Effective January 1, 2019, California requires foreign labor contractor applicants to file a Foreign Labor Contractor Bond with the Labor Commissioner through a viable surety company authorized to do work in the state. The contractor must maintain the ownership of this bond as long as they remain in business.
Why are Foreign Labor Contractor Bonds required?
The reasoning behind why a contractor must obtain this bond is because it works to protect workers and their rights. The bond prevents contractors from taking advantage of workers in a variety of ways, for example, unfair working conditions.
How do I get a Foreign Labor Contractor Bond in California?
Contractors can apply for a California Foreign Labor Contractor Bond online 24/7 or call 1(800)308-4358 to speak with a surety expert about their bonding needs.
How do I determine my bond amount for a California Foreign Labor Contractor Bond?
There are a few factors that come together to affect the required amount of the bond the individual must acquire. To begin, the contractor must submit the total amount of gross receipts for their last 12 months of business leading up to their application.
In this context, the definition of “gross receipts” is the total income the applicant has received in the past year. This does not just mean traditional forms of payment, it encompasses anything of value the applicant came into possession of. This includes promissory notes, credit, or any items of value, for the exchange of goods, or for services the applicant or their employees provided.
The applicant, when calculating this amount, should not adjust any income receipts for any sort of expenses such as rent, utilities, or interest. The applicant is responsible for delivering proper documentation to verify their income within 15 days of placing their request.
The information gleaned from these documents will determine the cost of the bond. The amount will range from $50,000 to $150,000.
An applicant may have their application or renewal of registration denied if they either fail to provide the necessary documentation or submit information that could be considered false or misleading.
If an applicant receives approval and then fails to maintain the ownership of a surety bond, the Labor Commissioner will suspend the contractors registration, and possibly revoke it entirely. If and when a contractor closes their business, the commissioner will keep a record of the possession of the surety bond for a maximum of six months post closure.