H-2A Farm Labor Contractor Bond

In the agricultural sector, ensuring that both employers and workers are protected is a top priority - especially when hiring and managing non-US labor through programs like H-2A. In order to legally employ non-US workers, contractors must be both licensed and bonded.

The licence is a H-2A Temporary Agriculture Program certification issued by the US Department of Labor under the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The Farm Labor Contractor Bond is a financial guarantee required by law for contractors who recruit, hire, transport, or house agricultural workers.

A Farm Labor Contractor Bond is a type of surety bond mandated by the US Department of Labor (DOL) for individuals or businesses who wish to become certified farm labor contractors (FLCs) under the H-2A visa program or other agricultural labor programs.

This bond ensures that if a contractor fails to adhere to employment laws - such as wage and hour regulations, safe transportation, or housing standards - workers or the government can file a claim to recover financial losses. It holds the contractor accountable for any violations that may harm workers or employers.

Who Needs a Farm Labor Contractor Bond?

Any individual or business seeking to register as a Farm Labor Contractor (FLC) or Farm Labor Contractor Employee (FLCE) under the H-2A program must secure this bond. This includes anyone who:

• Recruits, solicits, or hires agricultural laborers
• Transports or houses migrant or seasonal farm workers
• Provides employment or work assignments in the agricultural industry
   

It is important to note that not all US states participate, but states that do adhere to this program include California, Florida, Texas, Georgia, North Carolina, South Carolina, New York, Oregon and Washington. Laws and regulations are constantly evolving so we recommend staying up to date. You can find more information here.

Farm labor contractor bonds are structured as three-party agreements:

1. Principal: The farm labor contractor who is required to get bonded.
2. Obligee: The US Department of Labor or other licensing authority requiring the bond.
3. Surety: The bonding company that issues the bond and provides financial assurance.

If the contractor violates labor laws, the injured party can file a claim against the bond. If the claim is valid, the surety pays out damages up to the maximum bond amount. The contractor is then responsible for reimbursing the surety. All bond claims must go through an investigation process to confirm their validity before payment is made.

The requirement for a farm labor contractor bond is laid out in the MSPA. Under this agreement and the Department of Labor’s H-2A program you must be an employer located in the US and require work that is considered agricultural. You must also have work that is temporary or seasonal in nature, generally tied to a recurring cycle. If you meet the criteria then you may start the application process through the FLAG online filing system.

In addition, you must also remember that:

• Bond amounts vary based on the number of workers and activity.
• Contractors must renew bonds annually to maintain compliance.
• Contractors must submit proof of bonding when applying or renewing their registration.
   

Failure to comply can result in civil penalties, denial of certification, or suspension of operating privileges.

The cost to obtain a bond, or premium, is a percentage of the total bond amount and typically between $100 and $5,000. The percentage is determined by factors like:

• Credit score and financial history (those with good credit will typically pay between 1% and 3%)
• Experience in the industry
• Number of workers employed
• Size of the bond (ranging from $5,000 to over $75,000 depending on worker count)
   

For contractors with good credit, premiums typically range between 1% and 5% of the total bond value. As a cost guide, a $20,000 bond may cost between $200 and $1,000 annually. Contractors with poor credit may pay higher rates.

Securing a bond involves a few straightforward steps:

1. Evaluate Your Bond Requirement
   Determine the bond amount you need based on the number of H-2A workers you plan to hire and your service scope.
2. Choose a Reputable Surety Provider
   Work with a licensed and experienced surety agency familiar with DOL and H-2A compliance, who often provide a free quote.
3. Complete the Application
   Provide financial documentation, business information, and personal background as requested.
4. Undergo Credit and Risk Assessment
   The surety will evaluate your credit and business history to determine your premium.
5. Receive Your Quote
   After underwriting, you’ll be provided with a bond quote outlining the premium and terms.
6. Pay the Premium and Receive the Bond
   Once payment is made, the bond is issued and sent to you. You can then submit it to the Department of Labor.

Farm labor contractor bonds are generally valid for one year and remain active for the term of the approved work order plus three additional years. Failure to renew the bond before it expires may result in a suspension or revocation of your FLC registration.

If a contractor ceases operations or fails to meet obligations, the bond can be canceled by the surety with proper notice to the DOL. However, the contractor remains liable for any claims filed while the bond was active.

Can you get this surety bond with bad credit?

Yes, you can get this bond with bad credit although this may result in higher premiums. It’s still possible to qualify for a bond, particularly with a strong business track record or by providing collateral.

What is the validity period of a farm labor contractor bond?

The bond is typically valid for 12 months and must be renewed annually. Failure to do so can lead to the loss of registration and the right to operate as a farm labor contractor.

Can bond amounts change over time?

Yes. The Department of Labor may adjust the required bond amount based on changes in the number of workers employed, the scope of services provided or the contractor’s compliance record.

What happens if you don’t renew the bond?

If the bond is not renewed before expiration your farm labor contractor license may be suspended or revoked, you could face penalties and legal consequences or you may be held personally liable for any violations during the lapse period.

U.S. Department of Labor. (n.d.-a). H-2A temporary agricultural program. Retrieved April 9, 2025, from
https://www.dol.gov/agencies/eta/foreign-labor/programs/h-2a

U.S. Department of Labor. (n.d.-b). Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Retrieved April 9, 2025, from
https://www.dol.gov/agencies/whd/agriculture/mspa

U.S. Department of Labor. (n.d.-c). Home. Retrieved April 9, 2025, from
https://www.dol.gov/

Electronic Code of Federal Regulations. (n.d.). 29 CFR Part 501 - Enforcement of contractual obligations for temporary alien agricultural workers designated H–2A. Retrieved April 9, 2025, from
https://www.ecfr.gov/current/title-29/subtitle-B/chapter-V/subchapter-A/part-501

Foreign Labor Application Gateway (FLAG). (n.d.). H-2A program. Retrieved April 9, 2025, from
https://flag.dol.gov/programs/H-2A

Lance Surety Bonds. (n.d.-a). Bad credit surety bonds. Retrieved April 9, 2025, from
https://www.lancesuretybonds.com/learn/bad-credit-surety-bonds

Lance Surety Bonds. (n.d.-b). Surety bond cost: What affects your bond price? Retrieved April 9, 2025, from
https://www.lancesuretybonds.com/learn/surety-bond-cost

Lance Surety Bonds. (n.d.-c). Surety bond quote. Retrieved April 9, 2025, from
https://www.lancesuretybonds.com/surety-bond-quote