Connecticut Tightens Earned Wage Access Rules, Setting New Standards

Connecticut has emerged as a key player in the debate over earned wage access (EWA), implementing stringent regulations that could reshape the industry. As of October 1, 2025, Connecticut’s EWA law is among the most restrictive in the United States, classifying EWA as a small-dollar loan. This classification diverges from trends in most other states, marking a significant shift in how these financial products are regulated.

The new law imposes several limitations on EWA providers. Advances are capped at $750, and users can only access these funds once per pay period unless providers allow access to at least 75% of their wages. Additionally, finance charges are limited to $4 per advance, or a maximum of $30 per month. Providers must verify earned income through electronic or payroll data, and they are also responsible for monitoring and preventing advance stacking, which can lead to excessive borrowing.

Connecticut’s regulatory framework was anticipated by a turbulent relationship between the state and the EWA industry that dates back to 2023. At that time, state regulators identified on-demand pay as a form of small-dollar lending, thus subjecting it to the state’s usury cap laws. This effectively rendered EWA services unavailable in Connecticut, leading many providers to withdraw from the market. According to Darcy Tuer, CEO of EWA provider ZayZoon, the fallout from such restrictions pushed consumers towards high-interest payday loans. Tuer noted, “We learned in Connecticut, if you shut [EWA] off, [consumers] flock to payday lenders.”

A study by the University of Connecticut School of Public Policy, commissioned by EWA provider DailyPay, highlighted this trend, revealing that consumers resorted to high-cost payday loans after EWA services were curtailed. Instead of exiting the state, ZayZoon opted to continue its operations, albeit at a loss, demonstrating a commitment to providing EWA despite the challenging regulatory environment. “We made it free,” Tuer explained, underscoring the necessity of EWA for consumers.

Ongoing Debate and Future Regulations

Connecticut’s EWA law has become a focal point for both industry advocates and consumer protection groups. Industry representatives are pushing for more inclusive regulations that would allow broader access to EWA services. They plan to engage with the state legislature in upcoming sessions to advocate for changes. Conversely, consumer advocacy organizations have praised the law, with Yasmin Farahi, deputy director of state policy at the Center for Responsible Lending, referring to it as the “gold standard.” Farahi emphasized the significance of the protections included in the Connecticut legislation, which were the result of substantial efforts from consumer advocates.

There remains a call among some consumer groups for Connecticut’s model to serve as a template for other states. Laura Saunders, associate director at the National Consumer Law Center, reiterated the belief that EWA should be treated like payday loans, advocating for a 36% interest rate cap alongside strict limitations on advance fees. “If states are going to give these providers any leeway on what they charge, it’s absolutely essential to do what Connecticut did,” she stated.

Maryland Joins the Fray

Maryland is positioning itself as another challenger to the prevailing EWA business model. In May 2025, the state became the tenth to regulate the industry and is the only other state, alongside Connecticut, to classify EWA as a credit product. Recently, the city of Baltimore initiated legal action against EWA provider MoneyLion for allegedly misleading marketing practices and imposing illegal interest charges. Mayor Brandon Scott criticized the company for exploiting vulnerable residents and indicated that the city is determined to hold it accountable.

The lawsuit accuses MoneyLion of operating similarly to a payday lender, claiming that its fees and tips could result in annual percentage rates exceeding the 33% maximum allowed in Maryland. MoneyLion has not yet responded to requests for comment regarding the allegations. Additionally, New York Attorney General Letitia James has also taken action against MoneyLion and DailyPay, indicating a growing scrutiny of EWA providers across the region.

The evolving landscape of earned wage access highlights the critical role state regulations play in shaping financial products and consumer protections. As states like Connecticut and Maryland take a firm stance, the outcome of these legislative efforts will likely influence the future of the EWA industry across the United States.