provider may not, in connection with providing earned wage
access services to consumers:
(1) share with an employer any fees, tips, gratuities,
or other donations that were received from or charged to a consumer
for earned wage access services;
(2) accept payment of outstanding proceeds, a fee, or
a tip, gratuity, or other donation from a consumer through use of a
credit card or charge card;
(3) charge a late fee, deferral fee, interest, or
other fee or charge for failure to pay outstanding proceeds, a fee,
or a tip, gratuity, or other donation;
(4) require a consumer's credit score from a credit
report to determine the consumer's eligibility for earned wage
access services;
(5) compel or attempt to compel payment by a consumer
of outstanding proceeds, a fee, or a tip, gratuity, or other
donation to the provider by:
(A) repeatedly attempting to debit a consumer's
depository institution account in violation of applicable payment
system rules;
(B) making outbound telephone calls to the
consumer;
(C) filing a suit against the consumer;
(D) using a third party to pursue collection of
the payment from the consumer on the provider's behalf; or
(E) selling the outstanding amount to a
third-party collector or debt buyer for purposes of collection from
the consumer;
(6) make or use a false or misleading representation
or statement to a consumer during the offer or provision of earned
wage access services; or
(7) directly or indirectly engage in a fraudulent or
deceptive act, practice, or course of business relating to the
offer or provision of earned wage access services.
(b) An earned wage access services provider is not precluded
from using any of the methods described by Subsection (a)(5) to:
(1) compel or attempt to compel repayment of
outstanding amounts incurred by a consumer through fraudulent or
unlawful means; or
(2) pursue an employer for breach of the employer's
contractual obligations to the provider.
Sec. 355.010. REGISTRATION REQUIRED; FEES. (a) Except as
provided by Subsection (b), a person must hold a registration under
this chapter to engage in the business of offering or providing
earned wage access services in this state.
(b) The following persons are not required to obtain a
registration under this chapter:
(1) a bank, credit union, savings bank, or savings and
loan association organized under the laws of the United States or
under the laws of the financial institution's state of domicile; or
(2) an employer that offers a portion of salary,
wages, or compensation directly to its employees or independent
contractors before the normally scheduled pay date.
(c) The commissioner may prescribe the form for an
application for registration under this chapter. An application
must contain the information required by the commissioner in order
to determine an applicant's eligibility.
(d) On the filing of each registration application, the
applicant shall pay to the commissioner an investigation fee and a
registration fee in amounts determined as provided by Section
14.107.
(e) The commissioner shall approve the application and
issue to the applicant a registration under this chapter if the
commissioner finds that:
(1) the financial responsibility, experience,
character, and general fitness of the applicant are sufficient to:
(A) command the confidence of the public; and
(B) warrant the belief that the business will be
operated lawfully and fairly, within the purposes of this chapter;
and
(2) the applicant has obtained the surety bond
required under Section 355.012.
(f) If the commissioner does not find the eligibility
requirements of Subsection (e) are met, the commissioner shall
notify the applicant.
(g) If an applicant requests a hearing on the application
not later than the 30th day after the date of notification under
Subsection (f), the applicant is entitled to a hearing on the denial
of the application.
(h) A registration issued under this chapter is valid for
the period prescribed by finance commission rule adopted under
Section 14.112.
(i) In order to maintain an active registration, a
registration holder must pay to the commissioner the following
amount determined as provided by Section 14.107:
(1) an assessment to cover costs associated with
registration; and
(2) any direct and indirect costs of examination.
(j) A person who is required to hold a registration under
this chapter must hold a registration for each office at which the
person conducts business under this chapter.
Sec. 355.011. REGISTRATION SUSPENSION, REVOCATION, OR
REFUSAL TO RENEW. (a) After notice and opportunity for a hearing,
the commissioner may suspend or revoke a registration if the
commissioner finds that:
(1) the registration holder failed to pay the
registration fee, an examination fee, an investigation fee, or
another charge imposed by the commissioner under this chapter;
(2) the registration holder, knowingly or without the
exercise of due care, violated this chapter or a rule adopted or
order issued under this chapter; or
(3) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original application
for the registration, clearly would have justified the
commissioner's denial of the application.
(b) The commissioner may refuse to renew the registration of
a person who fails to comply with an order issued by the
commissioner to enforce this chapter.
Sec. 355.012. SURETY BOND. (a) A provider must maintain a
surety bond in the amount of $200,000.
(b) The surety bond must be in favor of this state for the
use of this state and the use of a person damaged by a violation of
this chapter.
(c) The surety bond must be issued by a surety company
qualified to do business as a surety in this state.
(d) The aggregate liability of a surety to all persons
damaged by the registration holder's violation of this chapter may
not exceed the amount of the bond.
Sec. 355.013. EXAMINATION OF PROVIDERS; ACCESS TO RECORDS.
(a) The commissioner or the commissioner's representative shall,
at the times the commissioner considers necessary:
(1) examine each place of business of each provider;
and
(2) investigate the provider's transactions and
records.
(b) A provider shall:
(1) give the commissioner or the commissioner's
representative free access to the provider's place of business and
records; and
(2) allow the commissioner or the commissioner's
representative to make a copy of a record that may be investigated
under Subsection (a)(2).
Sec. 355.014. PROVIDER'S RECORDS. (a) A provider shall
maintain a record of each transaction conducted under this chapter
as is necessary to enable the commissioner to determine whether the
provider is complying with this chapter.
(b) A provider shall keep the record until the later of:
(1) the fourth anniversary of the date of the contract
for earned wage access services; or
(2) the second anniversary of the date on which the
final entry is made in the record.
Sec. 355.015. ANNUAL REPORT. (a) Each year, a provider
shall file with the commissioner a report that contains relevant
information required by the commissioner concerning the provider's
business in this state during the preceding calendar year.
(b) A report under this section must be:
(1) in the form prescribed by the commissioner; and
(2) filed not later than the deadline set by the
commissioner.
(c) A report under this section is confidential.
Sec. 355.016. ADOPTION OF RULES. (a) The finance
commission may adopt rules to enforce this chapter.
(b) The commissioner shall recommend proposed rules to the
finance commission.
SECTION 2. Section 411.095(a), Government Code, is amended
to read as follows:
(a) The consumer credit commissioner is entitled to obtain
criminal history record information as provided by
Subsection (a-1) that relates to a person who is:
(1) an applicant for or holder of a license or
registration under Chapter 180, 342, 347, 348, 351, 353, 355, 371,
393, or 394, Finance Code;
(2) an employee of or volunteer with the Office of
Consumer Credit Commissioner;
(3) an applicant for employment with the Office of
Consumer Credit Commissioner;
(4) a contractor or subcontractor of the Office of
Consumer Credit Commissioner; or
(5) an officer, director, owner, or employee of a
person described by Subdivision (1) or another person having a
substantial relationship with that person under Chapter 180, 342,
347, 348, 351, 353, 355, 371, 393, or 394, Finance Code.
SECTION 3. A person engaging in business as an earned wage
access services provider on the effective date of this Act must
obtain a registration in accordance with Chapter 355, Finance Code,
as added by this Act, not later than January 1, 2026.
SECTION 4. Sections 355.008 and 355.009, Finance Code, as
added by this Act, apply only to a contract for earned wage access
services entered into on or after the effective date of this Act.
SECTION 5. This Act takes effect September 1, 2025.