Increased Car Wash Bond in California as of January 2014

From $15,000 to $150,000. That’s the surety bond increase that car washes in California are facing from January 1, 2014.

If you are running a car wash business, the useful information below can help you figure out what the legislation change is about and how to cope with the new bonding requirement.


Legislation changes

The significant surety bond increase comes as a result of the passing of the AB 1387 bill last year. Among other changes, it also alters some sections of California’s Labor Code. This touches upon car wash and automatic car wash employer’s surety bond requirements, replacing all old legislation in the field.

According to the new bill, the surety bond is not needed in cases when the employer has signed a collective bargaining agreement that sets wages, work hours, working conditions and a procedure for cases of wage non-payment.

The new rule also defines the car wash registration requirement as permanent.


Car wash bonds

Car washing and polishing businesses need to register with the Labor Commissioner in California in order to run their activities legally. Car wash owners need to obtain a California car wash employer’s surety bond as a part of the registration certificate procedure.

The car wash bond is a type of commercial surety bond. It acts as a guarantee that the owner will abide by the labor law and make the necessary payments to all employees. Thus, it is a protection for car wash and polishing services personnel.

Car wash employees

Car wash employees
cradlehall / Flickr / CC BY

The surety bond is posted by the principal, in this case a car wash, to guarantee to the obligee demanding the bond, the State of California Division of Labor Standards Enforcement, that this business will follow the state rules in its operations. The surety that underwrites the bond guarantees that the principal will follow its obligations to the obligee.


Getting bonded in California

While the increase is certainly a challenge for many car wash owners, getting bonded, even with far-from-perfect credit can be made easier if you choose the right surety bond agency.

The price of the surety bond is a percentage of the $150,000 bond amount. Rates vary depending on the specific financial and business situation of the car wash. Businesses perceived to be a higher risk may face higher prices in the bonding process.

Obtaining a surety bond can be difficult if your financial status is not good, as many surety agencies examine a variety of factors during the bonding process. However, other agencies such as JW Surety Bonds focus only on the personal credit score.  Higher risk bonding is possible at JW Surety due to our large business volume, which allows flexibility in the bonding process.  You can get an online quote with ease.

Eric is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog. He has held a range of different roles within the surety industry, from agent assistant to bond issuer, which gives him a unique insider perspective on surety related topics.


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