Some employers may require their employees to be bonded as protection against money or property loss due to employee dishonesty. However, many private bonding agencies will not bond job applicants with criminal histories or other questionable past behaviors because they are often categorized as "at-risk" or "not bondable." Being ineligible for private bonding insurance can be an additional employment barrier for many qualified job applicants with past criminal records. The Federal Bonding Program exists to help alleviate employers’ concerns about hiring qualified, but "at-risk," job applicants.

What Is the Federal Bonding Program?

The Federal Bonding Program serves as a job placement tool by guaranteeing to an employer the job honesty of “at-risk,” hard-to-place job applicants.

• The Federal Bonding Program issues fidelity bonds, which are business insurance policies that protect employers in case of theft, forgery, larceny, or embezzlement of money or property by an employee who is covered by the bond. The bond coverage is usually $5000 with no deductible amount of liability for the employer. Higher amounts of coverage, up to $25,000, may be allowed if justified. The bond does not cover liability due to poor workmanship, job injuries, or work accidents.
  
  
• Bond packages are issued by the Department of Labor to a purchasing organization such as a job placement agency or employer. The purchasing organization can be public or private, nonprofit or for profit. Then, the job placement organization or employer is able to bond individuals who other bonding agencies usually will not, such as individuals with criminal records.
  
  
• The bond is put into effect instantly on the first day of employment. The employer simply makes the applicant a job offer and sets a date for the individual to start working. There are no forms or other papers for the employer to sign, and no processing to delay matters.

Who Is Eligible for the Federal Bonding Program?

• Bond coverage is provided for any at-risk job applicant whose background usually leads employers to question their honesty and deny them a job. This includes people with criminal records, people in treatment or recovery for alcohol and/or other drug addictions, and people with little or no work history, including people transitioning from welfare to work.
  
  
• All jobs are bondable in private and public sectors, full and part-time positions, as well as jobs secured through temporary agencies. The bond insurance is free to the employer. It goes into effect the first day of the job applicant’s employment and will terminate after six months. After the six months, continued coverage can be purchased under the program’s bond.

Program Requirements

• The worker must meet the state’s legal age for working.
  
  
• Workers must be paid wages with federal taxes automatically deducted from the pay.
  
  
• The employer must make the applicant a job offer and set a date for the individual to start work.
  
  
• Bonds also can be issued to cover an already employed worker who needs bonding in order to (a) prevent being laid off, or (b) secure a promotion to a new job at the company.

Efficiency and Effectiveness of the Program

• Bonding services as a job placement tool has achieved a 99% success rate. About 41,000 job placements have been made for at-risk persons who were automatically made bondable.
  
  
• It encourages employers to hire people with criminal records. A survey of “Employer Attitudes Toward Hiring Ex-Offenders,” published in The Prison Journal, determined that employers were much more willing to hire people with criminal records who are bonded. The report states “bonding was the only variable to which the majority of employers (51%) responded favorably.”
  
  
• It reduces reincarceration rates and saves money. A Texas A&M comparison group study found that people with criminal records who were released from Texas State prisons and were job placed by the Texas Employment Commission (Project RIO) through use of bonding and other services, had their reincarceration rate reduced by 40%. Most important was that “RIO saved Texas over $10 million per year in potential reincarceration costs, and participants who secured employment generated about $1000 per year in state and local taxes.”

Program History

• Purchasers of the bonds include state employment agencies, Workforce Investment Boards and One-Stop Centers, organizations employing people with criminal records, state departments of corrections, private sector organizations and veteran’s initiatives.
  
  
• In 1966, the U.S. Department of Labor created the Federal Bonding Program. The Fidelity Bonds issued under the Program are insurance policies of the Travelers Property Casualty Insurance Company. The McLaughlin Company in Washington, DC is the agent for Travelers in managing the program nationwide.

To locate your state Federal Bonding Coordinator, visit our Resources, Information, and Assistance section.

For more information, please contact:

Ron Rubbin, Program Director
Federal Bonding Program, ETA/DOL
1725 DeSales Street, NW Suite 700
Washington, D.C. 20036
1-800-233-2258

Joe Seiler, Program Coordinator
Federal Bonding Program
P.O. Box 293535
Lewisville, TX 75029
1-888-266-3562

Also visit www.bonds4jobs.com or the Department of Labor's website: http://wtw.doleta.gov/documents/fedbonding.asp.