When a potential employer asks if you have been refused a bond, it is usually referring to fidelity bonds. These bonds are a type of insurance that protects employers from losses due to employee dishonesty. Look to your personal, criminal and financial history to help you determine whether it is likely that you have been denied a bond. While being denied a bond is not good, it does not disqualify you from employment.
Fidelity bonds provide protection against losses due to certain activities that are not covered by other insurance policies. These activities include fraud, theft and embezzlement committed by the company's employees. Fidelity bonds cover employer losses up to a predetermined amount. For example, the Federal Bonding Program provides bond coverage in $5,000 increments up to $25,000. These bonds may also cover all of a company's employees in one policy or individual employees. Any company that is at risk for losses from employee dishonesty may purchase fidelity bonds, but certain types of companies, such as insurance providers and securities brokerages, are required by regulators to have fidelity bonds. The exact amount required depends on the company's assets.
Commercial fidelity bond issuers deny bonds to job seekers they determine are at risk for employee dishonesty. One of the factors in making this determination is your criminal history. Crimes that prevent you from becoming bonded don't just include the financial crimes from which companies use fidelity bonds to protect themselves. Any crime can keep you from being bonded, and any record of arrest, conviction, imprisonment, parole or probation puts your ability to become bonded at risk. A dishonorable discharge from the military, whether there were related criminal charges or not, may disqualify you from bonding. In addition, you may be refused bonding if you have a history of drug or alcohol abuse, even if you have sought treatment and rehabilitated yourself.
The other big factor in determining your ability to become bonded, or why a previous employer might have refused a bond, is your financial history. A bankruptcy or poor credit score are among the biggest reasons people with no criminal history are refused a fidelity bond. Even though you committed no crime, bonding companies look at financial problems as a potential reason for dishonesty on the job. Other financial factors that might prevent bonding include having received public assistance at some point in your life, or lacking a work history.
The Department of Labor's Federal Bonding Program has helped diminish the impact of not being able to secure commercial bonding. This program provides bonds at no charge to the employer to cover employees that commercial bonding companies will not cover. The free bonding serves as an incentive to hire at-risk individuals, though you will still have to convince your prospective employer that anything negative from your past will not affect your work and integrity.
- Business Dictionary: Fidelity Bond
- Michigan Department of Career Development: What Is a Fidelity Bond?
- Michigan Department of Career Development: Are You High Risk?
- Wisconsin Department of Workforce Development: Fidelity Bonding Program
- The Federal Bonding Program: Program Background
- The Federal Bonding Program: Procedures for Bond Issuing and Management
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