NY State Senate Bill 2025-S4355

Current Bill Status - In Senate Committee Banks Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Feb 04, 2025	referred to banks

co-Sponsors

2025-S4355 (ACTIVE) - Details

See Assembly Version of this Bill:: A682
Current Committee:: Senate Banks
Law Section:: Banking Law
Laws Affected:: Add Art 9-B §§374-aa - 374-ee, Bank L
Versions Introduced in Other Legislative Sessions:: 2019-2020: A10309
2021-2022: A3570
2023-2024: S2186, A2495

2025-S4355 (ACTIVE) - Summary

Relates to the regulation and licensing of employer-integrated and non-verified on-demand pay providers.

2025-S4355 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S4355

SPONSOR: BAILEY
 
TITLE OF BILL:

An act to amend the banking law, in relation to on-demand pay providers

 
PURPOSE:

To provide regulatory clarity for on-demand pay providers so New York
workers can have flexible access to their pay.

 
SUMMARY OF PROVISIONS:

The bill creates a new article under the banking law entitled "On-Demand
Pay Providers" with the following sections: definitions; employer-inte-
grated on-demand pay providers; non-verified on-demand pay providers;
certain on-demand pay services to be considered loans; penalties. Among
other things, the bill delineates certain registration requirements.

 
JUSTIFICATION:

On-demand pay represents the most innovative and significant payroll
development since the advent of direct deposit. It enables employees to
view and access some or all their wages as they are earned, as opposed
to at the end of the payroll period. On-demand offers part-time workers
and low-income employees a way to pay for unexpected expenses without
resorting to payday loans and credit cards that come with high interest
rates. Over the next five years, on-demand pay is expected to grow from
6 percent market penetration to 30 percent.

There are two primary types of on-demand pay providers:  employer-inte-
grated on-demand pay providers and non-verified on-demand pay providers.

For the first type, an employer contracts with a pay provider to enroll
the company's employees and integrates with its payroll systems to track
an employee's accrued pay so that it can offer that employee access to
their verified accrued pay. A non-verified on-demand pay provider does
not verify an employee's pay through an employer contract. Instead, it
contracts directly with the employee to deliver funds in a more consist-
ent manner with lending practices.  Employees receiving employer-inte-
grated on-demand pay services report substantial savings from avoiding
overdraft fees, predatory loans and late fees, improved financial health
and reduced financial anxiety.  In addition, employers who offer this
benefit report turnover reduction and increased productivity on account
of improved employee financial wellness.

Since on-demand pay is a new payroll system, regulatory clarity is
necessary. Employer-integrated on-demand pay providers need to comply
with privacy, transparency and other relevant standards to protect an
employee's right to control their pay. Non-verified on-demand pay
providers need to comply with applicable credit regulations since their
services are like lending practices. This bill provides that fees and
interest charged for such loans shall not exceed 10 percent.

 
LEGISLATIVE HISTORY:

2021-22: S7898 - Referred to Banks

2023-24: S2186 - Referred to Banks

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
On the ninetieth day after becoming a law, with immediate provisions for
rule implementation.

2025-S4355 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4355
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 4, 2025
                                ___________
 
 Introduced  by  Sens.  BAILEY, COMRIE -- read twice and ordered printed,
   and when printed to be committed 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  ASSEM-
 BLY, 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  COMPA-
 NY,  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD01510-01-5

 S. 4355                             2
 
 EMPLOYER, IN WHICH PROVIDER VERIFIES A USER'S EARNED INCOME THROUGH DATA
 OR INFORMATION PROVIDED BY OR THROUGH SUCH EMPLOYER OR SERVICE PROVIDER.
   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  EMPLOY-
 ER-INTEGRATED  ON-DEMAND PAY PROVIDER SHALL OPERATE WITHOUT FIRST REGIS-
 TERING 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:
   (A) THE PROVIDER'S NAME AND ADDRESS;
   (B) AUDITED FINANCIAL STATEMENTS FOR THE PRIOR YEAR;
   (C) A STATEMENT OR SUMMARY OF FEES CHARGED TO USERS  OR  OBLIGORS  FOR
 ON-DEMAND PAY SERVICES BY THE PROVIDER IN NORMAL COURSE; AND
   (D)  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  STATE-
 MENTS  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 RESOL-
 UTION 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  INCUR-
 RING 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,
 S. 4355                             3
 
 PROVIDED THAT SUCH PROVIDER COMPLIES WITH THE REQUIREMENTS OF THIS ARTI-
 CLE.
   §  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.  ANY SUCH INTEREST RATES SHALL
 NOT EXCEED TEN PERCENT PER YEAR.
   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.

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Senate Bill S4355

Sponsored By

Current Bill Status - In Senate Committee Banks Committee

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co-Sponsors

2025-S4355 (ACTIVE) - Details

2025-S4355 (ACTIVE) - Summary

2025-S4355 (ACTIVE) - Sponsor Memo

2025-S4355 (ACTIVE) - Bill Text download pdf

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Sponsored By

Jamaal T. Bailey

Current Bill Status - In Senate Committee Banks Committee

Actions

co-Sponsors

Leroy Comrie

2025-S4355 (ACTIVE) - Details

2025-S4355 (ACTIVE) - Summary

2025-S4355 (ACTIVE) - Sponsor Memo

2025-S4355 (ACTIVE) - Bill Text download pdf

Comments