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Why is a California LLC Employee Worker Bond Required?
The California Contractors State License Board (CSLB) requires limited liability companies (LLCs) obtaining a contractors license to purchase a $100,000 employee/worker bond to protect the employees and those contracted to work for the LLC from the:
- Failure to pay wages
- Failure to pay interest on wages
- Withholding fringe benefits promised
- Plus other obligations and promises made as compensation
Employee Collective Bargaining Agreement
If an LLC's employees are part of a collective bargaining agreement, the bond further covers:
- Welfare fund contributions
- Pension fund contributions
- Apprentice program contributions
What Is The Cost of an LLC Employee Worker Bond?
The cost to purchase LLC employee worker surety bond is based on a rate quoted by a surety. A surety is the insurance company that underwrites surety bonds.
Every surety will use these factors when determining an individual application to determine a rate:
- The personal credit of the LLC members
- The financial standing of the LLC
- The previous experience of the LLC in the contractor field
- Prior bond claims in the LLC’s name if applicable
While each surety (generally) uses the same factors to determine a rate, they also use their own underwriting guidelines. This means the rates quoted by each surety can vary enough to save you hundreds of dollars on the price.
Why Use Surety Bonds Direct?
This is why using a specialized surety agency like Surety Bonds Direct is so important.
Surety Bonds Direct works with the top A rated sureties and can price shop rates to get you the lowest price. This can save you hundreds of dollars on a bond with such a large bond amount.
Here are some examples of bond prices based on great rates to average rates.
| Bond Amount | Surety Bond Rate | Price You Pay |
|---|---|---|
| $100,000 | 1% | $1,000 |
| $100,000 | 1.5% | $1,500 |
| $100,000 | 2% | $2,000 |
| $100,000 | 2.5% | $2,500 |
| $100,000 | 3% | $3,000 |
| $100,000 | 3.5% | $3,500 |
The only way you will know your exact price is to request a free, no-obligation, price quote today.
It typically takes your bond specialist a few business hours to find the lowest rate. Then you'll have exact pricing so you can decide on the next course of action for your business and timeline. Keep in mind, this is a requirement by the CSLB.
Request a free bond quote online or call a bond specialist at 1-800-608-9950.
What Are The Other Specific Requirements For LLCs to Obtain a Contractors License?
LLCs must be in good standing with the California Secretary of State.
Provide an active registration number.
Obtain Your Contractor License Bond
Obtain contractor license surety bond. All California contractor licenses require a $25,000 contractor license bond.
This surety bond is for the protection of the contractor's customers. Get a free online quote for the LLCs license bond or contact a bond specialist at 1-800-608-9950 to obtain both quotes over the phone.
Purchase Required Liability Insurance
Secure at least the minimum amount of liability insurance to meet requirements. For LLCs with five or fewer persons and/or companies listed as personnel of record, a minimum liability insurance coverage of $1 million is required.
An additional $100,000 is required for each additional person listed, not to exceed a maximum coverage of $5 million.
Detail All Personnel of Record
Every person and/or company that is an officer, responsible manager, member, or director of the LLC must be listed on the license application. Each personnel of record is required to submit fingerprints.
LLCs may have members (officers) who are not listed on the official Secretary of State record, but who must be listed on this application and who will become part of the contractor license. The Contractor State License Board will verify the number of managers and members listed on the Secretary of State record to ensure the application is correct and to accurately calculate the necessary liability insurance amount.
LLCs With Corporations Or Other LLCs Listed As Managers and/or Members
The full personnel of record for these LLCs must be listed on the application as well. One individual must be an authorized signer for the company. This individual will not be part of the official license personnel of record (unless they're a member of the applicant LLC). This individual's information is kept on record at the Contractor State Licensing Board for future signing purposes only.
LLC Bond of Qualifying Individual
The LLC does not have to purchase a qualifying individual bond for the qualifying individual of the LLC if the individual has a 10% membership interest in the LLC or greater.
If the membership interest is less than 10% or zero, the LLC will be required to purchase a qualifying individual bond in addition to the contractor's license bond and LLC employee/worker bond.
LLC Employee Worker Bonds And Getting Your California Business License/Registration
What Are The Other Specific Requirements For LLCs to Obtain a Contractors License?
- LLCs must be in good standing with the California Secretary of State.
- Provide Active Registration Number.
- Obtain Contractors License Surety Bond
All California contractor licenses require a $25,000 contractor license bond.
This surety bond is for the protection of the contractor's customer base. - Liability Insurance Minimum
For LLCs with five or fewer persons and/or companies listed as personnel of record, a minimum liability insurance coverage of $1 million is required.
An additional $100,000 is required for each additional person listed, not to exceed a maximum coverage of $5 million. - Personnel of Record
Every person and/or company that is an officer, responsible manager, member, or director of the LLC must be listed on the license application. Each personnel of record is required to submit fingerprints.
LLCs may have members (officers) who are not listed on the official Secretary of State record, but who must be listed on this application and who will become part of the contractor license. The Contractor State License Board will verify the number of managers and members listed on the Secretary of State record to ensure the application is correct and to accurately calculate the necessary liability insurance amount. - LLCs With Corporations Or Other LLCs Listed As Managers and/or Members
The full personnel of record for these LLCs must be listed on the application as well. One individual must be an authorized signer for the company. This individual will not be part of the official license personnel of record (unless they're a member of the applicant LLC). This individual's information is kept on record at the Contractor State Licensing Board for future signing purposes only. - LLC Qualifying Individual Bond
The LLC does not have to purchase a qualifying individual bond for the qualifying individual of the LLC if the individual has a 10% membership interest in the LLC or greater.
If the membership interest is less than 10% or zero, the LLC will be required to purchase a [qualifying individual bond](/surety-bond/bond-of-qualifying-individual) in addition to the contractor's license bond and LLC employee/worker bond.