Fringe Benefit Trust Bond - Colorado Carpenters & Millwrights in Colorado

Brief Summary

If the carpenters' trust funds have asked you for a bond before you sign on or put a crew to work, this is the bond that answers that request. It stands behind your monthly fringe benefit contributions, so the trustees get their assurance and you keep your cash in the business instead of posting a deposit with the funds.

The Colorado Carpenters and Millwrights fringe benefit trust bond guarantees that a signatory contractor will pay the health, pension, vacation and other fringe benefit contributions owed to the union trust funds for its carpenters and millwrights. The obligee is the trust funds' board of trustees, not a state agency. The amount and form are set by the trust documents and the collective bargaining agreement, so get both from the funds' administrative office before the bond is written.

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How to Apply for a Fringe Benefit Trust Bond:

• Get the required bond amount and bond form from the Colorado carpenters' trust funds administrative office.
• Have the legal business name exactly as it appears on your collective bargaining agreement or participation agreement.
• Provide owner name, address and Social Security number for the credit review.
• Complete the bond application and review the premium quote.
• Sign the bond and deliver the original to the trust funds as they direct.
• Keep the bond in force for as long as the trustees require it.

Detailed Information About the Colorado Fringe Benefit Trust Bond:

Who asks for this bond

This is a private bond. The obligee is the board of trustees of the carpenters' and millwrights' fringe benefit trust funds in Colorado, and the requirement comes from the trust agreement and the collective bargaining agreement the contractor signed, not from a Colorado statute or licensing agency. Funds commonly ask for a bond from new signatory employers, from contractors who have paid late or been audited with a shortfall, and from out of area contractors bringing work into the funds' territory. The trustees decide who has to post it and how large it must be.

What it guarantees

The bond guarantees that the contractor will remit the hourly fringe benefit contributions it owes for covered work, along with the reports the funds require. If the contractor fails to pay, the trustees can claim against the bond for the unpaid amounts, up to the bond's face value. The surety then looks to the contractor to repay whatever it paid out.

The federal law behind the contributions

The contribution duty itself is federal. Section 515 of ERISA, codified at 29 U.S.C. 1145, says every employer obligated to contribute to a multiemployer plan under the plan or a collectively bargained agreement must make those contributions according to the plan's terms. When a fund sues to collect and wins, 29 U.S.C. 1132(g)(2) requires the court to award the unpaid contributions, interest, an additional amount equal to the greater of interest or liquidated damages under the plan (capped at 20 percent unless other law allows more), plus reasonable attorney fees and costs. A delinquency can grow quickly, which is why trustees want a bond in hand.

Amount and form

The trust funds set the bond amount, often based on the size of the contractor's crew, its expected hours or its payment history. Ask the funds' administrative office for its required bond form and amount before applying, and make sure the bond names the trustees exactly as they appear on that form.

Premium

The premium is a percentage of the bond amount that the surety sets after reviewing the owner's credit and the company's financial strength. Contractors with clean credit and steady financials pay less than those with past delinquencies.

Eligibility and Requirements for a Colorado Fringe Benefit Trust Bond:

• Board of trustees of the trust funds named as obligee, worded exactly as on the funds' bond form.
• Bond amount set by the trust funds, not chosen by the contractor.
• A signed collective bargaining or participation agreement with the carpenters' union.
• Owner credit review and, for larger amounts, company financial statements.
• Timely monthly contribution reports to the funds while the bond is in force.

Colorado Fringe Benefit Trust Bond FAQs:

Official and Additional Resources for the Colorado Fringe Benefit Trust Bond: