APA supported California S.B. 472, concerning early access to earned wages (on-demand pay), with recommendations to improve the bill. In general, APA believes the legislation is helpful because it would recognize and codify emerging financial technological developments that facilitate early access to earned wages.
APA Concerns About California Early Wage Access
Despite support for S.B. 472, APA said that the bill seemed rushed without sufficient time to appropriately study and consider the implications and alternatives. However, APA noted that, if enacted, the measure would expire in 2023, which could ensure a later revision might fix any problems that arise.
APA’s primary concern was in proposed sections that would allow an employee to receive early wages three times during each pay period and prevent a service provider and an employer from contracting to limit the number of pay periods that an employee can access early wages.
APA questioned the need for these requirements. “Early access to earned wages should be available to employees for emergency use and to cover significant unexpected expenses between paydays,” APA said. These sections would prohibit employers from being able to set limits that they deem appropriate. In addition, prohibiting access restrictions serves to encourage frequent use of early wage access by employees, which, in turn, increases the aggregate costs paid by employees.
Factors for employers to consider are child support and other garnishments, withholding for retirement and health care, cost to employees, ease of administration, tax withholding, and the number of pay periods.
Not a member of APA? Check out the many benefits you get when you join!Alice P. Jacobsohn, Esq., is Senior Manager of Government Relations for the APA.