Wage and Fringe Benefits Bond - IBEW Local No. 551 in California
Table of Contents
Brief Summary
Contractors who sign on with IBEW Local No. 551 are often asked to post a wage and fringe benefits bond before electricians are dispatched. A surety bond satisfies that request for an annual premium, so you keep your working capital for payroll and materials instead of leaving a cash deposit with the union trusts.
The IBEW Local No. 551 Wage and Fringe Benefits bond guarantees that a signatory electrical contractor pays the wages and the fringe benefit contributions it owes under its labor agreement with Local 551. If the contractor does not pay, the union and its trust funds can recover the shortfall from the bond. The bond amount is set by Local 551 and its trusts, so confirm the current amount, form and filing steps with them before the bond is issued.
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How to Apply for a Wage and Fringe Benefits Bond:
- Get the required bond amount and any union bond form from IBEW Local No. 551 or its trust administrator.
- Provide the legal name of the contracting company exactly as it appears on the signatory agreement.
- Provide owner names, home addresses and Social Security numbers for the credit review.
- Complete the bond application and approve the quoted premium.
- Sign the surety's indemnity agreement.
- Deliver the executed original bond to Local 551 or the trust office as directed.
Detailed Information About the California Wage and Fringe Benefits Bond:
Who posts this bond
An electrical contractor that signs a collective bargaining agreement with IBEW Local No. 551 takes on two money obligations: paying its electricians the agreed wage, and sending health and welfare, pension, training and related contributions to the union trust funds each month. Local 551 can require security for those payments, and this bond is that security.
What it guarantees
The bond promises that if the contractor fails to pay wages or fringe benefit contributions as the agreement requires, the surety will pay valid claims up to the bond amount. The surety then looks to the contractor and its owners to repay every dollar. It is a guarantee for the workers and the trusts, not insurance for the contractor.
The federal rules behind it
Section 515 of ERISA, 29 U.S.C. 1145, requires an employer obligated by a collective bargaining agreement to contribute to a multiemployer plan to make those contributions on the agreement's terms. When a trust sues to collect, 29 U.S.C. 1132(g)(2) gives it the unpaid contributions, interest, liquidated damages and attorney fees. The bond gives the trusts a faster way to collect at least part of that without waiting on a lawsuit.
Amount and form
Local 551 and its trust administrator decide the bond amount, and it can depend on the size of your crew and the contributions you report. Get the required amount and any union bond form from Local 551 before you apply, and make sure the obligee names on the bond match exactly what they ask for.
Eligibility and Requirements for a California Wage and Fringe Benefits Bond:
- Signatory to a labor agreement with IBEW Local No. 551.
- Bond amount as set by Local 551 and its trusts.
- Obligee names worded exactly as the union requests.
- Surety licensed to write bonds in California.
- Credit review of the company and owners, which drives the premium rate.
California Wage and Fringe Benefits Bond FAQs:
It guarantees that the contractor pays the wages and fringe benefit contributions owed under its agreement with IBEW Local No. 551. If the contractor does not, the union and trust funds can claim against the bond.
Local 551 and its trusts set the amount. Ask the union office for the figure that applies to your agreement before you apply.
No. The bond only caps what the surety pays. Under 29 U.S.C. 1132(g)(2) a trust can still recover unpaid contributions, interest, liquidated damages and attorney fees from the employer.
The surety prices the bond from the required amount and the credit and financial history of the company and its owners.
The surety pays valid claims to the union or trusts and then seeks full repayment from the contractor and the owners who signed the indemnity agreement.
