Beginning Jan. 1, 2026, Indiana implemented its first regulatory framework for earned wage access programs under House Enrolled Act 1125. Due to the growth of EWA services across all industries, Indiana’s new law seeks to clarify how these programs are to be offered, licensing requirements and the protections that must be provided to workers. For banks and financial institutions, the law presents both compliance considerations and strategic opportunities.
What is earned wage access?
Earned wage access, commonly referred to as instant pay, earned income, early wage access, accrued wage access or on-demand pay, allows employees to access wages they have already earned before their regular payday. Employees typically access these payments through a third-party app or employer-integrated financial technology platform. Popular EWA platforms include DailyPay, Payactiv and ADP Wisely, along with bank-integrated or fintech-adjacent providers like MoneyLion, Chime and NetSpend. EWA services will likely continue to grow in popularity as employees look for more flexible ways to manage cash flow without relying on high-cost credit products.
Critically, Indiana’s new law makes clear that EWA is not a loan as long as the program meets the statute’s requirements. This means EWA will not be treated as consumer lending, a wage assignment or payroll advance under Indiana law, avoiding the regulatory load traditionally associated with credit products.
The Core of the Law: Licensing and consumer protections
Beginning in 2026 most EWA providers must obtain a license from the Indiana Department of Financial Institutions before offering EWA in the state. This licensing requirement applies broadly to third-party EWA apps and fintech companies.
Although employers themselves are not required to be licensed, banks should be aware that they should ensure any third-party provider they may partner with to provide EWA services is properly licensed in all relevant jurisdictions and compliant with new and existing regulations.
These services will likely continue to grow in Indiana and throughout the country.
The new law also establishes several consumer-protection requirements including:
Mandatory disclosures
HEA 1125 requires providers to clearly explain:
- any fees associated with accessing wages;
- how the advance amount is calculated;
- whether “tips” are optional;
- how wage reconciliation works on payday; and
- the frequency and limits of EWA transfers.
Transparency is the primary objective of HEA 1125. Participants should be made aware of the costs and mechanics before using the service.
Limits on fees, tips and practices
Under HEA 1125, providers:
- cannot charge interest;
- cannot require tips or suggest tipping affects service quality;
- cannot structure fees in a way that resembles interest; and
- must ensure employees are not penalized for choosing no-fee methods.
All EWA providers must offer at least one way for employees to access earned wages without any fees. This prevents providers from steering users toward costly or expedited transactions. These guardrails are intended to protect consumers from predatory or misleading financial practices.
What this means for employers – especially banks
Although HEA 1125 is aimed primarily at providers, not employers, Indiana banks and other financial institutions should evaluate how the new requirements intersect with their operations.
1. Vendor due diligence
If an institution offers EWA as part of an employee benefits package, it must verify that the provider:
- is licensed by Jan. 1, 2026;
- meets disclosure, fee and recordkeeping requirements; and
- has up-to-date contracts reflecting the new regulatory standards.
2. Potential opportunities for banks
Banks may see increased interest in EWA services from commercial clients or fintech partners. Understanding the law allows financial institutions to:
- explore partnerships;
- evaluate employer-integrated EWA products; and
- provide guidance to business customers considering EWA adoption.
Because EWA is not treated as lending under the statute, banks may face fewer regulatory barriers if exploring future involvement.
3. Internal payroll and HR implications
The law does not require employers to:
- change pay cycles;
- modify wage-deduction practices;
- treat EWA as a wage assignment; or
- offer EWA to employees.
Preparing for 2026
While employers are not required to offer EWA services to employees, these programs can function as a new type of modern benefit and a way for employers to compete for talent, but only if structured correctly. These services will likely continue to grow in Indiana and throughout the country. If an organization determines that offering EWA is a good option for their workforce, they should consider evaluating EWA vendor relationships now. It is also important to partner with qualified legal counsel to develop and implement appropriate policies and procedures.
Indiana’s earned wage access law reflects a growing trend in state-level control of financial-wellness tools used by employees. For banks and financial institutions, the law provides clarity on how EWA can be offered, reduces legal uncertainty and underscores the importance of compliant vendor partnerships. Preparing now will allow institutions to avoid regulatory pitfalls and take advantage of opportunities as EWA demand continues to grow.
Information in this article is provided for general information purposes only and does not constitute legal advice or an opinion of any kind. You should consult with legal counsel for advice on your institution’s specific legal issues.
