Maryland Enacts Earned Wage Access Legislation

A new Maryland law deems certain earned wage access (EWA) services to be loans. It then subjects those EWA services to the Maryland Consumer Loan Law and other consumer credit provisions, restricts the acceptance of tips by certain lenders, requires licensing or registration of certain entities offering EWA services, regulates EWA service agreements, and limits the costs and fees associated with obtaining EWA services. The law is effective October 1, 2025.

In particular, Section 12-101 and 12-318 of the Maryland Commercial Code are amended to define "tip," require consumer disclosures, and restrict misrepresentations that paying a tip will influence the lender's willingness to provide a loan at any time or affect the credit terms of any loan offered by the lender. Additionally the default tip must be set to zero.

A new Section 12-1501 is added to the Maryland Commercial Code to:

• Define terms related to EWA services, including defining "Earned wage access" as the following:
  • "Consumer–directed earned wage access" means delivery to a consumer of access to unpaid but earned wages:
    • that is provided to a consumer by a third party who does not have a relationship with the consumer's employer;
    • that is based on employment, income, or attendance data obtained directly from the consumer; and
    • where the consumer does not pay the provider interest.
  • "Employer–integrated earned wage access" means delivery of unpaid but earned wages:
    • that are provided to a consumer directly by a person the employer has contracted to provide the service;
    • that are determined based on employment, income, or attendance data obtained directly or indirectly from the consumer's employer, including a payroll service provider; and
    • where the consumer does not pay the provider interest.
• Exclude payroll service providers and employers from the definition of "Provider" of EWA services
• Require a Provider of EWA services to obtain a license
• Exclude EWA services from the laws regulating money transmission
• Exclude EWA services from compliance with state laws governing deductions from payroll, salary, wages, compensation, or other income or the purchase, sale, assignment, or order for unpaid but earned wages
• Implement policies and procedures to timely respond to consumer inquiries and complaints
• Offer consumers at least one reasonable option to obtain earned wage access at no cost and explain how to elect that option
• Provide certain disclosures for "tips"
• Comply with the EFTA for any electronic payments collected and reimburse consumers for any overdraft or nonsufficient fund fees that were caused by such payments within 5 business days of the consumer request
• Limit fees that may be charged for EWA services to $5 for any advance equal or less than $75 and $7.50 for any advance exceeding $75
• Prohibit certain activities including: sharing fees with employers, conditioning access on paying a tip, charging late fees or interest, reporting a consumer's failure to pay to consumer reporting agencies, obtaining a consumer credit report in qualifying a consumer, and using third party collection agencies, debt buyers or litigation to compel payment

Gov. Wes Moore raised some objections to the law, but he allowed the legislation to become law without his signature. The Maryland Constitution, Article II, Section 17(c) states that "[a]ny Bill presented to the Governor within six days (Sundays excepted), prior to adjournment of any session of the General Assembly, or after such adjournment, shall become law without the Governor's signature unless it is vetoed by the Governor within 30 days after its presentment."

In a letter to House Speaker Adrienne Jones, Governor Moore said that while he supports the purpose of the bill, it does not provide adequate consumer protection.

"Depending on how the product is structured, consumers face risks of paying relatively high costs while they are already short on cash or drawing too much of their pay, unintentionally landing Marylanders in worse financial situations," he wrote.

And in an obvious reference to the Trump Administration's management of the CFPB, he wrote, "In this time when federal protections are being eroded, it is more important than ever for states to step up and ensure that necessary protections are in place."

He acknowledged that the bill defines EWA products as loans, sets fee caps, provides some limitations on solicitations for tips, requires lenders to offer a no-cost option to consumers, and prevents certain fees from accruing.

"These protections are a significant step in the right direction and should serve as a starting place for future efforts on this issue," he wrote.

"While House Bill 1294 takes steps in the right direction, there is more to do and I look forward to engaging with partners in the legislature and stakeholders from across the state to chart a path forward," he added.

The American Fintech Council applauded Moore's decision to allow the bill to become law.

"This legislation provides a clear and responsible framework for Earned Wage Access, and we commend the state's leadership for recognizing the importance of empowering consumers with modern financial tools," Phil Goldfeder, CEO of the American Fintech Council said.

However, the AARP said it has serious reservations about the bill.

"While marketed as a modern financial convenience, this legislation undermines the very safeguards that have kept payday lenders out of Maryland for years," Hank Greenberg, State Director of AARP Maryland said. "This bill creates a dangerous loophole, giving third-party providers permission to charge excessive fees to workers who can least afford it—including older adults living paycheck to paycheck."

Several other states have adopted regulatory regimes governing EWA services. See our prior blog posts for California, South Carolina, Connecticut, Missouri, Montana, Nevada and Arizona.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.