On December 23, 2025, the CFPB issued an advisory opinion stating that “covered” earned wage access (EWA) products fall outside the definition of credit under TILA’s Regulation Z, withdrawing a Biden Administration July 2024 proposed interpretive rule identifying all EWA products as credit. Companies offering EWA products allow employees to access wages that they have already earned in advance of their scheduled pay dates.
EWA products are either employer-integrated or direct-to-consumer. In the employer-integrated model, the EWA company contracts with the employer to access their time management and payroll software, offers an app to employees, and reimburses its costs through a payroll reduction plus fees. In the direct-to-consumer model, the EWA company contracts with the consumer, recoups funds from the consumer’s checking account at a later date, and typically charges subscription fees and fees for expedited fund transfers.
Whether EWA products should be considered credit subject to TILA has been a subject of debate leading to regulatory and legal action in recent years. For example, as previously reported by us, a CFPB December 2020 advisory opinion clarified that some earned wage access services do not involve an offer of “credit” under Regulation Z, and the CFPB’s December 2020 compliance assistance sandbox approval to EWA companies provided them with a “safe harbor” for specified legal conduct in response to regulatory uncertainty. The new guidance supplants the December 2020 advisory opinion. And as also reported by us, in April 2025, New York State sued two EWA companies, arguing that transaction fees—typically amounting to no more than five dollars per advance payment—constitute impermissibly high annual interest between 250%-750%, depending on the amount of the advance payment and the recoupment timeline.
“Covered EWA” products which are now not considered credit under the recently-released CFPB guidance are limited to transactions which (i) do not exceed the accrued cash value of the wages the worker has earned up to the date of the transaction and (ii) deduct the amount of the advanced funds from the worker’s next payroll event. The EWA company must also (a) have no legal or contractual recourse if the payroll deduction is insufficient to cover the advance, (b) not engage in debt collection activities, (c) not place the transaction amount as debt, and (d) not report activity to consumer reporting agencies. Lastly, the EWA company must not assess the credit risk of consumers requesting advance funds.
The scope of the advisory opinion is narrow. The CFPB did not address direct-to-consumer EWA products, nor any other employer-integrated EWA products that do not meet the narrow definition outlined above, although it did state that “nothing in [the advisory opinion] should be understood to state that EWA products that are not Covered EWA are credit under Regulation Z.” (emphasis in original).
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