How Connecticut became a battleground for earned wage access

• Key insights: The number of states with earned wage access legislation doubled in 2025 with six states passing new laws, with particularly tough laws in Connecticut. 
• What's at stake: Earned wage access is a budding industry and new state laws will shape it for years to come. 
• Forward look: Maryland is also taking a tough stand against the pervading EWA business model. 

States have played a key role in shaping the way earned wage access providers run their businesses, with six new states ushering in new legislation in 2025. Connecticut has taken a very tough stance against the product. 

Connecticut's EWA law went into effect Oct. 1, 2025, and is one of the most restrictive in the country. Not only does it classify earned wage access as a small dollar loan in a break from a majority of other states, it also caps advances at $750, limits those advances to once per pay period if the provider does not allow users to to access at least 75% of their wages, and caps finance charges to $4 per advance or $30 per month. It also requires providers to verify earned income using electronic or payroll data, and makes providers responsible for monitoring and preventing EWA advance stacking.

Connecticut and the EWA industry haven't seen eye to eye since at least 2023, when the state's regulator said on-demand pay was a small-dollar loan and subject to the state's usury cap laws. That meant that EWA was effectively banned, and most providers stopped offering the services in the state. 

The move was a first, and had lasting repercussions on consumers in the state, Darcy Tuer, CEO at EWA provider ZayZoon, told American Banker. 

"We learned in Connecticut, if you shut [EWA] off, [consumers] flock to payday lenders," Tuer said. 

A study conducted by the University of Connecticut School of Public Policy that was commissioned by EWA provider DailyPay found that consumers turned to high-dollar payday loans once EWA left the state. 

Instead of pulling out of the state, ZayZoon chose to keep operating. 

"We made it free," Tuer said. "People need [EWA], but the problem is that under that regulation we could not build our business under that model. But we're big enough and that market is small enough that we're going to run it at a loss." 

The fight continues

Today, Connecticut's law continues to be a focal point for both industry groups and consumer advocacy groups. Industry groups want to make regulation more inclusive so that more consumers can use EWA and intend on reengaging with the legislature during the next session, while some consumer advocacy groups have hailed the requirements. 

"Connecticut is what we would have called the gold standard," Yasmin Farahi, deputy director of state policy and senior policy counsel at the Center for Responsible Lending, told American Banker. "There are some really meaningful protections in the Connecticut bill that were really hard fought from a lot of effort from consumer advocates at countering the industry narrative and really educating lawmakers on the harms and risks associated with these products." 

Other consumer groups want Connecticut's model to be the bellwether for new state regulations. 

"We continue to believe that [EWA] is a form of payday loan, and they should be covered by a 36% interest rate cap, which is our model for other payday loans," Laura Saunders, associate director and director of federal advocacy at the National Consumer Law Center, told American Banker. "If states are going to give these providers any leeway on what they charge, it's absolutely essential to do what Connecticut did, which is to put a firm limit on the cost per advance, and, most importantly, an overall cap on the monthly cost." 

Is Maryland next?

Maryland is emerging as another challenger to the pervading model. Maryland became the 10th state to regulate the industry in May, and is the only other state besides Connecticut to classify EWA as a credit product. 

Earlier this month, The City of Baltimore sued EWA provider MoneyLion for misleading marketing and illegal interest charges. 

"MoneyLion has preyed on Baltimoreans, trapping our most vulnerable residents in borrowing cycles that made it harder and harder for them to pay bills and put food on the table," said Mayor Brandon Scott, in a statement. "Not only is that wrong, it's illegal. We're committed to holding MoneyLion accountable — as we've done for other big corporations trying to take advantage of our residents."

The suit alleges that MoneyLion operates like a payday lender and takes aim at fees and tips, which it says amount to ten times the 33% APR maximum allowed in the state. 

MoneyLion did not respond to a request for comment. New York Attorney General Letitia James has also sued MoneyLion and DailyPay.