PayrollOrg Raises Regulation Z and EWA Concerns With CFPB

PAYO wrote to the Consumer Financial Protection Bureau (CFPB) in December about its concerns for the process under consideration of the Truth in Lending Act (Regulation Z) regarding earned wage access (EWA) benefits and the impact on payroll management. Regulation Z controls how lenders communicate the cost of borrowing to consumers and protects consumers from misleading lending practices.

PAYO said it is imperative that the CFPB’s approach to regulating EWA does not interfere with employees’ decision-making to better manage their finances. Employees say that financial wellness is the most important employer-provided benefit. Research data varies on employees’ stress about their finances, but the numbers are significant. Some surveys find that 60% of employees live paycheck to paycheck. In PAYO’s 2023 Getting Paid In America survey, 49% of survey participants said it would be very difficult if their paycheck was delayed for a week.

Financial tools, like EWA, bridge the gap between pay periods to help workers with expenses. If implementation and use of EWA become too cumbersome, the value of the benefit will diminish and could become untenable for use, PAYO said.

PAYO met with the CFPB on January 5, 2024, to talk about how to regulate EWA benefits to protect employee-consumers, payroll professionals, and employers without damaging opportunities for employees to better manage their finances and for employers to retain talent.

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Adam Prinzo is the Assistant Manager of Government Relations for PayrollOrg.