Surety Bond Encyclopedia

Home Care Organization Employee Dishonesty ($10,000) Bond - Statewide in California

Brief Summary

California will not issue a home care organization license until it has an executed HCS 402 dishonesty bond with at least $10,000 of coverage, and the bond has to stay in force for as long as you hold the license. We write the bond on the state's own form, signed by the surety's agent as CDSS requires, so it drops straight into your Section A application packet.

Every California home care organization must post and keep an employee dishonesty bond with third-party coverage and a minimum limit of $10,000, under Health and Safety Code 1796.37(a)(4) and 1796.42(c). The bond is written on CDSS form HCS 402, names the State of California as beneficiary, and the original is mailed to the California Department of Social Services with the license application.

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How to Apply for a Home Care Organization Employee Dishonesty ($10,000) Bond:

Legal name of the licensee exactly as it appears on the CDSS application (HCS 200).
Owner or officer details for the surety's underwriting review.
Bond written on CDSS form HCS 402 with the State of California named as beneficiary.
Effective date and expiration date shown on the bond.
Signature of the bonding company's agent on HCS 402.
Original signed HCS 402 mailed to CDSS with the Section A application forms and the license fee.

Detailed Information About the California Home Care Organization Employee Dishonesty ($10,000) Bond:

The bond protects your clients, not just your agency

Many owners assume this is an ordinary employee theft policy that reimburses the agency. California requires more than that. Health and Safety Code 1796.42(c) says a licensee must maintain an employee dishonesty bond "including third-party coverage" with a minimum limit of $10,000. The state form, HCS 402 Home Care Organization Dishonesty Bond, makes the surety answerable when clients suffer damages from a dishonest or fraudulent act by the licensee or its employees, including theft, embezzlement, conversion or fraud.

When it is required

The bond is a condition of getting the license and of keeping it. Section 1796.37(a)(4) lists it among the items the California Department of Social Services needs before it may issue a home care organization license, and Section 1796.42(c) requires the licensee to maintain it afterward. HCS 402 states the bond stays in effect as long as the license is valid. The $10,000 figure is a floor, so a larger limit also satisfies the rule.

Filing it with CDSS

HCS 402 is one of the Section A forms in the CDSS application packet. The CDSS instructions say an agent of the bonding company must sign it, the State of California must be identified as the beneficiary, the bond must show an effective date and an expiration date, and the original with the original signature goes to CDSS. The current CDSS fee page lists the home care organization license at $5,603 for two years. Licenses must be renewed every two years under Section 1796.37(b).

Other coverage you need at the same time

The bond does not replace your insurance. The same statute requires proof of general and professional liability insurance of at least $1,000,000 per occurrence and $3,000,000 in the aggregate, plus a workers' compensation policy covering your affiliated home care aides.

Who is outside this requirement

Section 1796.17(b) says a home care organization does not include, among others, licensed home health agencies, hospices, health facilities, In-Home Supportive Services providers, licensed clinics, and community care or residential care facilities. Those providers do not post this bond under the home care chapter.

Eligibility and Requirements for a California Home Care Organization Employee Dishonesty ($10,000) Bond:

Employee dishonesty bond with third-party coverage, as required by Health and Safety Code 1796.42(c).
Minimum limit of $10,000.
Bond kept in force for the full life of the license.
Separate proof of liability insurance of $1,000,000 per occurrence and $3,000,000 aggregate.
Separate proof of workers' compensation coverage for affiliated home care aides.
License renewal every two years with nonrefundable fees postmarked before expiration.

California Home Care Organization Employee Dishonesty ($10,000) Bond FAQs:

Is a regular employee theft policy enough?

Not unless it includes third-party coverage. Health and Safety Code 1796.42(c) requires an employee dishonesty bond including third-party coverage, which means coverage for losses your clients suffer from dishonest acts by you or your staff. CDSS supplies its own form for this, HCS 402.

Is $10,000 the exact amount?

It is the minimum. The statute sets a minimum limit of $10,000, so a bond with a higher limit also meets the requirement.

Who has to sign the HCS 402?

An agent of the bonding company signs for the surety and the licensee signs as principal. CDSS wants the original with the original signature, not a copy.

How long does the bond have to stay active?

For as long as you hold the license. Section 1796.42(c) requires licensees to maintain the bond, and the HCS 402 states it remains in effect as long as the license is valid. Licenses renew every two years.

Does a home health agency or hospice need this bond?

Not under the home care chapter. Section 1796.17(b) excludes licensed home health agencies, hospices, health facilities and several other provider types from the definition of a home care organization.