In the State of Alabama, Professional Employer Organizations (PEOs) are required under the Alabama Professional Employer Organization Registration Act to register with the Alabama Department of Labor (ALDOL), and post a $100,000 surety bond (or $50,000 for limited license) if they are not able to prove the same amount in equity at the time of registration.
Jet Insurance Company offers the Alabama Professional Employer Organization Bond as a financial guarantee to the ALDOL that all of the PEO’s outstanding unemployment tax and workers’ compensation claim liabilities will be paid, regardless of the financial solvency of the principal company.
With Jet, you buy your bond through a quick and streamlined process, with none of the middlemen who cost you more with their fees and commissions, directly from the surety carrier itself.
With Jet, the Professional Employer Organization Bond costs as little as 1% of the bond limit, or $1,000 per year or $100 per month ($500 per year or $50 per month for limited registrants). Pricing for the bond will depend mainly on the personal credit score of the applicant. See the table below for bond rates based on preferred credit score.
Jet’s unique monthly payment options gives you the convenience of a low monthly payment that you can place on automatic payments through the life of your bond. For PEO companies looking to space their payments to be less frequent, the bond is available in annual payments as well.
The Professional Employer Organization Act requires all companies who perform professional employer services to register with ALDOL Workers’ Compensation Division and meet the minimum financial condition requirements set by the Secretary. If PEO companies are unable to prove that they meet the financial requirements, the Secretary will require them to post the $100,000 bond to ensure that even if the PEO company becomes insolvent or neglects its obligations for unemployment tax and workers’ compensation, those liabilities will be paid. For those companies who qualify for limited registration (out-of-state companies or companies with 50 or fewer employees), the bond amount is only $50,000.
Jet provides the financial security the State requires for a PEO to receive certification if they do not have the cash on hand.
Applying for the Professional Employer Organization Bond is easy with Jet! The application can be done in minutes, completely online. Once you provide some basic information about your business, the Jet team will conduct a soft credit check to determine the best possible rate. (Don’t worry; this will not affect your credit score.)
After a short review, the Jet team will get back to you with an approved rate for the bond, and an option to purchase. When you have made your payment and your purchase is complete, a receipt and copy of the bond will be immediately available for your records.
Yes, Jet can! Once your bond purchase is complete, the Jet team will immediately ship the bond to the ALDOL for you. You will still need to register your PEO company on the ALDOL’s website as well.
If you prefer to send the bond to the ALDOL yourself for filing, you will have that option at checkout. Ensure that the original bond with signatures and seal are delivered to the following address:
State of Alabama
Director of the Department of Labor
Workers’ Compensation Division
649 Monroe Street
Montgomery, Alabama 36131
Cancelling your bond with Jet is easy. You will need to send written notice to the Jet team (an email to [email protected] will suffice), and Jet will communicate your intent to the ALDOL. Liability for your PEO company and Jet will end 60 days after notice is delivered to the ALDOL.
If you have chosen to pay through Jet’s simply monthly payments, payments will cease once the 60-day period ends, as the bond is still active through this period. If you are paying annually for your bond, Jet will review the timing of the cancellation and return any available premium to you.
Again, with Jet’s monthly payments, this part is easy! Just keep making your automatic payments out of your preferred account, and the bond will remain active. No renewal paperwork is required.
If you have chosen to pay annually, you will be required to prove that your bond is active each year on the anniversary date of your original registration, per the Code of Alabama Section 25-14-5. Don’t worry, Jet will notify you well in advance of your bond renewal deadline. Just make payment to Jet and the bond will remain active.
For PEO companies in Alabama, avoiding a bond claim can be accomplished simply by paying unemployment taxes and workers compensation claims when they become due. The Professional Employer Organization Act specifically authorizes the Secretary of the ALDOL to require the bond for the purpose of guaranteeing payment of these liabilities.
According to the ALDOL’s Workers’ Compensation Division, they will notify the PEO company before pursuing a formal demand against the bond. Working honestly with the ALDOL to pay obligations will keep the disparity at the lowest possible level and avoid a bond claim.
Notify Jet immediately! If you receive notice from the ALDOL that they will be using the surety bond to fulfill your obligations on workers’ compensation or unemployment tax, Jet will defend you to the maximum extent possible to keep you organization operating. In order to do so, the Jet team will need your help with open communication and transparency with the details of the liabilities.
If the claim progresses to a demand for payment from the ALDOL, Jet Insurance Company will be obligated to pay the claim up to the limit of the bond, within 30 days of notice. If this occurs, Jet is acting as your financial guarantor, paying on your behalf. You will be responsible for your actions that resulted in the bond claim, and must reimburse Jet. Failure to do so would suspend your ability to operate your business and jeopardize your ability to obtain a surety bond in the future.