California has enacted Assembly Bill 2227, which substantially increases and revises the surety bond requirements applicable to licensed farm labor contractors. The bill becomes effective on January 1, 2027.
The legislation is intended to strengthen financial protections available to agricultural workers and increase accountability among farm labor contractors by requiring larger bond amounts and modifying how bond levels are calculated.
Background
California law requires farm labor contractors to be licensed by the Labor Commissioner and to maintain a surety bond as a condition of obtaining or renewing a license. The bond may be used to satisfy wage claims, damages arising from violations of applicable wage orders, and other monetary relief awarded to agricultural workers for violations of employment laws.
Prior law tied bond amounts to the contractor’s annual payroll and required bonds of:
- $25,000 for payrolls up to $500,000;
- $50,000 for payrolls between $500,000 and $2,000,000; and
- $75,000 for payrolls above $2,000,000.
Surety Bond Amounts Increased
AB 2227 significantly increases the required surety bond levels.
Under the new law, farm labor contractors generally must maintain bonds of:
- $50,000 for annual payrolls up to $500,000;
- $100,000 for annual payrolls between $500,000 and $2,000,000; and
- $150,000 for annual payrolls exceeding $2,000,000.
As a result, the required bond amounts are effectively doubled compared to the former statutory requirements.
Calculation Method Revised
Legislative analyses of AB 2227 also indicate that the law revises how bond obligations are determined by modifying the criteria used to calculate bond levels and expanding requirements applicable to certain farm labor contractors, including distinctions involving foreign labor contractors.
The legislation requires contractors to provide documentation supporting the applicable bond level and authorizes the Labor Commissioner to review that information when issuing or renewing licenses.
Public Disclosure of Bond Information
AB 2227 additionally requires bond information to be made available through the state’s public farm labor contractor licensing database.
This change is intended to increase transparency regarding the licensing status and financial security maintained by licensed farm labor contractors.
Enforcement Provisions Clarified
The legislation also clarifies the application of civil penalties for violations of employment laws governing farm labor contractors. Penalties may apply not only to unlicensed farm labor contractors but also to licensed contractors that violate applicable employment requirements.
Employers Impacted
The law is particularly relevant for:
- Licensed farm labor contractors;
- Agricultural employers that utilize farm labor contractors;
- Foreign labor contractors operating in California
- Agricultural workforce providers; and
- Employers involved in farmworker recruitment, furnishing, or supervision.
Employer Takeaway
Farm labor contractors should review licensing and bonding requirements before their next license application or renewal. Contractors may face substantially higher bond obligations under AB 2227 and should work with their surety providers to ensure adequate coverage is in place. Agricultural employers that use farm labor contractors may also wish to confirm that their contractors remain properly licensed and bonded under the revised requirements.