What Is a California Farm Labor Contractor Bond?
If you want to operate as a farm labor contractor in California, you need to present a farm labor contractor bond to the state Department of Industrial Relations.
The purpose of your surety bond is to ensure that you will duly make all necessary and agreed payments to farm workers you have hired. It can provide a reimbursement to harmed parties in case you fail to make due payments.
Your bond is a three-party contractual agreement. The principal is your farm contracting business. The Department of Industrial Relations is the obligee to which you have to present the bond. The surety is the entity that provides you with a bond.
Frequently Asked Questions
When do I need to get bonded?
The Department of Industrial Relations requires all contracting companies to obtain a surety bond if they want to get a California farm labor contractor license. You have to present the bond in the officially required form. The initial bond amount is $25,000. When you renew the license, the bond amount depends on your annual payroll number.
Your California farm labor contractor bond ensures you will comply with the state Labor Code Section 1684(a)(3), as well as with all provisions of Chapter 3, Part 6, Division 2 of the California Labor Code.
What is the bond cost?
The amount of your California farm labor contractor bond varies. Initially, it is $25,000 for obtaining your first license. After that, it is based on the annual payroll. If it is below $500,000, you need a $25,000 bond. For payroll between $500,000 and $2 million, it is $50,000. If your payroll is above $2 million, the bond amount is $75,000.
The surety bond cost that you have to cover is calculated on the basis of the bond amount required from you. It is referred to as the bond premium. Usually it is between 1% to 3% of the bond amount in case you can demonstrate strong finances.
Your bond price is set after your surety examines your personal and business finances. It considers your personal credit score, as well as business financials and any assets and liquidity you can showcase. If your overall finances are stable, your bond premium is likely to be lower.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|California farm labor contractor bond - initial and for payroll amount below $500,000||$25,000||$187.5-$$375||$250-$625||$625-$1,250||$1,250-$2,500|
|Annual payroll amount between $500,000 and $2 million||$50,000||$375-$750||$500-$1,250||$1,250-$2,500||$2,500-$5,000|
|Annual payroll amount above $2 million||$75,000||$562.5-$1,125||$750-$1,875||$1,875-$3,750||$3,750-$7,500|
What if my finances are problematic?
We have designed our Bad Credit Surety Bonds program for applicants struggling with financial issues. If you have a low credit score, tax liens, bankruptcies, or civil judgements, this option might be right for you.
The typical rates for bad credit applicants are in between 5%-10%. Our close partnerships with a number of A-rated, T-listed surety companies, however, allow us to offer you a top bonding rate whatever your credit score is.
How do I get a California farm labor contractor bond?
Need more details about how bonding works? Don’t miss our our in-depth How to Get Bonded page.
If you have more questions, we are here to help. Just call us at (877) 514-5146, and we will happily assist you.
What happens if I get a bond claim?
The purpose of your California farm labor contractor bond is to protect your employees. It can provide a compensation to affected parties if you fail to make due payments. This means that you can end up with a bond claim if you don’t follow the California Labor Code, and other applicable laws.
The maximum sum that claimants can seek is your bond amount. At first, your surety may cover the costs in order to ensure a quick reimbursement for the affected parties. You are, however, liable to compensate it fully. Thus, it’s best to stay away from situations that can give rise to claims, as they can lead to financial and reputational harm.