Bill Text: CA SB472 | 2019-2020 | Regular Session | Amended
Bill Title: Wage-based, work-based, and income-based advances.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2019-09-06 - Re-referred to Com. on B. & F. pursuant to Assembly Rule 77.2. [SB472 Detail]
Download: California-2019-SB472-Amended.html
Amended
IN
Assembly
August 15, 2019 |
Amended
IN
Assembly
August 13, 2019 |
Amended
IN
Senate
May 07, 2019 |
Amended
IN
Senate
April 11, 2019 |
Amended
IN
Senate
March 27, 2019 |
Introduced by Senator Caballero |
February 21, 2019 |
LEGISLATIVE COUNSEL'S DIGEST
Existing
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program:Bill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 22001 of the Financial Code is amended to read:22001.
(a) This division shall be liberally construed and applied to promote its underlying purposes and policies, which are:(e)This section shall become operative on January 1,
2019.
(a)This division does not apply to any person doing business under any law of any state or of the United States relating to banks, trust companies, savings and loan associations, insurance premium finance agencies, credit unions, small business investment companies, community advantage lenders, California business and industrial development corporations when acting under federal law or other state authority, or licensed pawnbrokers when acting under the authority of that license.
“Community advantage lender” means an entity authorized by the United States Small Business Administration to deliver community advantage loans.
(b)This division does not apply to a check casher who holds a valid permit issued pursuant to
Section 1789.37 of the Civil Code when acting under the authority of that permit, and shall not apply to a person holding a valid license issued pursuant to Section 23005 of the Financial Code when acting under the authority of that license.
(c)This division does not apply to a college or university making a loan for the purpose of permitting a person to pursue a program or course of study leading to a degree or certificate.
(d)This division does not apply to a broker-dealer acting pursuant to a certificate then in effect and issued pursuant to Section 25211 of the Corporations Code.
(e)This division does not apply to any person who makes five or fewer loans in a 12-month period, these loans are commercial loans as defined in Section 22502, and the loans are incidental to the business of the person relying upon
the exemption.
(f)This division does not apply to any public corporation as defined in Section 67510 of the Government Code, any public entity other than the state as defined in Section 811.2 of the Government Code, or any agency of any one or more of the foregoing, when making any loan so long as the public corporation, public entity, or agency of any one or more of the foregoing complies with all applicable federal and state laws and regulations.
(g)This division does not apply to the provision pursuant to Division 21 (commencing with Section 60000) of a wage-based advance or work-based advance, as those terms are defined in Section 60001.
SEC. 2.
Section 22018.5 is added to the Financial Code, to read:22018.5.
(a) “Provider” has the same meaning as defined in Section 22481, unless the context clearly indicates otherwise.SEC. 3.
Section 22100.3 is added to the Financial Code, to read:22100.3.
A person shall not engage in the business of a provider without first obtaining a license to do so from the commissioner.SEC. 4.
Section 22101 of the Financial Code is amended to read:22101.
(a) An application for a license as a finance lender, broker,(j)This section shall become operative on January 1, 2019.
SEC. 5.
Section 22101.5 of the Financial Code is amended to read:22101.5.
(a) The commissioner shall submit to the Department of Justice fingerprint images and related information required by the Department of Justice of all finance lender, broker,(g)This section shall become operative on January 1, 2019.
SEC. 6.
Section 22102 of the Financial Code is amended to read:22102.
(a) A finance lender, broker,(g)This section shall become operative on January 1,
2019.
SEC. 7.
Section 22103 of the Financial Code is amended to read:22103.
(b)This section shall become operative on January 1,
2019.
SEC. 8.
Section 22104.5 is added to the Financial Code, to read:22104.5.
(a) An applicant for a provider license shall file with its application the following:SEC. 9.
Section 22105 of the Financial Code is amended to read:22105.
(a) Upon the filing of an application pursuant to Section 22101 and the payment of the fees, the commissioner shall investigate the applicant and its general partners and persons owning or controlling, directly or indirectly, 10 percent or more of the outstanding interests or any person responsible for the conduct of the applicant’s(c)This section shall become operative on January 1, 2019.
SEC. 10.
Section 22106 of the Financial Code is amended to read:22106.
(a) The finance lender, broker,(c)This section shall
become operative on January 1, 2019.
SEC. 11.
Section 22107 of the Financial Code is amended to read:22107.
(a) Each finance lender, broker,(g)This section shall become operative on January 1, 2019.
SEC. 12.
Section 22109 of the Financial Code is amended to read:22109.
