Surety Bond Encyclopedia

Wage & Fringe Benefits Bond - Local Union No. 38 Plumbing and Pipe Fitting in California

Brief Summary

Contractors bound by UA Local 38's agreement in San Francisco, Marin, Sonoma, Mendocino and Lake counties can be required to post a bond guaranteeing wages and trust fund contributions. A surety bond meets that requirement without locking up cash. The amount is set through the Local 38 agreement and its trust funds, so get the figure and obligee wording in writing before the bond is issued.

This bond guarantees that a contractor bound by the agreement with U.A. Local Union 38 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry pays its employees' wages and the contributions owed to the Local 38 trust funds. The Local 38 agreement places its bond provision, titled Deposit of Performance or Surety Bond, in Section 49, Administration of Trust Funds. Confirm the amount, obligee wording and bond form with Local 38 or its trust fund office before the bond is issued.

We can help with all California bonds!

How to Apply for a Wage & Fringe Benefits Bond:

Ask Local 38 or its trust fund office for the bond amount that applies to your firm and get it in writing.
Confirm whether the obligee is Local 38 or the trustees of the Local 38 trust funds.
Ask whether a specific bond form is required, and use it if so.
Use the contractor's exact legal name as it appears on the signed agreement.
Complete the bond application with owner and company information for underwriting.
Deliver the signed bond as directed and keep a copy with your agreement file.

Detailed Information About the California Wage & Fringe Benefits Bond:

Get the amount from Local 38 first

This bond comes from the collective bargaining agreement between U.A. Local Union 38 and the Northern California Mechanical Contractors Association, the Master Plumbers Association of San Francisco, Inc. and independent contractors. The 2012 to 2017 agreement lists a provision titled Deposit of Performance or Surety Bond under Section 49, Administration of Trust Funds. The required amount is tied to the agreement and the trust funds, so ask Local 38 or the trust fund office for the figure that applies to your firm and get it in writing before the bond is issued.

Who posts it

The contractor bound by the Local 38 agreement posts the bond as principal. The agreement covers the City and County of San Francisco and the counties of Marin, Sonoma, Mendocino and Lake. Ask whether the bond should name Local 38 or the trustees of the Local 38 trust funds as obligee, and whether they want their own bond form.

What it guarantees

The bond backs the employer's promise to pay wages and the monthly contributions owed under the agreement. Section 48 of the 2012 to 2017 agreement names the Health and Welfare Trust, Vacation and Holiday Trust, Apprentice and Journeyman Training Trust, Pension Trust, Group Supplemental Unemployment Benefits Trust and several smaller funds. Section 49 also covers the due date for monthly payments, damages for delinquent payments, the trustees' right to audit employer books, and the employer's liability for legal costs of collecting delinquent payments.

The federal law behind a claim

Under ERISA, 29 U.S.C. 1145, an employer bound by a collective bargaining agreement must make contributions on the terms of that agreement. When the trust funds sue and win, 29 U.S.C. 1132(g)(2) awards the unpaid contributions, interest, the greater of a second interest amount or the plan's liquidated damages, and reasonable attorney fees and costs. The bond gives the funds a source to collect from when a contractor cannot pay.

Eligibility and Requirements for a California Wage & Fringe Benefits Bond:

Contractor bound by the U.A. Local 38 collective bargaining agreement.
Bond provision found in Section 49, Administration of Trust Funds, of the Local 38 agreement.
Bond condition: payment of wages and contributions owed to the Local 38 trust funds.
Work in San Francisco, Marin, Sonoma, Mendocino or Lake counties.
Bond amount, obligee wording and form acceptable to Local 38 or the trust fund office.

California Wage & Fringe Benefits Bond FAQs:

How much is the bond?

The amount is set through the Local 38 agreement and its trust funds. Ask Local 38 or the trust fund office for the figure that applies to your firm and get it in writing before the bond is issued.

Who is the obligee?

The bond provision sits in the agreement's section on administration of the trust funds. Ask whether the bond should name Local 38 or the trustees of the Local 38 trust funds, and use their exact wording.

What does the bond guarantee?

Payment of wages and the contributions owed under the agreement to funds such as the Health and Welfare Trust, Vacation and Holiday Trust, Apprentice and Journeyman Training Trust, Pension Trust and Group Supplemental Unemployment Benefits Trust.

Where does the Local 38 agreement apply?

The City and County of San Francisco and the counties of Marin, Sonoma, Mendocino and Lake.

What can the funds recover if contributions go unpaid?

ERISA, 29 U.S.C. 1145, requires contributions on the terms of the agreement. A plan that wins in court recovers the unpaid contributions, interest, liquidated damages or added interest, and attorney fees and costs under 29 U.S.C. 1132(g)(2). The bond is one place the funds can collect from.