Federal Bonding

Priority of Service:

Priority of Service is given to Veterans and eligible spouses. Veteran, for the sole purpose of Priority of Service, means a person who served at least one day in the active military, naval, or air service, and who was discharged or released under conditions other than dishonorable. Active service includes full-time Federal service in the National Guard or a Reserve component.

Federal Bonding:

 

Background

Jobseekers who have in the past committed a fraudulent or dishonest act, or who have demonstrated other past behavior which casts doubt upon their credibility or honesty, often experience a special barrier to gaining employment due to their personal backgrounds. Such persons are routinely classified as "at-risk" job applicants.

These jobseekers, whose past life experience raises an obstacle to their future ability to secure employment, could benefit from the Federal Bonding Program. Created in 1966 by the U.S. Department of Labor, the Federal Bonding Program helps to alleviate employers concerns that at-risk job applicants would be untrustworthy workers by allowing them to purchase fidelity bonds to indemnify them for loss of money or property sustained through the dishonest acts of their employees.

return to top

What is the Federal Bonding Program?

An innovative activity that serves as a tool to secure the job placement of ex-offenders and other high-risk applicants. The program, sponsored by the U.S. Department of Labor, issues Fidelity bonds.

return to top

What is a Fidelity Bond?

It is a business insurance policy that protects the employer in case of any loss of money or property due to employee dishonesty. It is like a "guarantee" to the employer that the person hired will be an honest worker.

The Fidelity Bonds issued under the Federal Bonding 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.

return to top

How does the Bond help someone get a job?

The bond is given to the employer free-of-charge, and serves as an incentive to the company to hire a job applicant who is an ex-offender or has some other "risk" factor in their personal background. The employer is then able to get the workers' skills without taking any risk of worker dishonesty on the job.
In addition, employers may receive up to a $2400 - $9000 tax credit for hiring an individual who has been convicted of a felony and/or released from incarceration or another WOTC targeted program. For more information go to:  Tax Credits.

return to top

What exactly does the Bond Insurance cover?

It insures the employer for any type of stealing by theft, forgery, larceny, or embezzlement. It does not cover liability due to poor workmanship, job injuries, or work accidents. It is not a bail bond or court bond for the legal system. It is not a contract bond, performance bond, or license bond sometimes needed to be self-employed.

return to top

What restrictions exist in the Program's Bond coverage?

The worker must meet the State's legal age for working; there are no age limits. The job may be full time, part time, or seasonal. Workers must be paid wages with Federal taxes automatically deducted from pay; self-employed persons cannot be covered.

return to top

Who does the program help?

Bond coverage is provided for any persons whose background usually leads employers to question their honesty and deny them a job. The program will cover any person who is a "risk" due to their being in one or more of the following groups:

  • ex-offender with a record of arrest, conviction or imprisonment; anyone who has ever been on parole or probation, or has any police record
  • ex-addict who has been rehabilitated through treatment for alcohol and drug abuse
  • poor credit record or have declared bankruptcy
  • persons lacking a work history who are families with low income
  • dishonorably discharged from the military

 

return to top

Who must request issuance of the Fidelity Bond?

Issuance of the bond for job placement to occur can be requested by either the employer or the job applicant. This request is to be made to the local agency certified by the Federal Bonding Program.

return to top

Can the Bond be issued at anytime?

For the bond to be issued, the employer must make the applicant a job offer and set a date for the individual to start work. The job start date will be effective date of the bond insurance which will terminate six months later. After the six months, continued coverage will be made available for purchase if the worker has exhibited job honesty under the program's bond.

return to top

In what time period is the Bond effective?

The initial Fidelity bond is issued for a six-month period.

return to top

How much Bond insurance coverage will be issued?

A total of $5,000 bond coverage is usually issued, with no deductible amount of liability for the employer. Larger bond amounts can possibly be issued if the certified agency issuing the bonds has acquired a special bond package and has determined that larger bond amounts are appropriate.

return to top

How many people have been helped by the program?

About 40,000 applicants have obtained jobs due to being bonded, and 99% have proven to be honest employees.

return to top

Where can I get more information on Bonding Services?

return to top

Required forms:

(to be completed by Colorado Workforce Center staff ONLY)