(a) Upon reasonable notice and opportunity to be heard, the commissioner may deny the application for a finance lender, broker,(d)This section shall become operative on January 1,
2019.
SEC. 13.
Section 22112.5 is added to the Financial Code, to read:22112.5.
A provider shall at all times comply with all of the following:SEC. 14.
Section 22151 of the Financial Code is amended to read:22151.
(a) A finance lender license, broker license, program administrator license, provider license, and the license of every mortgage loan originator employed by a lender or finance broker, along with any currently effective order of the commissioner approving a different name pursuant to Section 22155, shall be conspicuously posted in the place of business authorized by the license. In the alternative, the commissioner may authorize a licensee that does not routinely conduct business at a physical location to post its license in another location, including, but not limited to, its internet website or within an application downloaded to a mobile or other electronic device.(c)This section shall become operative on January 1, 2019.
SEC. 15.
Section 22152 of the Financial Code is amended to read:22152.
(b)This section shall become operative on January 1, 2019.
SEC. 16.
Section 22153 of the Financial Code is amended to read:22153.
(a) If a finance lender, broker,(c)This section shall become operative on January 1, 2019.
SEC. 17.
Section 22154 of the Financial Code is amended to read:22154.
(a) A licensee shall not conduct the business(d)This
section shall become operative on January 1, 2019.
SEC. 18.
Section 22155 of the Financial Code is amended to read:22155.
(b)This section shall become operative on January 1, 2019.
SEC. 19.
Section 22156 of the Financial Code is amended to read:22156.
(b)This section shall become operative on January 1, 2019.
SEC. 20.
Section 22157 of the Financial Code is amended to read:22157.
(a) Finance lender, broker, provider, and mortgage loan originator licensees shall preserve their books, accounts, and records, if any, for at least three years after making the final entry on any(c)This section shall become operative on January 1, 2019.
SEC. 21.
Section 22159 of the Financial Code is amended to read:22159.
(a) Each finance lender, broker, provider, and program administrator licensee shall file an annual report with the commissioner, on or before March 15th, giving the relevant information that the commissioner reasonably requires concerning the business and operations conducted by the licensee or authorized by the program administrator licensee within the state during the preceding calendar year for each licensed place of business. The individual annual reports filed pursuant to this section shall be made available to the public for inspection except, upon request in the annual report to the commissioner, the balance sheet contained in the annual report of a sole proprietor or any other nonpublicly traded person. “Nonpublicly traded person” for purposes of this section means persons with securities owned by 35 or fewer individuals. The report shall be made under oath and in the form prescribed by the commissioner.(e)This section shall become operative on January 1, 2019.
SEC. 22.
Section 22161 of the Financial Code is amended to read:22161.
(1)
(2)Make a materially false or misleading statement or representation to a property owner about the terms or conditions of an assessment contract.
(3)
(4)
(5)
(6)
(7)
(b)This section shall become operative on January 1, 2019.
SEC. 23.
Section 22162 of the Financial Code is amended to read:22162.
(a) A(b)A program administrator licensee shall not place an advertisement disseminated primarily in this state for an assessment contract unless the licensee discloses in the printed text of the advertisement, or in the oral text in the case of a radio or television advertisement, the license under which the assessment contract would be administered.
(c)This section shall become operative on January 1, 2019.
SEC. 24.
Section 22163 of the Financial Code is amended to read:22163.
(b)This section shall become operative on January 1, 2019.
SEC. 25.
Section 22164 of the Financial Code is amended to read:22164.
(b)This section shall become operative on January 1, 2019.
SEC. 26.
Section 22168 of the Financial Code is amended to read:22168.
(a) The commissioner may, after appropriate notice and opportunity for hearing, suspend for a period not to exceed 12 months or bar a person from any position of employment with a licensee if the commissioner finds that the person has willfully used or claimed without authority a designation or certification of special education, practice, or skill that the person has not attained, or willfully held out to the public a confusingly similar designation or certification for the purpose of misleading the public regarding(e)This section shall become operative on January 1, 2019.
SEC. 27.
Section 22169 of the Financial Code is amended to read:22169.
(a) The commissioner may, after appropriate notice and opportunity for hearing, by order, censure or suspend for a period not exceeding 12 months, or bar a person, including a mortgage loan originator, from any position of employment with, or management or control of, any finance lender, broker, program administrator, provider, or any other person, if the commissioner finds either of the following:(e)This section shall become operative on January 1, 2019.
SEC. 28.
