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LLC employee/worker bond cost

The cost of every surety bond is dependent upon the amount of the bond required by the obligee. In the case of LLC employee/worker bonds, the amount is set at $100,000 by the Contractors State License Board, or CSLB. Since this bond amount is quite large, the premium an applicant should expect to pay will be determined by underwriters after they have reviewed the applicant’s personal credit.

For applicants with exceptional credit, these bonds are typically written for just 2% of the total bond amount. So, for a $100,000 bond, the price would be just $2,000 per year. Please note that those wishing to purchase a California LLC employee/worker bond must also obtain a $15,000 contractor license bond

Why this bond

The California Business and Professionals code, Section 7071.6.5 requires that an LLC wishing to receive a license must purchase a $100,000 surety bond in order to protect employees from damage resulting from the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as any other contributions.

Should an LLC fail to provide any of the guarantees listed above, a claim may be filed against the bond in an amount of more than $100,000, which the surety company will pay in order to settle the claim. Once the claim has been settled, the surety will look to the principal to reimburse them for any money paid out.

In order to risk losing $100,000, plus the non-refundable premium, it is important that principals who purchase these bonds understand exactly what their responsibilities are under the bond. This information may be found below in the Additional information section of the page.

LLC Employee/Worker Bond details

California LLC employee/worker bonds run concurrently with the license and must be renewed annually, which requires paying your premium for the next year. However, the surety may cancel the bond at any point, so long as they do so in accordance with Section 996.310 et seq. of the Code of Civil Procedure, which states that the surety must provide notice to both the obligee and the principal. Once notice has been provided, the bond’s cancellation will become effective at the earliest of the following:

  • Thirty days after notice of cancellation or withdrawal is given
  • If a new surety is substituted for the original surety, the date of substitution becomes effective
  • If a new bond is given, the date the new bond becomes effective

Once the bond has been canceled, it is the principal’s responsibility to obtain a new bond within 30 days or they run the risk of facing further punitive action, including license revocation.

Get a contractor license for my LLC

Along with the $100,000 bond, LLCs seeking license must complete the application process, which includes, but is not limited to:

  • Complete the application in its entirety
  • Pay the $300 nonrefundable application fee
  • Obtain a minimum $1,000,000 liability insurance policy
  • Exact amount determined by the number of individuals employed by the LLC, but cannot exceed $5,000,000
  • Provide a personnel of record list
  • License must be qualified by a responsible managing employee, responsible managing officer, responsible managing manager, or responsible managing member
  • QI must pass a law and business examination and a specific trade examination, unless waived
  • Submit fingerprints for a criminal background check

Complete registration information can be accessed from the Additional information section of this page. Begin the licensing process by purchasing the surety bond you need.

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Additional information