What's happening
This bill regulates on-demand pay providers in New York, establishing registration, disclosure, and consumer protection requirements, and defines when such services are considered loans.
Why it matters
Creates a clear regulatory distinction between "employer-integrated" and "non-verified" on-demand pay providers. , with different legal obligations and consumer protections depending on how providers access and verify workers’ wage information.
Employer-integrated providers face registration and annual reporting requirements (including financial audits and complaint disclosures), explicit consumer protections (clear fee disclosures, easy cancellation, and data privacy), and are exempted from being classified as lenders or money transmitters. potentially encouraging partnerships between employers and compliant providers.
Non-verified providers are regulated as lenders. , meaning their fees are treated as loan interest, subjecting them to strict state and federal lending laws, transparency requirements, and consumer protection measures—making it harder for such providers to operate without employer involvement.
Imposes financial penalties for violations and grants state regulators authority to enforce compliance. , signaling increased oversight and potential consequences for companies that fail to meet new standards, which may reduce predatory practices and protect workers accessing their earned wages early.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Employer-integrated on-demand pay providers
They would have to register with the superintendent and meet reporting and consumer-protection requirements, while their services would not be treated as loans or require money-transmitter registration if they comply.
Non-verified on-demand pay providers
Their services would be treated as loans subject to lending licensure, interest restrictions and federal disclosures, with fees and optional contributions counted as interest.
Workers using employer-integrated pay services
They would receive clear fee disclosures and free cancellation rights, and providers generally could not pursue collections, sue or report them to credit agencies over unpaid advances absent evidence of fraud.
Employers offering on-demand pay programs
Providers would be barred from sharing user fees with them or paying them other compensation directly tied to those fees.
Headline styles
Regulate On-Demand Pay Apps
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to banks
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Regulate On-Demand Pay Apps
In Senate Committee · Banks · Sponsor Brian Benjamin
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
10309
IN ASSEMBLY
April 22, 2020
Introduced by M. of A. HEVESI -- read once and referred to the Committee on Banks
AN ACT to amend the banking law, in relation to on-demand pay providers
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The banking law is amended by adding a new article 9-B to read as follows:
ARTICLE 9-B
ON-DEMAND PAY PROVIDERS Section 374-aa. Definitions.
374-bb. Employer-integrated on-demand pay providers.
374-cc. Non-verified on-demand pay providers.
374-dd. Certain on-demand pay services to be considered loans.
374-ee. Penalties.
§ 374-aa. Definitions. For the purposes of this article, the following terms shall have the following meanings:
1. "Earned but unpaid income" means earned income that has not yet been paid to a user by an employer.
2. "Earned income" means moneys that have accrued to the benefit of a user for services rendered to an employer.
3. "Employer" means any person, corporation, limited liability company, or association employing a user in any occupation, industry, trade, business or service, or any other person who is contractually obligated to pay a user any sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by such user. "Employer" shall not include a customer of an employer or other third party whose obligation to make any payment to a user is based solely on such user's agency relationship with the employer.
4. "Employer-integrated on-demand pay provider" means an on-demand pay provider that offers on-demand pay services through a contractual arrangement with (i) an employer, or (ii) a service provider to an employer, in which provider verifies a user's earned income through data or information provided by or through such employer or service provider.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16194-01-0
A. 10309 2
5. "Non-verified on-demand pay provider" means an on-demand pay provider that is not an employer-integrated on-demand pay provider.
6. "On-demand pay provider" or "provider" means any person that is engaged in the business of delivering on-demand pay services to a user in New York state.
7. "On-demand pay services" means the delivery of funds to a user that represent earned but unpaid income.
8. "User" means any natural person.
§ 374-bb. Employer-integrated on-demand pay providers. 1. No employer-integrated on-demand pay provider shall operate without first registering with the superintendent. An employer-integrated on-demand pay provider shall be deemed registered if it provides, on a confidential basis, the following information to the superintendent:
(i) the provider's name and address;
(ii) audited financial statements for the prior year;
(iii) a statement or summary of fees charged to users or obligors for on-demand pay services by the provider in normal course; and
(iv) copies of the provider's end user terms and conditions and/or terms of use, and privacy policies.
2. Each employer-integrated on-demand pay provider shall:
(a) deliver to the superintendent on a confidential basis no later than June thirtieth of each calendar year the following items for the prior calendar year:
(i) the provider's audited financial statements, provided, that if audited financial statements are unavailable by the date such annual report is due, such provider shall provide unaudited financial statements at such time, provided that provider shall file such audited financial statements to the superintendent promptly upon receipt of such financial statements; and
(ii) copies of user complaints filed with the Better Business Bureau or the Consumer Financial Protection Bureau, with the recorded resolution of such complaints;
(b) develop and implement policies and procedures to quickly respond to questions raised by users and to quickly address complaints from users;
(c) fully and clearly state all fees for on-demand pay services to best prevent misunderstanding by prospective users;
(d) inform users, prior to entering into an on-demand pay services contract, of such user's rights under the program;
(e) afford users the right to cancel, at any time and without incurring a charge, participation in an on-demand pay services program;
(f) absent evidence of fraud by a user, be restricted from initiating a collection action, suing such user, or reporting such user to a credit reporting agency if such employer-integrated on-demand pay provider is unable to be repaid for funds delivered to such user;
(g) comply with all applicable laws, rules, regulations, and orders regarding the duty to safeguard a user's personal information; and
(h) not share any fees with an employer or pay any other compensation to an employer that is directly related to fees received from or charged to users.
3. Employer-integrated on-demand pay providers shall not be required to be registered as a money transmitter under article thirteen-B of this chapter to engage in the activities of an on-demand pay provider, provided that such provider complies with the requirements of this article.
A. 10309 3
§ 374-cc. Non-verified on-demand pay providers. Each non-verified on-demand pay provider shall be subject to:
1. section 190.40 of the penal law;
2. the licensure requirements of article nine of this chapter, and any other provisions of this chapter would otherwise apply to a loan or credit transaction; and
3. the federal Truth in Lending Act, and the regulations implementing such act, to provide any disclosures required for closed-end loans.
§ 374-dd. Certain on-demand pay services to be considered loans. 1. Non-verified on-demand pay services shall be considered a loan, and any fees or other required or optional contributions of such services shall be considered as interest when determining the rate of interest for purposes of compliance with this chapter.
2. Employer-integrated on-demand pay services shall not be considered a loan.
§ 374-ee. Penalties. Any corporations, limited liability company, or other entity that violates any provision of this article shall be liable for a penalty, in addition to any other penalty imposed by law, of not more than one thousand dollars for each violation.
§ 2. This act shall take effect on the ninetieth day after it shall have become a law. Effective immediately, the addition, amendment and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.