Chapter 2.5 (commencing with Section 22480) is added to Division 9 of the Financial Code, to read:CHAPTER 2.5. Wage-Based and Work-Based Advances
22480.
(a) It is the intent of the Legislature that this act accomplish all of the following:22481.
For purposes of this chapter, the following definitions shall apply:22482.
(a) Division 1.2 (commencing with Section 2000) and Division 10 (commencing with Section 23000) shall not apply to providing a wage-based advance or a work-based advance to a worker.22483.
A provider shall comply with all of the following requirements:22484.
(a) A provider may offer wage-based or work-based advances through any of the following:22485.
(a) A provider shall develop and implement policies and procedures to both respond to questions raised by workers and to address, in an expedient manner, complaints from workers.22486.
A provider’s annual report submitted to comply with Section 22159 shall include the following information related to wage-based or work-based advances provided to workers in the most recently completed calendar year:22487.
(a) A provider shall comply with all laws, rules, and orders regarding the duty to safeguard a consumer’s personal information, including, but not limited to, Title 1.81 (commencing with Section 1798.80) of Part 4 of Division 3 of the Civil Code.22488.
(a) A person licensed under the California Deferred Deposit Transaction Law (commencing with Section 23000) shall not provide wage-based or work-based advances or be licensed as a provider under this chapter.22489.
(a) The commissioner may, by rule, regulation, or order require a provider to provide disclosures to workers, including:22490.
This chapter shall become inoperative on January 1, 2023, and as of that date is repealed.SEC. 29.
Section 22700 of the Financial Code is amended to read:22700.
(a) Finance lender, broker,(d)This section shall become operative on January 1, 2019.
SEC. 30.
Section 22701 of the Financial Code is amended to read:22701.
(b)This section shall become operative on January 1, 2019.
SEC. 31.
Section 22706 of the Financial Code is amended to read:22706.
(b)This section shall become operative on January 1, 2019.
SEC. 32.
Section 22712 of the Financial Code is amended to read:22712.
(a) Whenever, in the opinion of the commissioner, any person is engaged in business as a finance lender, broker, program administrator, provider, or a mortgage loan originator, as defined in this division, without a license from the commissioner, or(c)This section shall become operative on January 1, 2019.
SEC. 33.
Section 22714 of the Financial Code is amended to read:22714.
(a) The commissioner shall suspend or revoke any license, upon notice and reasonable opportunity to be heard, if the commissioner finds any of the following:(c)This section shall become operative on January 1, 2019.
SEC. 34.
Section 22716 of the Financial Code is amended to read:22716.
(b)This section shall become operative on January 1, 2019.
SEC. 35.
Article 4 (commencing with Section 22790) is added to Chapter 4 of Division 9 of the Financial Code, to read:Article 4. Wage-Based and Work-Based Advance Penalties
22790.
(a) If any amount other than, or in excess of, the payments permitted by Chapter 2.5 (commencing with Section ____) is willfully charged, contracted for, or received, the wage-based or work-based advance contract is void, and a person shall not have a right to collect or receive the amount advanced, a payment, charges, or recompense in connection with the transaction.22791.
(a) Except as provided in subdivision (b), if an amount other than, or in excess of, the payments permitted by Chapter 2.5 (commencing with Section ____) is charged or contracted for, or received, for any reason other than a willful act of the licensee, the licensee shall forfeit all payments on the wage-based or work-based advance and may collect or receive only the amount advanced to the worker.22792.
(a) Except as provided in subdivision (b), if a provision of Chapter 2.5 (commencing with Section ____) is violated in the making or collection of a wage-based or work-based advance, for any reason other than a willful act of the licensee, the licensee shall forfeit all payments on the wage-based or work-based advance and may collect or receive only the amount advanced to the worker.22793.
A person who willfully violates a provision of Chapter 2.5 (commencing with Section ____) or who willfully violates a rule or order, adopted pursuant to this division, which implements Chapter 2.5 (commencing with Section ____) shall, upon conviction, be punished by a fine of not more than ten thousand dollars ($10,000), by imprisonment in a county jail for not more than one year or pursuant to subdivision (h) of Section 1170 of the Penal Code, or by both that fine and imprisonment. However, a person shall not be imprisoned for the violation of a rule or order unless that person had knowledge of the rule or order. Conviction under this section shall not preclude the commissioner from exercising the authority in Section 22713.22794.
A provision imposing liability under this article shall not apply to an act done or omitted in good faith in conformity with a written general rule, regulation, or specific ruling of the commissioner.22797.
