Detailed Program Bonding Requirements.docx

The Office of Employment and Training is seeking a contract for Federal Bond coverage to provide fidelity bonds to employers to insure their business if they hire at-risk, hard-to-place job seekers who are unable to secure private coverage. Many private bonding companies will not bond job seekers with criminal histories or questionable past behaviors, so they are not hired.

Federal Bond Specs.

As for program history , the Department of Labor (DOL or Department) is committed to helping those involved in the criminal justice system, including ex-offenders recovering from opioid and other drug addictions, obtain employment in family-sustaining jobs; better informing employers about the knowledge, skills, and abilities of this population; and advancing strategies to address the barriers to reemployment. Through the Federal Bonding Program (FBP), established in 1966 to provide fidelity bonds to employers to insure their business if they hire at-risk, hard-to-place job seekers who are unable to secure private coverage the Department provides fidelity bonds to employers to help reduce the risks of hiring individuals whose criminal backgrounds pose barriers to securing employment. Many private bonding companies will not bond job applicants with criminal histories or questionable past behaviors, so they are not hired. FBP is authorized under Section 169 of the Workforce Innovation and Opportunity Act (WIOA). Over the years, FBP has remained a small program, currently serving an estimated 934 ex-offenders a year.

The goals of the FBP include:

1. Improving employment outcomes, which in turn decreases recidivism, for persons with criminal records by encouraging states and workforce development partners to provide fidelity bonds to employers as a hiring tool for persons with criminal records;

1. Educating employers and the public on the availability and benefits of fidelity bonds for persons with criminal records; and

1. Providing outreach to employers to encourage them to hire persons with criminal records.

Specifically, the Federal Bonding Program provides a fidelity bond that is a limited-liability insurance policy at no cost to the job applicant or employer. The federal fidelity bond insures employers against theft, forgery, larceny or embezzlement by the bonded employee for the first six months of employment. The bond does not cover liability due to poor workmanship, job injuries or work accidents. It does not provide bail, contract or performance bonds, or license bonds for self-employment.

New hires in one of the following categories are eligible:

• Ex-offenders

• Individuals in recovery from substance use disorders

• Public assistance recipients

• Individuals with poor credit records

• Economically disadvantaged youth and adults who lack work histories

• Individuals dishonorably discharged from the military

• Economically disadvantaged persons who lack a stable work history

• Anyone already employed who needs bonding to prevent termination or secure a transfer or promotion

Bonds can be issued as soon as the applicant has started a job. Workers must be paid wages with federal taxes automatically deducted from pay; self-employed persons cannot be covered. Part-time and temporary workers are eligible.

Each bond is issued for $5,000 coverage for a six-month period. Exceptions are possible based on the situation and in some instances more than one bond may be attached to an individual. When the initial bond coverage expires, employers can purchase continued bond coverage from insurer if the worker has demonstrated job honesty.

At a minimum, these fidelity bonds must include the following:

1. Bonds must reimburse employers for losses due to the illegal acts of their employees, such as, theft, forgery, and embezzlement;

1. Bonds must provide at least $5,000 of coverage;

1. Bonds must be allowed to be used in multiples to cover an individual employee, totaling up to $25,000 of coverage per employee; and

1. Bonds must provide coverage for at least six months.

1. Purchased bonds by the state must not expire

1. Employers must be able to purchase additional bonds if desired