Fidelity bonds are like a kind of insurance policy for employers and companies that serve to protect the ownership and management of a business in the event that any of their employees steals monies, misappropriates funds, or acts in a dishonest fashion that ends up causing the business to suffer a financial loss. These types of bonds cover acts of theft, forgery, and embezzlement of funds that are the responsibility of the employee or placed within their care. These types of security are not liability bonds and do not apply to a series of other work related costs and damages including: employee mistakes or errors, poor or shoddy performance or workmanship, accidents at the workplace, and on the job injuries.
One common type of fidelity bonds is an ERISA bond. This is a form of bond whose name comes from the Employee Retirement Income Security Act (ERISA). The ERISA legislation was passed in 1974 to provide protection for employee benefit and pension plans. One requirement of the ERISA legislation is that businesses that currently operate a registered employee benefit or pension plan must obtain a bond or surety in the amount of ten percent of the worth of the employee benefit plan. In accordance with the overall purpose of the ERISA legislation, this provision is to protect employees and their benefit plans against inappropriate or illegal actions that may be taken by employers in the management and operations of these benefit plans.
Another popular form of fidelity bonds are criminal insurance bonds. Their main purpose is to protect business owners against deliberate criminal acts on the part of their own employees. These types of bonds do not replace the need to closely screen new hires for criminal backgrounds, but they do provide some measures to allow the business to recoup any such financial losses which may occur later.
Fidelity bonds may not be able to guarantee that employees won’t bite the hand that feeds them by stealing from their employers, but they are a useful tool for management of a company to use as part of any employee anti-theft program. This anti-theft program should also focus on two other main areas. One is to ensure that the people who walk in your front door as employees are not likely to walk out the back with your products, goods, services, money, or corporate information.
The second is a firm and unwavering policy to severely punish employee theft, regardless of whether that theft occurs in the warehouse or the executive boardroom. This policy should be well known and well publicized to employees as part of an introduction or orientation to their new workplace. They need to know that theft of any of the employer’s belongings or property will bring swift discipline that might include dismissal for a first offense. These programs, along with sureties and insurance, can help to protect not only the employer’s property, but the integrity and honesty of all employees.
Contact www.bfbond.com to learn more about how to insure your business properly.