Overview
In 1966, the U.S. Department of Labor (USDOL) created the Federal Bonding Program as an employer job hire incentive that guaranteed the job honesty of at-risk career seekers. Federal financing of Fidelity Bond insurance, issued free-of-charge to employers, enabled the delivery of bonding services as a unique job placement tool to assist ex-offenders, and other at-risk/hard-to-place job applicants (e.g., recovering sub-stance abusers, welfare recipients, poor credits, etc.)
Employers receive the bonds free-of-charge as an incentive to hire hard-to-place job applicants as wage earners. The Federal Bonding Pro-gram bond insurance was designed to reimburse the employer for any loss due to employee theft of money or property, with no deductible amount to become the employer’s liability (i.e., 100% bond insurance coverage). The USDOL experiment has proved to be a great success, with over 42,000 job placements made for at-risk career seekers who were automatically made bondable.
WHAT IS FEDERAL BONDING?
- Insurance to protect employers against employee dishonesty
- Covers any type of stealing: theft, forgery, larceny, and embezzlement
- In effect, a guarantee of worker job honesty
- An incentive to the employer to hire an at-risk job applicant
- DOES NOT cover ‘liability” due to poor workmanship, job injuries, work accidents, etc.
- Is NOT a bail bond or court bond needed in adjudication
- Is NOT a bond needed for self-employment (contract bond, license bond or performance bond)
WHO IS ELIGIBLE FOR BONDING SERVICES?
- Any at-risk job applicant is eligible for bonding services, including: ex-offenders, recovering substance abusers (alcohol or drugs), welfare recipients and other persons having poor financial credit, economically disadvantaged youth and adults who lack a work history, individuals dishonorably discharged from the military, and others
- Anyone who cannot secure employment without bonding
- All persons bonded must meet the legal working age set by the State in which the job exists
- Self-employed persons are NOT ELIGIBLE for bonding services (bondee must be an employee who earns wages with Federal taxes automatically deducted from paycheck)
- Bonds can be issued to cover already employed workers who need bonding in order to (a) prevent being laid off, or (b) secure a transfer or promotion to a new job at the company
- Bonding coverage can apply to any job at any employer in any State
WHY IS FEDERAL BONDING NEEDED FOR JOB PLACEMENT?
- Employers view ex-offenders and other at-risk career seekers as potentially untrustworthy workers, thereby, denying them job hire
- Insurance companies will not cover risky job applicants under commercial Fidelity Bonds purchased by employers to protect themselves against employee dishonesty
- Anyone who has ever “committed a fraudulent or dishonest act” is deemed NOT BONDABLE by insurance companies; a situation leading to routine denial of employment opportunities for such persons
- Being NOT BONDABLE is a significant barrier to employment possessed by the hardest-to-place job applicants; this barrier can be eliminated only by The Federal Bonding Program
- Job bonding enables the employer to “obtain worker skills without taking risk”
- Persons who are NOT BONDABLE can ultimately become commercially BONDABLE by demonstrating job honesty during the 6 months of bond coverage under the Federal Bonding Program (such commercial bonding will be made available by the Travelers Casualty and Surety Company of America)