A3450

An Act concerning earned income access services and supplementing Title 17 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. As used in this act:

“Consumer” means a natural person.

“Earned but unpaid income” means earned income that has not yet been paid to the consumer by an earned income obligor.

“Earned income” means moneys that a consumer or obligor has represented, and the earned income access service provider has reasonably determined, have accrued to the benefit of that consumer for services rendered to an earned income obligor.

“Earned income access service provider” or “provider” means any person that is engaged in the business of delivering earned but unpaid income to a consumer in New Jersey.

“Earned income access services” means the delivery of funds to a consumer that represent earned but unpaid income.

“Obligor” means an employer or another person who is contractually obligated to pay the consumer any sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by the consumer. “Obligor” shall not include a customer of an obligor or other third party whose obligation to make any payment to a consumer is based solely on the consumer’s agency relationship with the obligor.

2. a. An earned income access service provider shall offer earned income access services through a contractual arrangement with an obligor or a service provider to an obligor, in which the provider:

(1) verifies a consumer’s earned income; and

(2) delivers earned income to the consumer prior to the date on which the obligor is scheduled to pay the consumer, and the amount of the earned income delivered by the provider to the consumer is reduced or withheld from the consumer’s next payment.

b. An obligor shall not share information with an earned income access service provider pertaining to the obligor’s accrued and expected obligations to the consumer unless:

(1) the obligor or service provider to the obligor has entered into a contractual arrangement for earned income access services with the earned income access service provider; and

(2) the consumer consents to sharing that information.

c. An earned income access service provider shall not enter into a contractual arrangement with a consumer that permits delivery of earned income directly to the consumer that is to be repaid directly by the consumer to the provider.

d. The imposition of a fee on a consumer who opts to use the services of an earned income access service provider, and the reduction or withholding from a consumer’s payment as set forth in subsection a. of this section, shall not violate section 4 of P.L.1965, c.173 (C.34:11-4.4), provided that the consumer is informed in writing of the right to receive the full amount of the consumer’s wages, without discount, if the consumer waits until the regular payment due date.

3. a. Any earned income access services that fail to comply with the provisions of section 2 of this act shall be subject to:

(1) the provisions of the civil usury law, R.S.31:1-1, and the criminal usury law, N.J.S. 2C:21-19;

(2) any provisions of Titles 17 or 56 of the Revised Statutes that would otherwise apply to a loan or credit transaction; and

(3) the federal "Truth in Lending Act," 15 U.S.C. s.1601 et seq. and the regulations implementing that act, 12 C.F.R. s.226 et seq., to provide any disclosures required for closed-end loans.

b. Earned income access services that do not comply with section 2 of this act shall be considered a loan, even if those services are provided without recourse, and any fees or other required or optional contributions of those services shall be considered as interest when determining the rate of interest for purposes of compliance with a law with which an earned income access service provider is required to comply pursuant to the provisions of this section.

c. Any person who violates any provision of this act shall be liable for a penalty, in addition to any other penalty imposed by law, of not more than $5,000 for each violation.

4. This act shall take effect on the 90th day next following enactment.

STATEMENT

This bill creates certain requirements for earned income access service providers. Under the bill, “earned income access services” means the delivery of funds to a consumer that represent earned but unpaid income.

The bill requires an earned income access service provider to offer earned income access services through a contractual arrangement with an obligor or a service provider to an obligor in which the provider verifies a consumer’s earned income, delivers earned income to the consumer prior to the date on which the obligor is scheduled to pay the consumer, and the amount of the earned income delivered by the provider to the consumer is reduced or withheld from the consumer’s next payment.

The bill provides that an obligor may not share information with an earned income access service provider pertaining to the obligor’s accrued and expected obligations to the consumer unless:

(1) the obligor or service provider to the obligor has entered into a contractual arrangement for earned income access services with the earned income access service provider; and

(2) the consumer consents to sharing that information.

The bill prohibits an earned income access service provider from entering into a contractual arrangement with a consumer that permits delivery of earned income directly to the consumer that is to be repaid directly by the consumer to the person.

Under the bill, the imposition of a fee on a consumer who opts to use the services of an earned income access service provider, and the reduction or withholding from the consumer payment, is not in violation of current law prohibiting deductions from an employee’s wages, provided that the consumer is informed in writing of the right to receive the full amount of the consumer’s wages, without discount, if the consumer waits until the regular payday.

The bill requires earned income access services that do not comply with certain requirements of the bill to comply with:

(1) the provisions of the civil and criminal usury laws;

(2) any provisions of Titles 17 or 56 of the Revised Statutes that would otherwise apply to a loan or credit transaction; and

(3) the federal "Truth in Lending Act" and the regulations implementing that act, to provide any disclosures required for closed-end loans.

For purposes of the bill, earned income access services that do not comply with certain requirements of the bill are considered a loan, even if those services are provided without recourse, and any fees or other required or optional contributions of those services are to be considered as interest when determining the rate of interest for purposes of compliance with a law with which an earned income access service provider is required to comply.

The bill also provides that any person who violates any provision of the bill is liable for a penalty, in addition to any other penalty imposed by law, of not more than $5,000 for each violation.