If you want to be a successful contractor in the United States, you’re going to have to deal with surety bonds. The bonding process can get pretty confusing which is why it helps to do a little research before you buy. One of the most common things you’ll run into when researching surety bonds is Little Miller Act.

California’s Little Miller Act is essential for all surety bond business in the state, so if you plan to do any contract work there, you need to understand what’s involved. Learn more about the California Little Miller Act and discover how your surety bond prospects are affected.

Little Miller Act Basics

Just about every state has their own version of the Little Miller Act. The name is an offshoot of the federal Miller Act which requires contractors to use performance bonds and payment bonds to ensure that contracts are completed correctly and that all subcontractors and material suppliers are paid.

The specific provisions of the Little Miller Act vary from state to state, but they all hold the same requirements for contractors. Performance bonds cover any potential financial loss should the contractor fail to do their job correctly or leave it unfinished while payment bonds ensure that vendors and subcontractors get paid one way or another. Overall, it keeps contracting business open and reliable.

Benefits of Performance and Payment Bonds

Little Miller Acts are designed to protect the industry as a whole. While contractors may feel like performance and payment bonds are a burden, they actually come with quite a few benefits. With a performance bond in place, it becomes much easier to get subcontractors on board knowing they don’t have to bear the financial weight of an incomplete project should the contractor’s company fold.

Payment bonds also make it easier to get vendors and subcontractors to work for you. One of the greatest fears in the construction industry is not getting paid for the work put in, but payment bonds ensure that all subcontractors and material suppliers get paid in the end in somehow.

California Little Miller Act

When working in California, you need to know what the California Little Miller Act dictates to make sure you’re in compliance. When getting a performance bond, the bond needs to cover the entire price of the contract. Payment bonds are only required when a public work contract is more than $25,000 and they typically cover half of the contract amount. Architects and engineers aren’t required to have payment bond protection.

Remember that the Little Miller Act isn’t to protect you, but rather to protect your subcontractors. If you’re not paid for public works, then your issue is with the government. The Little Miller Act only dictates how subcontractors can make a claim after not getting paid to either the contractor or the surety bond itself.

Performance and Payment Bonds With NSSI

Now that you know a bit about the California Little Miller Act, you might be in need of performance and payment bonds for your next project. For a service and results based approach, National Surety Services Inc is happy to help. Contact us today to start your California surety bonding process!