This article shall become inoperative on January 1, 2023, and as of that date is repealed.SEC. 36.
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.It is the intent of the Legislature that this act accomplish all of the following:
(a)Protect the interests of workers in this state who avail themselves of wage-based and work-based advances.
(b)Provide for the safe, efficient, and orderly conduct of the business
of providing wage-based and work-based advances.
(c)Provide legal certainty to providers of wage-based and work-based advances by establishing a regulatory framework for their lawful conduct in this state.
(d)Maintain public confidence in providers of wage-based and work-based advances.
(e)Prohibit both employers and persons that retain independent contractors from directly profiting from workers’ use of wage-based and work-based advances.
(f)Establish a registration and reporting system facilitated by the Commissioner of Business Oversight in order to provide the state with information about the number and size of businesses providing wage-based and work-based advances in California and about the evolving nature of their business models.
For purposes of this division, the following definitions shall apply:
(a)“Delivery” means the delivery of funds to a worker by a provider.
(b)(1)“Obligor” means either of the following:
(A)An employer.
(B)A person, including an independent contractor, who is not an employer but who is contractually obligated to pay the worker a sum of money on an hourly, project-based, piecework, or other basis for labor or services provided by the worker to or on behalf of the other person.
(2)“Obligor” does not include a customer of an obligor or other third party whose obligation to make a payment to a worker is based solely on the worker’s agency relationship with the obligor.
(c)“Payment” means money or other consideration paid by a worker to a provider that is directly related to the provision of wage-based or
work-based advances, including, but not limited to, a payment for an expedited transfer.
(d)“Payroll services provider” means a person that assists a business in meeting its payroll administration obligations by collecting information on employees and independent contractors, hours worked, pay rates, deductions, and other payroll-related data from the business and uses that information to prepare paychecks, wage statements, and related reports for the employees employed by or the independent contractors retained by the business.
(e)“Provider” means a person that is engaged in the business of delivering wage-based or work-based advances. “Provider” does not include a payroll services provider, unless that payroll services provider is separately engaged in the business of delivering wage-based or work-based advances.
(f)“Providing wage-based or work-based advances” means the delivery to a worker of a wage-based advance or a work-based advance.
(g)“Wage-based advance” or “work-based advance” means funds advanced to a worker by a provider that are based on wages or compensation the worker has represented have been earned but have not, at the time of the advance, been paid to the worker for work performed for or on behalf of an obligor.
(h)“Worker” means a natural person who has earned wages or compensation in this state as an employee or an independent contractor.
(a)Division 1.2 (commencing with Section 2000), Division 9 (commencing with Section 22000), and Division 10 (commencing with Section 23000) shall not apply to providing a wage-based advance or a work-based advance to a worker.
(b)The
requirement that a worker who opts to use the services of a provider shall not be a violation of Section 212 of the Labor Code to the extent that the
worker
is informed in writing of the right to receive the full amount of the worker’s wages, without discount, if the worker waits until the regular payday.
(a)A person shall not engage in the business of providing wage-based or work-based advances without registering as a provider with the commissioner and paying all fees required by the commissioner.
(b)A person may apply to register as a provider under this division by submitting an application to the commissioner that shall be in the form prescribed by the commissioner and shall include all of the following information:
(1)The name, business address, and licensing details, if applicable, of the provider and all physical locations, internet website addresses, and mobile applications from which the provider will engage in activities subject to this division.
(2)The name and contact information for an employee of the provider who is knowledgeable about, and has the authority to execute, a contract governing a business relationship between the provider and any obligors.
(3)The name and contact information for an employee of the provider who has authority over the provider’s policies and procedures for complying with this division.
(4)A description of the provider’s business model used to provide wage-based or work-based advances.
(5)Other information the commissioner determines is necessary or convenient for the purposes of evaluating the ability of an applicant to provide wage-based and work-based advances or to implement this division.
(c)A
registrant shall pay to the commissioner an assessment that is calculated based on the registrant’s pro rata share of all costs and expenses reasonably incurred in the administration of this division, as estimated by the commissioner, for the ensuing year and any deficit actually incurred or reasonably anticipated in the administration of the program in the year in which the assessment is made with respect to costs attributable to the registrant. The commissioner shall calculate a registrant’s pro rata share based on the revenue earned by the provider by providing wage-based and work-based advances in this state.
(d)The commissioner shall, by rule, establish the timelines and fees applicable to applicants for original provider registrations and annual renewals.
