Loss of Capacity to Be Bonded

Commercially available fidelity bonds may not be obtainable to cover potential employees who are also ex-offenders. Insurance companies may designate an individual as “not bondable” because of previous fraudulent behavior, criminal convictions, or a history of substance abuse. As a result, this loss of capacity to be bonded may prevent an employer from hiring an otherwise qualified ex-offender.

Loss of capacity to be bonded may create difficulty for ex-offenders searching for employment. Difficulty in obtaining employment, along with other issues, such as loss of voting rights, is commonly referred to as the “collateral consequences” of a conviction. It has been recognized, however, that the ability to gain and maintain employment may help prevent an ex-offender from reoffending and may play an important role in reducing recidivism. Policy makers have enacted reforms intended to reduce the barriers to employment for ex-offenders in an effort to reduce recidivism. The Federal Bonding Program, sponsored by the U.S. Department of Labor, is one such policy.

As a regular course of good business practice, many employers purchase fidelity bonds from commercial insurance companies. A fidelity bond is like an insurance contract that protects the employer from the dishonest behavior of employees. If an employee is covered under a fidelity bond and that employee steals money or equipment from the employer, the employer will be reimbursed. An employer may require that all employees be covered by a fidelity bond and may refuse to hire individuals who are not bondable.

The U.S. Department of Labor took note of this issue and in 1966 instituted the Federal Bonding Program. This program is intended to provide an incentive for employers who would otherwise be predisposed to avoid hiring an ex-offender because of fears that the ex-offender might steal from the employer. The Federal Bonding Program provides a fidelity bond, at no cost to the employer or employee, which covers an ex-offender who would be designated as not bondable for purposes of commercially available bonding. This program is available to any ex-offender regardless of type or number of convictions.

The Federal Bonding Program also allows an employee who demonstrates trustworthiness to become bondable despite a past criminal record. Fidelity bonds provided through the Federal Bonding Program cover an employee for a six-month period. These fidelity bonds are policies currently issued by the Travelers Casualty and Surety Company of America. If an employee demonstrates honesty during this six-month period, the employer may purchase fidelity bonds as it would for any other employee through Travelers.

The fidelity bonds offered through the Federal Bonding Program are available in amounts from $5,000 to $25,000. The default amount covered is $5,000. If an employer demonstrates that an employee may steal more than $5,000 in equipment or cash at one time, then the bond amount may be increased in $5,000 increments, up to a ceiling of $25,000. If an employee covered under the Federal Bonding Program steals from an employer, the employer will be reimbursed to the extent of the loss, limited by the bond amount, without having to pay any deductible.

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