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California Car Wash Bond

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The California Car Wash bond is a labor bond required by the CA Department of Industrial Relations, Division of Labor Standards Enforcement. In order for an employer doing business as a car wash to register with the Labor Commissioner of CA, a minimum $150,000 surety bond must be filed. The bond is continuous, i.e. the bond is required to be active as long as the employer is registered with the Labor Commissioner. The bond is annually renewable, meaning the bond is issued for an initial 1 year term then requires renewal every successive year.

What does the bond do?

The CA car wash bond protects employees who are employed at a car wash. The bond provides a form of protection for the employee’s wages, interest on wages, fringe benefits as well as gratuities paid to the employees. If the employer fails to properly administer employee wages and fringe benefits and/or fails to forward employee directed gratuities in full, the potential for a claim on the bond arises.

If a claim is made on the car wash bond, the surety will determine the validity of the claim. If the claim is found to be valid, the surety will pay the claim and attempt to recoup the claim related losses from the principal, the employer. The employer is ultimately financially responsible for any amount paid out on a claim by the surety.

A surety may cancel the bond if claim activity arises. Since the bond is required to be in place for the car wash to conduct business, it is best for the employer to settle any applicable labor issues before they amount to a claim on the bond.

Requirements to apply for the bond

The CA car wash bond is a financial guarantee bond. This simply means that the surety writing the bond is essentially guaranteeing the employer’s payments as stated on the bond form, up to the bond penalty/amount. Financial guarantee bonds often require a personal financial statement for the business owners in addition to the bond application. A credit check is also performed as part of the application process. In some cases a business financial statement may be needed as well.

In most cases, it is best to speak with a bonding agent to know exactly what will be needed for your specific bond request.

CA Car Wash bond Cost

Premium for a CA car wash bond is charged at an annual rate. The rate is typically quoted as both a dollar amount and as a percentage of the bond amount. There is no set rate for this type of bond. The quotes provided by the surety are based on the credit and/or financial standing of the principal as well as the surety’s state filed rates. The typical range quoted for this bond type is from 2% to 8% of the bond amount. This is truly a general range and a bond quote can come in lower or higher than the range depending on credit and/or financial standing.

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More About Surety Bonds:
Typical Performance Bond Cost, Rates, Premium

Performance Bond cost can vary based on several variables. Each application has unique aspects that affect the cost. Read about how the cost is figured.

How do Performance Bonds work?

Performance Bond processing is typically more involved than Commercial but they still work basically the same. Learn about how Performance Bonds work.

Challenged Credit?

Credit challenges are not always a barrier to obtaining a Surety Bond. Often times, Viking can quote your request despite a poor credit rating.

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