What is an H-2A Surety Bond for Farm Labor Contractors?
An H-2A Surety Bond – also referred to as the H-2A Migrant Farm Contractor Bond or the H-2A Program Bond – is required by the U.S. Department of Labor, Wage and Hour Division (USDOL WHD) for H-2A farm labor contractors to meet the H-2A requirements for the agriculture industry.
The bond ensures that farm labor contractors will be able to perform their agricultural duties and protect H-2A migrant workers from maltreatment, exploitation, and other harmful situations.
H-2A workers are authorized by the Immigration and Nationality Act. They are conditional non-U.S. citizens that are lawfully admitted to working in the U.S. to meet the high demand for agriculture labor.
Why do you need an H-2A Surety Bond?
The Migrant and Seasonal Agricultural Worker Protection Act (MSPA) has established employment standards to protect migrant and seasonal agricultural workers. Persons who are subjected to MSPA as Farm Labor Contractors (FLCs) must register with the USDOL WHD.
FLCs are individuals or organizations that act as agricultural employers. These agricultural employers expect a shortage of U.S. migrant workers needed to work on seasonal or temporary agricultural labor.
FLCs must possess a valid Federal Employer Identification Number (FEIN).
FLCs must carry a Farm Labor Contractor Certificate of Registration before conducting any farm labor contracting activity. An H-2A Surety Bond is required to obtain the Certificate of Registration. FLCs will need to submit both the surety bond application with the H-2A application to USDOL.
An H-2A Bond is important because:
- It ensures that FLCs are engaging in a fair and ethical employment practices of U.S. migrant workers.
- It increases positive employment where it requires foreign nationals to have a job even if temporary.
- H-2A workers receive benefits, such as housing and transportation at no additional cost.
How does the H-2A Surety Bond work?
The H-2A Surety Bond aims to protect the H-2A workers from unscrupulous FLCs. The bond will cover liabilities incurred during the term of the work contract that the FLC listed in their application.
If there is a claim made on the bond and an FLC has violated the terms of the bond agreement, a Surety (bonding company) will be required to pay any amount to the Administrator for wages, benefits, and interests that are owed to H-2A workers. This will be based on the Department’s decision in finding proof that the FLC has breached the rules of labor certification, which the bond is designed to protect. Once the claim is filed, the FLC will have to pay the Surety back.
How long does the H-2A Surety Bond remain effective?
USDOL requires the bond to stay active for at least two years from the date the labor certification terminates.
If WHD has commenced any enforcement proceedings against the FLC before the mentioned date, the bond has to remain active until the close of the action and any appeal litigation. The regulations would also extend the notice period for cancellation from 30 to 45 days.
How much does an H-2A Surety Bond cost?
According to USDOL, here are the bond amounts:
- $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; and
- $75,000 for a labor certification with 100 or more employees.
The premium cost (the amount the customer pays to a surety bond company) is a percentage of the bond amount. The percentage varies depending on credit, experience and financial stability.
How do I get an H-2A Surety Bond?
First, you will want to find a reliable surety bond partner who is experienced in the H-2A program requirements and can guide you through the necessary steps.
Requirements for the bond include the following:
- Completed bond application
- 790 form
- Financial credentials
- Bond form (may be obtained from the Obligee – in this case, it’s the Department)
The Surety will review your application and contact you with a firm quote to rate your surety bond.
For more information about how to get your H-2A Surety Bond, please do not hesitate to contact us today! We will assist you with the H-2A FLC requirements and provide an easy and fast application process to meet your bonding needs.