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Farm Labor Contractor Bond

What is a Farm Labor Contractor Bond?

Farm Labor Contractor bonds are used to provide a form of protection for employees of a farm labor contractor. The bond provides a form of guarantee that the contractor will pay acceptable wages to the laborers as well as operate in a way that adheres to labor standards. These labor standards can include regulations involving labor recruitment, worker termination, pay rates and guaranteed hours among other considerations.

Farm Labor Contractor bonds can be required at the federal level by the U.S. Department of Labor Wage and Hour Division and at the state level as well. State level farm labor contractor bond amounts vary state to state. Usually there is a minimum bond amount with higher bond amounts required based on the number of employees. The U.S. Department of Labor required bond amounts are as follows:

  • $5,000 for a labor certification with fewer than 25 employees
  • $10,000 for a labor certification with 25 to 49 employees
  • $20,000 for a labor certification with 50 to 74 employees
  • $50,000 for a labor certification with 75 to 99 employees
  • $75,000 for a labor certification with 100 or more employees

How does a Farm Labor Contractor Bond work?

If a farm laborer has reason to believe their employer violated contractual obligations, that laborer may file a claim against the bond seeking financial compensation for something like unpaid wages or any other kind of damages. The surety company backing the bond agrees to compensate anyone who files a valid claim, but the bonded party has the final financial responsibility and must pay the surety company back. This is by design. Bonds exist so that farm operators cannot escape financial responsibility for illegal or non-contractual behaviors.

Who should get a Farm Labor Bond?

Anyone legally required to do so by either federal or state laws. Farmers will struggle to find the labor they need without having the required bond in place, so it's important to begin pursuing a bond as soon as you know you need one. Rely on Viking Bond Service to get you a quote in as little as 48 hours.

Who are the parties involved in a Farm Labor Contractor Surety Bond?

Just like all surety bond agreements, there are three parties involved:

  • The principal is the farmer who obtains the bond and agrees to pay for any claims.
  • The obligee is the party that files a claim against the bond seeking compensation.
  • The surety is the company that issues the bond and steps in to pay when the principal can't or won't. When that happens, the principal must pay the surety back in full with interest and fees added.

How much does a Farm Labor Contractor Bond cost?

The cost of the bond (called the premium) depends first on the size of the bond. Farmers must obtain a bond worth a certain amount specified by the federal or state government. That amount designates how much the surety company is willing to pay out to settle claims. Premiums cost a small percentage of the bond amount, and the exact figure depends on the applicant's credit along with other considerations.

Can you get a Farm Labor Contractor Bond with bad credit?

That's up to the discretion of the surety. Some will deny applicants with bad credit, others will approve them but with a higher premium. Increase your chances of getting approved at a competitive rate by working with a surety brokerage like Viking Bond Service.

How long does a Farm Labor Contractor Surety Bond remain valid?

That will vary by state. In the event that you need a bond for an extended duration, renewal may be necessary. To renew a bond, you will need to allow an underwriter to reassess your credit and quote you a new premium price, which could cost more or less than the previous price.

How are claims handled for Farm Labor Contractor Bonds?

The surety company investigates all claims to determine if they have merit. Investigations could involve lawyers, professional investigators, and other resources. Surety companies guarantee payment for all valid claims, giving obligees a way to pursue justice and hold farm operators accountable. In the event the surety does settle a claim, the farmer holding the bond must pay that debt back.

How to apply for a Farm Labor Contractor Bond?

The bonding process for Farm Labor Contractor Bonds is typically simple and easy. Outside of a bond application and credit check, a financial statement is usually helpful in getting a more preferable rate.

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