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Frequently Asked Questions: Wage Bond Requirements
What is a Wage Bond? A wage bond is a security that is posted with the Division of Labor for the sole purpose of protecting employee wages and fringe benefits.
What is a Wage Bond used for? After an investigation has been performed and the Commissioner of Labor has determined that employee wages and/or fringe benefits are unpaid, the Commissioner shall make demand of the employer for the payment of those wages. If the employer is unable to pay the unpaid wages as determined by the Commissioner, the Division will forfeit the company’s wage bond to pay those employees.
Are all companies required to post a wage bond? Only those companies engaged in the following industries are covered under the West Virginia wage bond statute:
Construction
- Provided, that construction performed for the owner or lessee of a single family dwelling or a family farming enterprise is excluded.
Mining
- Transportation of Minerals
- The transportation of clay; coal; flagstone; gravel; limestone; manganese; sand; sandstone; shale; iron ore and any other metallurgical ore. Railways and water transporters are excluded.
Exemptions:Companies that have been engaged in a covered activity within the state of West Virginia, with employees, for the last five (5) consecutive years (next proceeding the posting of a bond) may qualify for a wage bond exemption.
The company must apply to the Division of Labor for an exemption before engaging in any covered activity in West Virginia and is responsible for supplying the information necessary to qualify.
Should a company fail to maintain employee activity for each subsequent year after receiving an exemption for a previous year, that company will be required to post an adequate wage bond.
How is the bond amount calculated? By using one of the following methods:
- The bond amount is calculated at 4 weeks payroll + an additional 15% based on gross wages at current maximum capacity or production..
- The bond must be calculated at 40 hrs per week * 4 weeks unless the company can provide existing payrolls to show their maximum capacity is less.
- The amount must continually be maintained to cover current maximum capacity or production. (any increase in payroll or hours)
- The Division will not accept any bond that is based on an hourly wage that is less than the minimum wage. {(#employees X $7.25) X 40hrs X 4} + 15% = minimum bond amount acceptable.
What methods of bonding are there? Companies may choose one of the following four bonding options:
- Check or Money Order
- Personal / Business Checks
- Cashiers or Certified Checks
- Letter of Credit
- Surety Bond
- Certificate of Deposit