What is a farm labor bond?
A farm labor bond is a type of contract bond that protects farm labor contractor employees. It ensures that a contractor pays fair wages and operates according to current labor standards. It can help prevent employee exploitation and poor working conditions. These bonds may be required at both the state and federal levels (depending on your location). Many prospective farm labor contractors must obtain this bond as part of the licensing process to operate legally in their state. If you want to work in the recruitment, housing, transportation, or employment of migratory workers in agriculture, you may be required to post this bond. At the federal level, these bonds are called farm labor contractor H-2A bonds. The U.S. Department of Labor requires employers to obtain a bond to engage in the hiring, employing, housing, transporting, furnishing, recruiting, or soliciting of workers subject to the H-2A regulations.
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Quick Takeaways
- A farm labor bond ensures that a contractor pays their employees fair wages and operates according to current labor standards.
- This bond may help prevent employee exploitation and poor working conditions.
- It’s required in many states for anyone wishing to obtain a farm labor contractor license.
- Typically, you may expect to pay 1-4% of the total bond amount as your premium.
How do bonds work for farm labor contracting?
Many states require a farm labor bond for those wishing to obtain a farm labor contractor license. It helps protect contractors’ clients or employees – who are often migrant workers. This surety bond is an agreement among three parties:
- A principal: The farm labor contractor business that obtains the bond and agrees to the contract terms
- An obligee: A government agency/licensing authority that requires the bond
- A surety: The bond underwriter that may settle valid claims against the bond
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For example, if an employer doesn’t pay an employee a fair wage, the employee can file a claim on the bond. The surety company will determine whether the claim is valid or not. If it is, the surety company may take financial responsibility for settling the claim. The employer, however, must repay the surety. This holds farm operations in check, dissuading operators from participating in illegal or unethical business practices.
What does a farm labor contractor bond cost?
The cost of your bond will depend on your state and the required bond amount. Your credit score and business financials may also play a role in your premium amount. Typically, you may expect to pay around 1-4% of the total bond amount. The surety bond must cover liability incurred throughout the work contract period listed on the H-2A application. It must remain in effect for at least two years from the labor certification’s expiration date. At the federal level, the U.S. Department of Labor (DOL) requires the following bond amounts, depending on the size of your operation.
- For a labor certification with fewer than 25 employees: $5,000
- For a labor certification with 25-49 employees: $10,000
- For a labor certification with 50-74 employees: $20,000
- For a labor certification with 75-99 employees: $50,000
- For a labor certification with 100 or more employees: $75,000
Can you get a farm labor bond with bad credit?
Your surety will determine whether you are eligible for a bond if you have a poor credit score. Some sureties will approve applications for applicants with bad credit for a higher premium. While certain companies may offer affordable rates for low-credit applicants, others may deny approval.
Get a Farm Labor Contractor Bond
Begin your application on our all-digital platform to get bonded as quickly as possible. If you have any questions or concerns along the way, feel free to reach out to our team directly by phone or email.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.