Federal Farm Labor Surety Bond Requirement Updated

FederalThe U.S. Department of Labor has introduced modifications to the regulations for farm labor contractors which would keep the surety bond requirement but alter the amount. As of now, the contractor must acquire a surety bond related to the hiring of temporary nonimmigrant laborers (H-2A workers) to ensure that the employer is holding up their contractual responsibilities to the employees and the certification requirements. The surety bond is payable to the Administrator for the Wage and Hour Division of the Department and has to be in the following amounts: $5,000 for 25 or less employees, $10,000 for 25 to 49 employees, and $20,000 for 50 employees or more. There is no set bond form. As a result of a previous rule, SFAA had created a bond form that the Department advised would be satisfactory. The newly proposed rules would create two additional tiers to this bonding requirement for contractors with 75 employees or more. Within the proposal, the existing $20,000 surety bond would be for contractors who have 50 to 74 employees. A $50,000 bond would be demanded from contractors with 75 to 99 employees, and a $75,000 bond would be required for contractors with 100 workers or more. The present rules permit an increase in the surety bond amount with notice and a hearing, if the Administrator displays that the bond is insufficient to meet any possible liabilities. The Proposal notes the Department’s sustained support for the surety bond requirement as it “permits the Department to ensure labor contractors can meet their payroll and other obligations contained in the terms of the job order and the H-2A program obligations.” Present rules and regulations states that the surety’s aggregate liability is limited to the face amount of the bond. The surety is required to pay any amounts to the Administrator for wages and benefits that are owed to H-2A and U.S. workers based on the Department’s concluding decision finding that the contractor had dishonored the rules concerning the labor certification, which the bond is meant to protect. The bond covers any liability encountered throughout the period specified in the labor certification that the contractor listed in their application. The Department asked to require the bond to stay active for no less than two years from the date the labor certification terminates. If the Wage and Hour Division has started any enforcement proceedings against the employer prior to the mentioned date, the surety bond has to remain active until the close of the action and any appeal litigation. The regulations would also boost the notice period for cancellation from 30 to 45 days.