(e)(1)If a registered provider fails to pay a required fee or assessment by the due date
specified by the commissioner, the commissioner may by order summarily suspend or revoke the provider’s registration.
(2)If, after an order is made pursuant to paragraph (1), the person who was the subject of the order files a request for hearing in writing within 30 days with the commissioner, and a hearing is not held within 60 days thereafter, the order is deemed rescinded as of the effective date of the order.
(3)During a period when its registration is revoked or suspended pursuant to paragraph (1), a provider shall not conduct business pursuant to this division except as may be permitted by order of the commissioner. However, the revocation, suspension, or surrender of a registration shall not affect the powers of the commissioner as provided in this division.
(a)Upon reasonable notice and opportunity to be heard, the commissioner may deny an application for a registration as a provider only for either of the following reasons:
(1)A false statement of a material fact has been made in the application.
(2)The commissioner has grounds to believe that approval is likely to result in harm to the public.
(b)An application for registration as a provider shall be considered withdrawn if the applicant fails to respond to a written notification of a deficiency in the application within 90 days of the date of the notification.
(c)The commissioner shall, within 60 days after a registrant files a full and complete application for a registration and pays the required assessment, either issue a registration or file a statement of issues prepared in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. If the commissioner fails to issue a registration or file a statement of issues within 60 days from the filing of a full and complete application for a registration with the required fees, the registrant may operate provisionally until the commissioner issues a registration or files a statement of issues.
A provider shall comply with all of the following requirements:
(a)A
provider shall permit a worker to cancel participation in a wage-based or work-based advance program at any time without incurring a charge for doing so.
(b)Before providing a wage-based or work-based advance, a provider shall provide the worker with a written or electronic document, and the worker shall acknowledge receipt of that document. That document shall meet all of the following requirements:
(1)Inform the worker of the worker’s rights under the program and include instructions for how to cancel
participation in the program.
(2)Include a statement that reads as follows:
“If you have questions about the services we perform, you may contact us at [telephone or email address at which the provider may be reached]. If you wish to report a complaint about [Name of provider], you may contact the California Department of Business Oversight at 866-275-2677, or file your complaint online at https://dbo.ca.gov/file-a-complaint/.”
(3)Be separate from any other agreement the worker is asked to sign.
(4)Be written in a minimum 12-point font size, or, if provided electronically, be easily legible.
(5)Be written in language intended to be understood by a layperson.
(6)A worker shall be given the option of receiving a hard copy or an electronic copy of this document at a designated address when entering into an agreement to receive wage-based or work-based advances.
(7)If a worker accesses wage-based or work-based advances via an electronic application, the document shall also be provided with an in-app link to this document.
(c)A
provider shall deliver funds to the
worker via any means mutually agreeable to the worker and the provider.
(d)(1)Except as provided in paragraph (2), a provider shall not require a worker to open an account at a particular depository institution as a condition of providing a wage-based or work-based advance.
(2)A provider may require a worker to open an account at a particular depository institution if neither the worker nor an obligor is required to pay a fee or charge to open or maintain the account.
(e)(1)During an applicable time period, payments, whether required by the provider or at the worker’s option, received by a provider from a worker for wage-based or
work-based advances shall not exceed an average of fifteen dollars ($15) per month.
(2)A provider shall not require payments totaling more than fifteen dollars ($15) in any month.
(3)For purposes of paragraph (1), “applicable time period” means either of the following:
(A)The period of time beginning January 1 and ending June 30.
(B)The period of time beginning July 1 and ending December 31.
(f)A provider shall not make more than three wage-based or work-based advances to a worker per week.
(g)A contract between
a provider and an obligor shall not contain a provision that limits the number of pay periods during which the
worker may utilize
wage-based or work-based advances.
(h)(1)Except as provided in paragraph (2), a wage-based or work-based advance shall not exceed 50 percent of the
gross amount owed by an obligor to a worker as of the date and time of the worker’s request.
(2)A provider may advance an amount to a worker that is larger than the maximum allowed pursuant to paragraph (1) up to two separate times in an applicable time period, as defined in paragraph (3) of subdivision (e).
(i)Wage-based advances and work-based advances shall be provided exclusively on a nonrecourse basis. For purposes of this division, nonrecourse basis means all of the following:
(1)Except
as provided in paragraph (2) of subdivision (a) of Section 60006, a provider shall not attempt to collect, either directly or through a third party, or sell or transfer to a third party the right to collect funds from a worker in connection with provision of wage-based or work-based advances.
