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Bond Package Availability and Purchase

Since 1966 there have been many changes in the financing and administration of The Federal Bonding Program (FBP). However, the US Department of Labor (USDOL) has continued to actively sponsor and support the program.

With enactment of the Workforce Investment Act (WIA) in 1997, USDOL determined that State and local funds (including Federal funds allocated to State and local level entities) were to be used to purchase bonds, and any State or local agency (public or private, profit or non-profit) could acquire bonds and deliver bonding services through the purchase of a bond package.

To facilitate the purchase of a bond package, the following actions were taken by The McLaughlin Company (exclusive agent of the Travelers Casualty and Surety Company of America; referred to hereafter as TRAVELERS for bonds issued under FBP):

• Bond cost was set at a level equivalent to that previously financed by USDOL before WIA enactment.
• Procedures for bond issuance were simplified to support instant job placement.
• Full discretion was given to the purchasing organization regarding client eligibility determination, employers and jobs selected for bonding, records maintained, and bond amounts issued to employers.

Any organization (public or private, nonprofit or profit) that provides job placement services to ex-offenders and/or other at-risk job applicants can purchase a bond package on condition that the Fidelity Bonds will be used as a job placement tool without charge to any employer or job applicant for the bonds (i.e., the bonds cannot be resold by the purchaser).

Key Bond Purchase Features

1. Fidelity Bonds can be purchased in packages of 25, 50, 75, and 100 bond units. Each bond unit provides $5,000 employee dishonesty insurance for a six-month period.

2. Bond package costs are as follows:
 

NOTE: If necessary, two or more agencies can combine resources to purchase a bond package.

3. Bond units purchased must be issued to employers within 24 months following the date of bond package purchase. Once issued, each unit of bonding provides the employer with 6-months insurance coverage starting the first day of work for the bondee (i.e., the individual worker at a specific employer who is covered by the bond).

4. The number of bond units issued to cover any particular bondee is determined by the organization that purchases the bond package. Past experience shows that only one bond unit ($5,000 coverage) is sufficient to facilitate most job placements. From 1 to 5 bond units can be issued for the six-months of coverage. Therefore, bond amounts will be either $5,000, $10,000, $15,000, $20,000, or $25,000.

5. Upon expiration of the initial six-months of bonding, the bond issued free-of-charge to the employer can be renewed by the purchasing organization (covering the same worker at the same employer). However, the Travelers will make the bond available for purchase by the employer at a regular commercial rate after the six-months of free bonding if the worker has demonstrated honesty (i.e., no claim has been paid for employee dishonesty).

6. Included in the cost of each bond package is 24 months of technical assistance provided by The McLaughlin Company. This assistance pertains to bond issuance, processing, and utilization; dissemination of information on exemplary practices and new policy developments; the design of sample brochures and other informational materials; as well as the availability of the toll-free hotline 1-800-233-2258 to address any daily technical assistance needs of staff of the purchasing organization.

Actions to Purchase a Bond Package

• Complete the FIDELITY BOND PURCHASE AGREEMENT (a copy of the Agreement and related explanatory information are shown in this document).
• Return the signed AGREEMENT with full payment or purchase order.

Also…

• Call Ron Rubbin at 1-800-233-2258, ext. 246, to arrange immediate bond use.
• Alert operating staffs to the utility and administrative ease in use of the unique resource of bonding services as a job placement tool for the hardest-to-serve applicants. A set of FBP self-training materials for staff development is available to facilitate successful implementation of bonding services delivery.