What Is an Employment Agency Bond?
In many states, employment agencies need to post an employment agency bond, so that they can be licensed to operate. The bond requirement and amounts vary across the U.S.
Employment agency bonds safeguard the interests of the state and agency customers. For employment agencies, being bonded is a sign of trustworthiness.
Like other surety bonds, your employment agency bond is a contractual agreement between three entities. Your business is the principal that needs to purchase the bond. The local or state authority that requires the bond is the obligee. The third party is the surety, which is the entity that provides the bond.
Questions about Employment Agency Bond
Who needs to obtain an employment agency bond?
An employment agency bond can be required of a business that provides the service of finding job opportunities for employment seekers in return for payment. Many states or local authorities ask for employment agencies to provide such a bond in order to get an employment agency license. States where you need a bond include Arizona, California, Texas and South Carolina, among others.
The employment agency bond works as an extra level of security for agencies customers. Employment agencies function as an intermediary in matching job seekers with employers. The bond is there to guarantee that agencies will provide top services, and will follow applicable rules.
In most cases, it’s the state that requires the bond from employment agencies. Alternatively, the bond can be a licensing prerequisite from local authorities. Before you start your licensing process, make sure to check with your licensing entity about the exact requirement in your case.
How much does an employment agency bond cost?
The required employment agency bond amounts are different across states, which means that your bond price will depend on your local requirements. The bond cost is additionally affected by your personal and business financials.
The bond amount is set by the licensing authority, but your bond premium is only a fraction of this sum. In the typical cases for standard bonding, the rates range between 1% and 4% of the bond amount. For a $5,000, this means you can pay as low as $100-$375.
|Surety Bond Cost by Credit Score|
|Surety Bond Name||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Nevada and Utah Employment Agency Bond||$1,000||$100||$100-$150||$100-$150||$100-$250|
|Massachusetts and California Employment Agency Bond||$3,000||$100-$150||$100-$150||$150-$200||$150-$300|
|South Carolina, North Dakota, Illinois, Hawaii, Washington, D.C., and New York Employment Agency Bond||$5,000||$100-$150||$100-$150||$150-$250||$250-$375|
|Maryland Employment Agency Bond||7,000||$100-$150||$100-$175||$175-$350||$350-$525|
|Connecticut Employment Agency Bond||$7,500||$100-$150||$100-$187,5||$187,5-$375||$375-$562,5|
Which financial factors are considered when determining your bond premium?
Your surety needs to take a close look at your personal credit score, business finances, assets and liquidity, as well as business knowhow. If it assesses these to be in good shape, you can expect to pay less for your employment agency bond.
Our surety bond cost offers a wholesome overview of the way in which your surety bond price is set.
Can I get an employment agency bond with bad credit?
Here at Lance Surety Bonds, we’ve worked with a wide array of employment agencies. We realize how difficult it can be to get the bond you need with problematic finances. That’s why our Bad Credit Surety Bonds program was created, to help employment agency owners with low credit scores, tax liens, bankruptcies, or civil judgements get bonded.
The bonding rates for bad credit applicants are between 5% and 10%. The price is slightly higher, but it still presents a great opportunity to get bonded and stay in business. With Lance Surety Bonds, you can be sure that you’re getting the top rates for your situation. We foster close relations with numerous A-rated, T-listed surety companies, so we can shop around for the best matching bonding option for you.
How do I get my employment agency bond?
Getting your employment agency bond is a straightforward process. Just apply online today for your free bond quote. You can also receive an exact bond price after submitting your full application, together with all the necessary paperwork.
For further information, make sure to check our How to Get Bonded page for a complete overview of the bonding process.
Our bonding specialists are here to help. For any questions, call us at (877) 514-5146 and we’ll be glad to assist you.
How are bond claims handled for employment agencies?
Employment agency bonds, unlike insurance, protect your customers and not your business. They guarantee you will provide high quality services and will abide by applicable laws.
In case you transgress from these rules, an affected party can file a claim against your bond. Proven claims can lead to financial compensation to claimants up to the penal sum of your bond. At first, your surety provides the reimbursement, but you need to repay it fully afterwards.
Claims are a serious threat to your employment agency. They can hurt your business financially and in terms of reputation. After a claim, it can be very difficult to get bonded again.