What is an employment agency bond?
Employment agencies in many states must post a surety bond to become licensed to run a business. An employment agency bond protects clients and the state. It also shows that an agency is trustworthy.
The bond ensures that an agency will follow the rules concerning paying taxes and following industry laws and regulations. Some refer to this license and permit bond as a “staffing agency bond.”
Who needs an employment agency bond?
If you intend to run a for-profit business that offers employment placement services – connecting prospective employees with employers – you may need this bond. Employment may include permanent placement or temporary work. Roughly half of the states in the U.S. require this bond.
Check your state and local licensing requirements to determine if you need this bond and in what amount. You may need a separate bond for each business location.
Get Your Employment Agency Bond:
- An employment agency bond guarantees that a business will pay taxes and follow industry laws and regulations.
- If you intend to run a for-profit business that offers employment placement services – connecting prospective employees with employers – you may need this bond.
- Required bond amounts can vary but are $10,000 or less in many states.
How do employment agency bonds work?
An employment agency bond is an agreement between three parties:
- Principal: The staffing or employment agency
- Obligee: The state or local authority that requires the bond
- Surety: The financial company that issues and guarantees the bond
This surety bond will protect your clients if you fail to follow applicable laws or regulations. If you break your surety agreement and cost a client money, they may file a claim against your bond to receive compensation. If the claim is valid, your surety may have to pay the claimant up to the total sum of your bond. You will be responsible for paying them back in full.
How much do these bonds cost?
Employment agency bonds are relatively inexpensive. Required bond amounts can vary but are $10,000 or less in many states. If you have a high credit score and strong business and personal financials, you could pay as low as 1% of the bond amount. If you have poor credit, you could pay upwards of 5-10%.
Get an Employment Agency Bond in Your State
We can help you find the right surety bond for your employment agency. ZipBonds offers the fastest and most secure option for acquiring license and permit bonds. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888-435-4191 to speak with an agent directly.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.