(2)A provider shall not report a worker’s repayment or failed repayment of a wage-based or work-based advance to any person other than the worker, including, but not limited to, the following:
(A)A consumer credit reporting agency, as that term is defined in subdivision (d) of Section 1785.3 of the Civil Code.
(B)An investigating consumer reporting agency, as that term is defined in subdivision (d) of Section 1786.2 of the Civil Code.
(C)A consumer reporting
agency, as that term is defined in subdivision (f) of Section 1681a of Title 15 of the United States Code.
(3)A worker shall not be held liable for a failed repayment of a wage-based or work-based advance if the obligor fails to meet its payroll obligation to the provider or to the worker.
(j)(1)If a provider requires a worker to make a payment in exchange for providing a wage-based or work-based advance, that payment shall not vary based on the delivery method that is used to provide a wage-based or work-based advance. For purposes of this paragraph, “delivery method” includes, but is not limited to, an automated clearinghouse or reloadable card.
(2)A payment described in paragraph (1) may vary based on the speed with which the wage-based or work-based advance is provided. A payment
required for an expedited transfer shall be reasonable and proportional to the costs directly associated with the expedited transfer.
(3)A payment may either be required by the provider as a condition for providing a wage-based or work-based advance or may be optional and in an amount determined by the worker.
(k)(1)Prior to making a wage-based or work-based advance, a provider shall make a reasonable determination of the wages or compensation that have been earned but have not been paid to a worker at the date and time that worker requests a wage-based or work-based advance.
(2)For purposes of complying with paragraph (1), a provider shall not rely only on the amount of wages or
compensation previously paid to the worker by an obligor.
(a)A provider may offer wage-based or work-based advances through
any of the following:
(1)A contractual arrangement with an obligor in which the funds advanced to the worker by the provider during a pay period are deducted from the
worker’s
next paycheck. All of the following conditions shall apply to a contractual arrangement described in this paragraph.
(A)The obligor shall not directly pass on to the worker the cost of offering the wage-based or work-based advance, but the obligor may offer to the worker an optional service package for which a fee is charged by the provider. The obligor shall not directly profit from the fees paid by workers for the optional service package.
(B)The contract between a provider and obligor may allow the provider to offer services separate from wage-based or work-based advances and to charge
workers separately for those services. The obligor shall not directly profit from the charges to workers for those services. However, in no case may a provider condition the availability of a wage-based or work-based advance on a worker’s willingness to purchase a separate service.
(C)The contract shall prohibit the obligor from sharing payments with or receiving other compensation from the provider that is related to a worker’s use of wage-based or work-based advances from the provider.
(2)A contractual arrangement with a
worker that permits the provider to be repaid directly by the worker via a means mutually acceptable to the worker and provider. All of the following conditions shall apply
to a contractual arrangement described in this paragraph.
(A)A provider shall notify a worker, at least two days before the date of the payment is due, of the total amount due and the date on which the provider will attempt to collect that amount from the worker. The provider shall make the notification by any means mutually acceptable to the worker and the provider. However, the provider shall not provide that notification solely via a provider’s mobile application, if that application requires a worker to provide a password or similar credentials to access the notification.
(B)A provider that seeks repayment from a worker through the worker’s deposit account shall take best efforts to ensure that there are sufficient funds in the account before attempting to collect from
that account.
(C)A provider that seeks repayment from a worker through the worker’s deposit account shall not initiate a payment transfer from the worker’s deposit account after the provider has attempted to initiate three consecutive failed payment transfers from that account. For purposes of this subparagraph, a payment transfer shall be deemed to have failed when it results in a return indicating that the worker’s account lacks sufficient funds.
(D)A provider may contract with a worker to provide services that are separate from and unrelated to wage-based or work-based advances and may charge separately for those separate and unrelated services. However, a provider shall not condition the availability of a wage-based or work-based advance on a worker’s willingness to purchase a separate or unrelated service.
(E)A provider shall not charge a worker a fee for an unsuccessful payment transfer from that worker’s deposit account.
(b)An obligor that is notified by
a provider that it has entered into an arrangement described in subdivision (a) with a worker may, with the worker’s consent, share information with the provider pertaining to the obligor’s accrued and expected obligations
to the worker.
A person who engages in business as a provider shall at all times comply with all of the following:
(a)Maintain a minimum net worth, excluding assets that exist to satisfy the requirements of subdivision (b) or (c), of at least two hundred fifty thousand dollars ($250,000) as determined by generally
accepted accounting standards.
