What is an employment agency bond?
Employment agency bonds are legally binding agreements between three parties: employment agencies, the local authority responsible for regulating employment agency activity, and a surety company.
The local authority is the Obligee and establishes the obligations that the employment agency (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the employment agency.
Why do you need an employment agency bond?
Employment agency bonds are required in some states before being eligible to obtain a license to operate an employment agency. Some states where you need a surety bond include California, Texas, New York, and North Dakota, among others. In certain states, bonds are required at the municipality level, not at the state level.
When the surety company issues the bond, they provide the local authority a guarantee that the prospective employees and employers using the employment agency’s services will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the employment agency license.
If the employment agency fails to meet the obligations set out by the local authority, the surety will pay out any damages up to the bond amount. The employment agency is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
How much does an employment agency bond cost?
Employment agency surety bond costs vary depending on the total bond amount and the premium rate. The local authority sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for employment agency bonds typically cost 1% of the total bond amount. Most employment agency bonds require credit checks. During the application process, the surety company evaluates your credit score, financial strength, and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing an employment agency bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for employment agency surety bonds in popular states.
- EZ Surety has issued employment agency bonds in the State of South Carolina for premiums as low as $100.
- EZ Surety has issued employment agency bonds in the State of Michigan for premiums as low as $100.
- EZ Surety has issued employment agency bonds in the State of New York for premiums as low as $100.