Surety Bond Encyclopedia

Employee Fringe Benefits Bond - Colorado Pipe Industry in Colorado

Brief Summary

Pipe trades contractors in Colorado post this bond so the industry's benefit funds have a guaranteed source of payment for the fringe contributions they owe. You pay a premium instead of locking up cash, and the trustees get a surety standing behind your contributions.

The Colorado Pipe Industry Employee Fringe Benefits bond guarantees a pipe trades contractor's contributions to the Colorado pipe industry trust funds, such as the Colorado Pipe Industry Annuity and Salary Deferral Trust Fund and the Pipe Industry Health and Welfare Fund of Colorado. These are private multiemployer trusts tied to the United Association locals, not a Colorado state agency. The fund trustees set the amount and form.

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How to Apply for a Employee Fringe Benefits Bond:

Ask the pipe industry fund office or your UA local for the current bond amount.
Get the exact names of the trust funds to list as obligees.
Find out whether the trustees require their own bond form.
Use the legal company name shown on your signed agreement.
Complete the bond application with owner information for the credit review.
Pay the premium and deliver the executed bond where the trustees direct.

Detailed Information About the Colorado Employee Fringe Benefits Bond:

The obligee is a group of trust funds, not DORA

This is not a Colorado license bond. "Colorado Pipe Industry" refers to the trust funds that receive fringe contributions from union plumbing and pipefitting contractors. In federal collection cases in Denver, the Colorado Pipe Industry Annuity and Salary Deferral Trust Fund has sued alongside the Pipe Industry Health and Welfare Fund of Colorado, apprenticeship and training funds, and UA locals including Pipefitters Local Union No. 208 and Journeymen Plumbers and Gas Fitters Local Union No. 3. Those trustees are the people this bond protects.

The bond is a floor, not a ceiling

The most common misunderstanding is that the bond limit is the most a contractor can lose. A Colorado case shows otherwise. In Trustees of the Pipe Industry Health and Welfare Fund of Colorado v. Expert Mechanical Services, Inc., No. 13-cv-00911 (D. