{"id":3136,"date":"2021-09-06T23:32:33","date_gmt":"2021-09-06T23:32:33","guid":{"rendered":"https:\/\/suretyone.com\/blog\/?p=3136"},"modified":"2021-09-06T23:32:33","modified_gmt":"2021-09-06T23:32:33","slug":"union-fringe-benefit-wage-bond","status":"publish","type":"post","link":"https:\/\/suretyone.com\/blog\/union-fringe-benefit-wage-bond\/","title":{"rendered":"Union Fringe Benefit and Wage Bond"},"content":{"rendered":"

A union fringe benefit bond, also sometimes referred to as a wage and welfare bond (collectively “Union Fringe Benefit and Wage Bond”) is often required by labor unions to guarantee that an employer will pay participating members the wages and benefits due to them under the particular union’s collective bargaining agreement. A fringe benefit bond is a strict financial guarantee, the amount of which is generally based on the number of covered laborers multiplied by the prevailing wage and benefit rate. A W\/W bond may or may not include fringe benefit considerations and a fringe benefit guarantee may not include a guarantee of the payment of wages. Individual locals determine exactly what the surety bond form must contain however the language of a union bond varies little. Most contain provisions similar to the following:<\/p>\n

The Principal shall well and\u00a0faithfully pay the wages due to the Union Employees with respect to the work performed by the Union\u00a0Employees, the contributions due to the Funds, the dues due to the Union, any interest, liquidated\u00a0damages, attorneys\u2019\u2019 fees\u00a0and\/or costs that may become due, and such other amounts as the Principal may be required to\u00a0pay to the Obligees, or to any of them, pursuant to the collective bargaining agreement between the\u00a0Principal and the Union or pursuant to the rules and regulations of any or all Funds, then this obligation\u00a0shall be void; otherwise it shall remain in full force and effect.<\/em><\/p>\n

A union wage and welfare bond is onerous by nature. The most serious violations encountered in union bond underwriting are a principal’s underreporting of employee count and\/or misrepresentation of claims history with one or more union offices. Most union claims manuals contain complicated procedures for the reporting of claims, how a limited bond penalty will be prorata distributed among claimants and very short timelines for the satisfaction of amounts due to the complaining union members. Fringe benefit bonds\u00a0also sometimes included discovery periods that are outside of most surety companies’ appetites. Character and capital are the most important considerations to the underwriting of this surety bond class. The following underwriting key is a helpful guide.<\/p>\n