Bill
HB 5560
HB 5560 exempts earned wage access services from wage-and-fringe rules if HB 5558 becomes law, delaying effects until that Act is enacted.
Aims and purpose
- HB 5560 amends the 1978 Labor and Wages Act (Public Act 390) to add a new Section 18a.
- The core provision: the act does not apply to earned wage access services that are governed by the Earned Wage Access Services Act (HB 5558). In other words, if HB 5558 becomes law, earned wage access services would be exempt from the wage-and-fringe-benefits regulation in PA 390.
Relationship to other bills
- HB 5560 is a tie-bar with HB 5558 (i.e., HB 5560’s effective date depends on HB 5558 becoming law).
- HB 5558 would establish a comprehensive regulatory framework for Earned Wage Access Services (license, ethics, consumer protections, fees, reporting, enforcement).
- A set of related bills (HB 5559, 5561, 5563–5569) would amend other Acts to exclude earned wage access services licensees or activities from certain regulatory regimes; these companion bills cannot take effect unless HB 5558 is enacted.
What earned wage access services are (as defined by HB 5558)
- Consumer-directed wage access: access to earned but unpaid income based on representations of earned income and licensee determinations.
- Employer-integrated wage access: access to earned income based on data from the employer or payroll provider.
- Earned income includes salary, wages, compensation, or income earned in various employment arrangements (hourly, project-based, piecework, independent contractor, etc.).
Key provisions (HB 5558, which HB 5560 ties to)
- Licensure: Department of Insurance and Financial Services (DIFS) would license licensees; applications include location, executives, owners, and other strategic information. A hearing can be requested if a license is denied or not timely decided.
- Obligations of licensees: consumer protections, fee disclosures, privacy and information security compliance, no-cost options for no-fee proceeds, transparent handling of tips/gratuities, and compliance with Electronic Fund Transfer rules when collecting outstanding proceeds.
- Prohibited practices: sharing fees or tips with employers; using consumer credit scores for eligibility; late/deferral/interest charges for nonpayment of proceeds; aggressive collection tactics; charging more than $7 for delivery fees; misrepresenting the voluntary nature of tips; and misleading consumers about rights.
- Fees and bonds: licensees pay a schedule-based license fee; required to post a $50,000 surety bond (per 20% ownership rule, unified bond possible if multiple licenses).
- Renewal and duration: annual licenses due by September 30; renewal by August 1.
- Exemptions: certain banks, credit unions, payroll service providers, employers advancing wages, and entities reporting consumer payments to credit bureaus are exempt from the Act.
- Transfers and changes of control: licenses are not transferable; changes in control trigger a DIFS review; written approval required to continue under an existing license; costs borne by the licensee for such investigations.
- Multi-location operators: separate licenses needed per location; advance notice required to add or remove locations.
- Reporting and recordkeeping: annual, and upon request; records kept at least 3 years; DIFS may require reports with revenue, transactions, consumers, proceeds, and fees data.
- Investigations and enforcement: DIFS can investigate complaints, issue cease-and-desist orders, suspend or revoke licenses, and impose fines; order duties apply to executives, with due process and appeal rights.
- Penalties: administrative fines ($1,000–$10,000 per violation); misdemeanor penalties for violations of final orders (up to $1,000 fine or 1 year in jail, or both); organizational changes required to comply with orders.
- Interstate costs: licensees must cover actual travel costs for DIFS investigations conducted out of state.
- Funds and administration: fines deposited to an interest-bearing state treasury account for DIFS administration; rules can be promulgated by the DIFS director.
- Effective date and transition: a person already providing earned wage access in Michigan as of 1/1/2025 may continue by applying for a license within six months after the licensing process becomes available and complying with requirements until licensed.
- Connection to other acts: HB 5558 (Earned Wage Access Services Act) would be included in the Consumer Financial Services Act’s definition of financial licensing acts.
Who is affected
- Licensable entities offering earned wage access services in Michigan (consumer-directed or employer-integrated), including those operating online or at physical locations.
- Employers, payroll providers, and service providers interacting with earned wage access arrangements (with exemptions noted).
- Consumers using wage-access services (commercial users) would be protected by licensing, fee disclosures, cancellation rights, privacy protections, and consumer-friendly terms.
- DIFS would gain new regulatory responsibilities, staffing needs, and enforcement authorities; penalties would fund the department.
Procedural and timeline aspects
- HB 5560 is a tie-bar to HB 5558; it takes effect only if HB 5558 becomes law.
- Licenses would expire annually on Sept 30 and renew by Aug 1.
- If a license is denied or not timely acted on within 60 days, applicants can request a hearing; DIFS must grant or deny after a hearing.
- Multiple bills (HB 5559–5569) would align various Acts to exempt earned wage access activities from some regulatory regimes, contingent on HB 5558’s passage.
- Administrative processes include reporting, audits, and potential judicial review of certain orders.
Fiscal impact (high level)
- HB 5558 would impose licensing, staffing, and enforcement costs on DIFS; fee schedules would aim to cover these costs.
- Fines and penalties would generate revenue; some funds would support public and county libraries and could affect court costs, though precise revenue is uncertain.
- Overall fiscal effects are indeterminate until license fees are set and the number of licensees is known.
Compiled from official sources — confirm details with the bill’s official record.
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