Farm Labor Contractor Bonds
Learn everything you need to know about farm labor contractor bonds, and get bonded today with Surety Bond Professionals.
What Are They?
Farm labor contractors help farms meet their seasonal staffing needs. A number of states require these contractors to be licensed and bonded in order to operate legally within the state. This is in addition to the federal certification issued by the U.S. Department of Labor under the Migrant and Seasonal Agricultural Worker Protection Act (MSPA)
A farm labor contractor bond protects the state and farms that use the contractor’s services against financial loss stemming from the contractor’s failure to abide by all applicable laws and regulations. The bond is essentially the contractor’s guarantee to do business in a completely lawful and ethical manner. That includes ensuring that the farm laborers hired through the contractor, many of whom are migrant agricultural workers, are paid in a timely manner and have a safe work environment.
Who Needs Them?
The following states currently require licensing and bonding of farm labor contractors: Florida, California, Oregon, Idaho, New York, Wisconsin, Nebraska, Washington, Maryland, and Pennsylvania.
How Do They Work?
The licensing authority in each state (the obligee requiring the surety bond) sets the required bond amount. In some states the required bond amount is based on the number of workers provided annually by the farm labor contractor. The range is from $5,000 in Nebraska to $30,000 in Oregon and Idaho.
The farm labor contractor (the principal required to purchase the surety bond) is legally responsible for paying any claims filed against the bond. The third party in the surety bond agreement is the company (the surety) that underwrites and issues the bond. Any party that suffers a financial loss due to the unethical or unlawful actions of the principal has the right to file a claim against the bond and be compensated up to the full required (or penal) amount of the bond.
When a claim is filed, the surety will investigate to make sure it’s valid before it moves into the payment process. Although the principal bears sole legal responsibility for paying claims, often the surety will pay on behalf of the principal and then collect reimbursement from the principal. This ensures prompt compensation of the claimant and gives the principal a little time to liquidate assets if necessary to cover the claim.
What Do They Cost?
The premium you will pay for a farm labor contractor’s bond is a small percentage of the total required bond amount. The surety determines that percentage, known as the premium rate, on a case-by-case basis. The primary factors taken into account are your personal credit score, personal and business financial statements, and experience in the farm labor contracting business.
The most important factor is credit score. If your credit is good, you’ll likely pay somewhere in the range of 1% to 3% of the required bond amount.
Get Bonded Today
Our expert agents at Surety Bond Professionals are here to help you get the farm labor contractor’s bond you need. Request a quote online, or give us a call today to discuss your bonding needs.