This guidance is designed to provide a service to employers and employees in Connecticut. It does not constitute legal advice. Although the Department of Labor makes every effort to provide quality information, it makes no claims, promises or guarantees about the accuracy or completeness of the information contained herein.
Wage and Workplace Standards Division Notice to Employers Utilizing Earned Wage Access (EWA) Products with Their Employees
Earned Wage Access (EWA) are advances of money on future wages or salary to employees that have been earned but not yet paid. EWA products are a way for workers to have access to their wages before payday. EWA products come in two varieties:
- Third-Party Advance - The third-party provider advances funds prior to payday at the request of the employee. The advance and associated fee are paid by payroll deduction to the third-party provider from the employee’s wages on the next scheduled payday. This product is sought by the employee directly from the EWA provider instead of being offered by the employer.
- Employer Advance - A third-party provider facilitates the advancing of wages by the employer by making hours worked and wages earned transparent to the employee and employer. Employees can opt to have the employer advance wages prior to payday for a fee paid to the provider. The employer may be billed directly by the provider for this service and may pass the fee on to the employee via payroll deduction.
The Third-Part Advance EWA products are voluntary arrangements between workers and the EWA providers and remain outside the jurisdiction of the Connecticut Department of Labor (CT DOL). CT DOL does not have jurisdiction over EWA providers. Employer Advance EWA products, however, may implicate several Connecticut wage statutes, because of our jurisdiction over the employer/employee relationship. The Wage and Workplace Standards Division (WWSD) is providing this guidance so that employers can offer these services mindful of applicable laws and regulations.
In situations where the employer passes the fee along to the worker in the form of a payroll deduction, the employer must obtain written authorization from the employee on a form approved by the Commissioner of Labor pursuant to Conn. Gen. Stat. Sec. 31-71e. Employers seeking to obtain authorization of the form and deduction may make such a request to the Wage and Workplace Standards Division at Authorization for Payroll Deductions | e-Delivery Project (ecourt.com). In approving the request, we consider whether the fee charged is nominal and reflects the costs of the service in providing EWA, does not reduce the employee’s wages below minimum wage, does not impact overtime pay and that all appropriate financial disclosures are made to the employee.
While WWSD has taken the position that the EWA processing fee with Employer Advance EWA products is not wage scaling pursuant to Conn. Gen. Stat. Sec. 31-74, as it is a fee for the service of a third-party processing the payment, employers must be aware that courts may find that reducing the rate of pay or any other wage deduction for advancing pay may be considered wage scaling in violation of Sec. 31-74.