Date Published: January 31, 2024
H-2A Farm Labor Contractor Surety Bond Guide | Surety1.com
Key Purpose:
The H-2A Farm Labor Contractor Surety Bond’s primary purpose is to protect H-2A workers and the U.S. Department of Labor (DOL). It serves as a financial guarantee that the H-2ALC will fulfill all its legal obligations, including:
- Paying workers at least the Adverse Effect Wage Rate (AEWR).
- Providing suitable housing that meets federal standards.
- Arranging transportation to and from the worksite
- Adhering to all applicable labor laws, including those related to safety, health, and working conditions.
Who needs one?
- Any person or entity acting as an H-2ALC must obtain a surety bond. This includes:
- Farm owners or operators who recruit and employ H-2A workers directly
- Crew leaders or recruiters who act on behalf of farmers
- Third-party contractors who provide housing, transportation, or other services to H-2A workers
How much is the bond amount?
Here are the tiers provided by the U.S. Department of Labor (DOL):
- Fewer than 25 workers: $5,000 bond
- 25-49 workers: $10,000 bond
- 50-74 workers: $20,000 bond
- 75-99 workers: $50,000 bond
- 100 or more workers: $75,000 bond
While these are the base amounts, the actual required bond amount can be further adjusted. According to the 2022 Final Rule, the base amount is multiplied by the average Adverse Effect Wage Rate (AEWR) in effect at the time of bond submission, and then divided by $9.25. This means the required bond amounts will vary based on changes in the average AEWR, which the DOL calculates and publishes.
For example, a $5,000 base bond for fewer than 25 workers might become around $9,178.38 if the average AEWR is $16.98 per hour (as seen in some recent calculations: $5,000 x $16.98 / $9.25).
Additionally, for labor certifications involving 150 or more workers, the bond amount applicable to 100 or more workers ($75,000) is further increased. This increase is calculated as two weeks of wages for every additional 50 workers beyond the 100 mark, using the average AEWR
The cost of the surety bond is usually between 1% and 3% of the bond amount, subject to a minimum premium and fees of $150.
How do I get a bond?
At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:
- Complete the easy to navigate and secure online application. 1
- Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day. 2
- Sign some paperwork and pay the bond premium
Once these steps have been completed, the H-2A Farm Labor Contractor Surety Bond will be shipped to the bond applicant.
1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.
2- Subject to underwriter approval, based on aggregate surety bond exposure, additional underwriting information may be required
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Important things to remember:
- The bond must be in effect for the entire duration of your H-2A certification, plus two years after expiration.
- You must maintain good financial standing throughout the bond period.
- If you fail to comply with your obligations, the DOL can file a claim against the bond to compensate workers for their losses.
- It’s crucial to understand the specific terms and conditions of your bond agreement.
Additional resources:
- U.S. Department of Labor: https://www.dol.gov/agencies/whd/agriculture/h2a
- Fact Sheet #26H: H-2A Labor Contractor (H-2ALC) Surety Bonds: https://www.dol.gov/agencies/whd/fact-sheets/26h-h2a-labor-contractor-surety-bonds
Frequently Asked Questions about H-2A Farm Labor Contractor Bonds
An H-2A visa is the temporary agricultural worker visa obtained by foreign workers, allowing them to enter the U.S. for seasonal farm work. An H-2A Farm Labor Contractor bond, however, is a financial guarantee provided by the employer (the H-2ALC) to the DOL, ensuring they fulfill their obligations to those visa holders, protecting the workers and the government.
While credit is a factor in surety bond underwriting, having less-than-perfect credit does not automatically disqualify you. Surety1.com works with multiple surety companies and can often find solutions for applicants with credit challenges, sometimes through specific programs or with additional collateral.
For most qualified applicants with complete information, Surety1.com can typically provide a quote within one business day, and the bond can often be issued shortly after payment and paperwork are finalized. Complex cases might require additional underwriting time.
H-2ALC stands for H-2A Labor Contractor. You are considered an H-2ALC if you recruit, solicit, hire, furnish, or transport H-2A workers, or if you house or provide meals for them, for a fee. This applies whether you are the primary agricultural employer or a third-party intermediary.
If a claim is filed by the DOL or a worker, the surety company will investigate its validity. If the claim is determined to be valid, the surety will pay the claim up to the bond amount. As the principal (bondholder), you are then legally obligated to reimburse the surety for any amount paid out, as the bond is a guarantee of your obligations, not an insurance policy for you.
The information provided above is for general informational purposes only and does not constitute legal advice. Do not rely solely on the information presented here as a substitute for professional legal counsel.
Surety1 was founded in 2003 and helps thousands of clients find the best prices on their surety bonds. We take pride in our work so that we can give you great service. Learn more about Surety1.