(b)Maintain a fidelity bond or bonds in an amount not less than one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000), whichever is greater, executed by an insurer authorized to do business in this state or an eligible surplus line insurer pursuant to Section 1765.1 of the Insurance Code. In the alternative, a provider may deposit an amount of cash or securities or
irrevocable letters of credit in an amount not less than one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000), whichever is greater, in an insured escrow account at a depository institution of the provider’s choice. Interest on that amount shall accrue to the provider. Funds placed on deposit
pursuant to this subdivision may be withdrawn pursuant only to a court order, an order of the commissioner, or as otherwise specified by the commissioner by rule.
(c)Maintain a policy of errors and omissions insurance in an amount not less than one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000), whichever is greater, executed by an insurer authorized to do business in this state or an eligible surplus line insurer pursuant to Section 1765.1 of the Insurance Code. In the
alternative, a provider may deposit an amount of cash or securities or irrevocable letters of credit in an amount not less than one-sixth of the total wage-based and work-based advances that it made in the final six calendar months of the immediately preceding calendar year, rounded to the nearest ten thousand dollars ($10,000), or two hundred fifty thousand dollars ($250,000), whichever is greater, in an insured escrow account at a depository institution of the provider’s choice. Interest on that amount shall accrue to the provider.
Funds placed on deposit pursuant to this subdivision may be withdrawn pursuant only to a court order, an order of the commissioner, or as otherwise specified by the commissioner by rule.
(d)The requirements of subdivisions (a), (b), and (c) are independent of one another, and an action taken to satisfy one of those subdivisions shall not be construed to satisfy the requirements of any other requirement of this section.
(e)In any application for registration, and on or before the 15th day of March of each calendar year thereafter, a person who engages in business as a provider shall submit proof satisfactory to the commissioner that the person is satisfying the requirements of subdivisions (a), (b), and (c).
(f)(1)Except as provided in paragraph (2), on an annual basis, a person who engages in business as a provider shall submit to the commissioner a report, certified by an independent public accountant, that contains audited financial statements covering the calendar year or, if the provider has an established fiscal year, then for that fiscal year, within 105 days after the close of the calendar or fiscal year, as applicable. The commissioner may, pursuant to paragraph (2) of subdivision (d) of Section 6254 of the Government Code, choose not to disclose a record submitted pursuant to this section.
(2)Notwithstanding paragraph (1), a person who engages in business as a provider and who has been incorporated for less than three years as of the date on which audited financial statements are required to be submitted pursuant to this section may submit financial
statements reviewed by an independent public accountant in lieu of audited financial statements.
(g)A person claiming to have sustained damage from a provider’s violation of this division may file a claim on the bonds, deposits, or letters of credit described in this section to recover the damages subject to the terms and conditions of the bonds, deposits, or letters of credit.
(a)A provider shall develop and implement policies and procedures to both respond to questions raised by workers and to address, in an expedient manner, complaints from workers.
(b)(1)Upon receipt of a complaint from a worker, a provider shall deliver the worker the following statement:
“If you have questions about the services we perform, you may contact us at [telephone or email address at which the provider may be reached]. If you wish to report a complaint about [Name of provider], you may contact the California Department of Business Oversight at 866-275-2677, or file your complaint online at
https://dbo.ca.gov/file-a-complaint/.”
(2)The provider shall provide the statement described in paragraph (1) in no smaller than 12-point font size, or, if provided electronically, be easily legible.
(3)For purposes of this subdivision, “receipt of a complaint from a worker” includes receiving a review from a worker that is linked to the provider’s mobile application on a mobile application platform, including, but not limited to, a platform offered by an online or mobile device-accessible application store or comparable medium of which the provider should reasonably be aware.
(c)The commissioner shall implement a system of tracking complaints submitted to the department pursuant to this division and shall make data related to those complaints available upon
request.
A provider shall file an annual report with the commissioner, on or before the 15th day of March, giving the following information related to wage-based or work-based advances provided to workers in the most recently completed calendar year:
(a)Gross revenue received. For purposes of this subdivision, the provider shall distinguish between revenue received from workers and revenue received from obligors for providing services to their workers.
(b)The total number of wage-based or work-based advances.
(c)The total dollar amount of wage-based or work-based advances.
(d)The total number of workers served.
(e)The average and standard deviation of the number of wage-based or work-based advances per worker.
(f)The number of workers who requested advances described in paragraph (2) of subdivision (i) of Section 60005.
(g)The total number of failed payment transfers as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 60006.
