Wage Bonds in NY - Overview

A wage bond is a type of license surety bond, which guarantees employees of nail salons fair treatment in terms of receiving payment regularly, including overtime pay and fringe benefits.

Starting October 6th, 2015, nail salon owners in the state of New York are required to purchase a wage and welfare bond, to protect their employees from wage violations.

Like most surety bonds, wage bonds are a three-party agreement between:

  • a nail salon owner, called a principal;

  • the state of New York, called an obligee;

  • a surety bonding company, backing the agreement

By underwriting the bond, the surety vouches for the principal, so you can think of the wage bond as a line of credit. If the principal– the salon owner– breaks the terms of the agreement, the surety, as the provider of the bond, will have to pay any successful claim that may be triggered as a result. Since sureties and principals sign indemnity agreements, the nail salon owner will then be responsible for reimbursing all of the surety’s costs.

To learn more about surety bonds and how they work, check out our handy surety bond guide.

Wage Bond Costs

There are two numbers you need to remember when it comes to wage bonds in New York: the total bond amount and your premium. This means that your surety bond cost will only be a fraction of the total bond amount.

The total bond amount is the sum up to which an employee will be protected for in case the employer fails to pay their wage. The bond premium is the sum you will pay the surety for providing the bond. Remember that a surety is legally responsible for your claims, so they will assess your likelihood of triggering and repaying a claim by asking for your credit report. The better your credit history and personal credit score, the better your premiums will be. In the case of wage bonds in NY, premiums for applicants with good credit could be as low as 2.5%, or less.

Total bond amounts are fixed by the state and vary based on the number of employees that work for a nail salon. Here is a breakdown of the minimum amounts, per number of employees providing nail specialty services:

  • 2 - 5 full-time employees or their equivalent: $25,000

  • 6 - 10 full-time employees or their equivalent: $40,000

  • 10 - 25 full-time employees or their equivalent:$75,000

  • More than 26 full-time employees: $125,000.

To give an example, if you employ 7 nail specialists and you have a credit score of more than 680, you will most likely pay a premium of around 2%, or $800.

NY Wage Bonds with Bad Credit

Your credit score is an essential piece of information sureties will request from you. Many nail salon owners are anxious that a low credit score, or lack of credit history, will prevent them from getting bonded.

Applicants with bad credit are considered high-risk, and are naturally under more scrutiny from the surety. At Bryant Surety Bonds, we can still find you the best available rates through our bad credit program, plus personalized service, tailored to your unique situation. Generally, we can still get you bonded in the same amount of time regular applications are processed, so you won’t have to worry about missing the deadline, or being declined the bond.

Applicants with bad credit should be prepared to pay higher premiums - in some cases they may surpass 10%. Feel free to talk to one of our agents on what steps you can take to decrease your bonding costs.

How to Get a Nail Salon License

Getting your nail salon license, officially known as an appearance enhancement business license, is a straightforward process and can be done through an online account at NY.gov. You must be at least 18 years of age, post a wage bond, and in addition, have either general liability insurance or “accidental and professional liability insurance policies, each in the minimum amount of $25,000 per occurrence and $75,000 in the aggregate.”

A non-refundable fee of $60 is applicable whether you apply for a first-time license or wish to renew it.

Handling Claims for NY Wage Bond

As mentioned earlier, you will be responsible for reimbursing all claims made against your wage bond. However, it is never a good idea to bring things to the point where you have to deal with a claim. The process is complicated, and it can damage your reputation with both the public, and sureties. This may mean higher renewal prices, or in some cases, even an inability to get bonded.

According to the surety form provided by the Department of State, the principal entity will never have to pay out a claim as long as it fulfills its “statutory responsibility to pay its employees earned wages, interest on wages and fringe benefits as are due to said employees, and such damages as may be due an employee damaged by a violation of law”.

In case a dispute arises with one of your employees, put an extra effort to settle it before it becomes a claim. Settlement is not an admission of fault on your part, and often it can be the best and most cost-effective solution for all involved.

Get Your New York Wage Bond Today

Your wage bond is inseparable from your license and will need to be renewed each year.

The Department of State has made it easy for you to create an account on their website and renew your license online. We make the bonding process easy as well, by sending you a renewal reminder ahead of time, along with a free quote for renewing your bond.

Ready to begin your application? Get a FREE quote now or 866.450.3412 and one of our bond experts will guide you through the process.

About us:
Bryant Surety Bonds, Inc. is a surety bond agency based in Pennsylvania. Licensed in all 50 states and with access to over 20 T-listed, A-Rated bonding companies, we have the contacts, expertise, and top service to provide you with a hassle-free experience, all while offering competitive rates for your surety bond.