California LLC Employee / Worker Bond

Bond Penalty: $100,000

A California specialty or general contractor that wishes to license and operate his or her firm a limited liability company must file a California LLC Employee Worker surety bond. The State of California has specific concerns with the formation of LLCs as business entities for the use of contracting firms and therefore imposes more severe surety bond requirements that an individual operator who need only file the $15,000 CLB bond. In 2010, the state legislature passed SB 392, authorizing the Contractors’ State License Board to issue licenses to a limited liability company IF a responsible managing manager, officer, member, or employee of the LLC qualifies for the same and files the $100,000 surety bond.

The California LLC employee bond is defined under California Code, Business and Professions Code (BPC §7071.6.5). The obligation ostensibly guarantees "statutory compliance" however in reality it is much more than that. The surety bond contains specific financial guarantees and can been held as a "union w/w bond". There are two distinct statutory obligations:

  • The LLC worker bond must run to the benefit of any employee damaged by the LLC's failure to pay wages, interest on wages, or fringe benefits and is intended to serve as an additional safeguard for workers employed by or contracted to work for the limited liability company.
  • If the licensed LLC is also a party to a collective bargaining agreement, then the LLC employee bond also strictly guarantees welfare fund contributions, pension fund contributions, and apprentice program contributions.

In additions to the generally onerous terms of wage guarantee bonds, the California LLC employee/worker bond includes a significant "tail". Per the language of the obligation, any person with a claim may bring an action in a proper court against the surety bond for the amount of the damage he or she suffered up to two (2) years after the expiration of the license period during which the damages occurred, or within two (2) years of the date of inactivation, cancellation or revocation the the LLC's license, whichever occurs first, the exception being claims for fringe benefits which are limited to six (6) months after the date the fringe benefit delinquencies were discovered, and any civil action filed within two (2) years after the date the fringe benefit contributions were due.

The California Contractors State License Board provides a resource page with all of the forms and instructions for all initial, renewal and license maintenance needs. Each licensee or candidate may submit application materials and contractor bonds to:

California Registrar of Contractors
Contractors State License Board
9821 Business Park Drive
Sacramento, CA 95827

California surety bond leader, Surety One, Inc. is a specialist in providing for the bonding needs of general, specialty and artisan contractors. We offer this class of surety bond and performance bonds to all applicants in EVERY state where contractors must be bonded. Although personal credit is a factor in surety bond underwriting, we have programs to fit every credit condition. Call (800) 373-2804, email Underwriting@SuretyOne.com or click here for a live chat regarding a California LLC employee worker bond application or to discuss your particular needs.

Surety bond application review and quoting are free of charge. There is no obligation to purchase.

MORE ABOUT "CONTRACTOR'S BONDS"
A “contractor’s bond” is one of the most common surety bond needs in the North American market but what does that term mean? MANY different parties may require a contractor to provide a "bond". Private and public project owners, state licensing boards and local municipalities all routinely require contractors to file a bond of one type or another to guarantee very specific things. Generally the need will fall in to one of these categories:

  • License & Permit Bonds (L&P) - required by states and municipalities to issue a contractor license. These may be simply “obey the code” obligations, or can include onerous wage guarantees.
  • Third Party Fidelity Bonds - also known as dishonesty bonds, insure dishonesty losses resulting from the contractor and his or her employees’ actions while providing services on a client’s premises (this is what a party refers to when he says, "We are bonded.").
  • Contract performance bonds: bid bonds, payment and performance bonds for particular projects.

What We Need From You

Additional Attachments

  • Current Certificate of Liability and W/C Insurance