(h)The total number of workers affected by at least one failed payment transfer as described in subparagraph (C) of paragraph (2) of subdivision (a) of Section 60006.
(i)For workers affected by at least one failed payment transfer as described in subparagraph (C) of paragraph (2) of
subdivision (a) of Section 60006, the average and standard deviation of number of failed payment transfers per worker.
(j)Any other information the commissioner may reasonably request in connection with the commissioner’s responsibilities under this division.
(a)A provider shall comply with all laws, rules, and orders regarding the duty to safeguard a consumer’s personal information, including, but not limited to, Title 1.81 (commencing with Section 1798.80) of Part 4 of Division 3 of the Civil Code.
(b)A provider shall comply with all requirements of the California Consumer Privacy Act of 2018 (Title 1.81.5 (commencing with Section 1798.100) of Part 4 of Division 3 of the Civil Code).
(c)A provider shall not sell, as defined in subdivision (t) of Section 1798.140 of the Civil Code, share, or otherwise disclose personal information, as defined by subdivision (o) of Section 1798.140 of the Civil Code, that is solicited or
collected from a worker for the purpose of providing wage-based or work-based advances pursuant to this division.
(d)A provider shall not utilize geolocation data, however derived, to either present information to a worker regarding the availability of a wage-based or work-based advance or to invite a worker to seek or obtain information regarding a wage-based or work-based advance.
(a)The registration of a provider issued under this division shall remain in effect until it is surrendered, revoked, or suspended.
(b)For the purpose of securing information required by the commissioner in the administration and enforcement of this division, the commissioner may, at any time, investigate and examine the books, accounts, records, and files used in the business of a person providing wage-based or work-based advances, whether the person acts or claims to act as principal or agent, or under or without the authority of this division. For the purpose of examination, the commissioner and the commissioner’s representatives shall have free access to the offices and places of business, books, accounts, papers, records, files,
safes, and vaults of all these persons. The commissioner shall not be required to conduct routine examinations of a provider.
(c)The power of investigation and examination by the commissioner shall not be terminated by the surrender, suspension, or revocation of a registration issued by the commissioner pursuant to this division.
(d)(1)If, upon inspection, examination, or investigation, the commissioner has cause to believe that a provider is violating a provision of this division or a rule or order thereunder, the commissioner or the commissioner’s designee, may issue a citation to the provider in writing that describes with particularity the basis of the citation. A citation may contain an order to correct the violation or violations identified and provide a reasonable time period or periods by which the violation or violations shall be corrected. In
addition, the commissioner may include a claim for ancillary relief. The ancillary relief may include, but not be limited to, restitution or disgorgement or damages on behalf of the persons injured by the act or practice constituting the subject matter of the action.
(2)The commissioner may issue an order to desist and refrain from engaging in a specific business or activity or activities or may issue an order to suspend all business operations to a provider who is engaged in or who has engaged in continued or repeated violations of this division. The sanctions authorized under this section shall be cumulative to all other administrative, civil, or criminal remedies.
(3)If, within 30 days from the receipt of the citation, the provider cited fails to notify the department that the provider intends to request a hearing as described in paragraph (4), the citation shall be deemed
final.
(4)A hearing under this section shall be conducted pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code.
(5)After the exhaustion of the review procedures provided for in this section, the commissioner may apply to the appropriate superior court for an order compelling the cited person to comply with the order of the commissioner. The application, which shall include a certified copy of the final order of the commissioner, shall constitute a sufficient showing to warrant the issuance of the judgment and order.
(e)The commissioner shall suspend or revoke a registration upon notice and reasonable opportunity to be heard, if the commissioner finds any of the following:
(1)The provider has
failed to comply with a demand, ruling, or requirement of the commissioner made pursuant to this division.
(2)The provider has violated a provision of this division or a rule or regulation made by the commissioner under and within the authority of this division.
(3)A fact or condition exists that, if it had existed at the time of the original application for registration, reasonably would have warranted the commissioner in refusing, pursuant to subdivision (a) of Section 60004, to issue the registration originally.
(a)A person who violates this division is subject to civil suit in a court of competent jurisdiction.
(b)In addition to damages available in an action brought pursuant to subdivision (a), a person who violates this division shall be subject to a civil penalty of up to two thousand dollars ($2,000) for each violation.
(c)In the case of an action to enforce a liability under this division, a prevailing plaintiff shall be entitled to its reasonable attorney’s fees, costs, and expenses.
This division shall become inoperative on January 1, 2023, and as of that date is repealed.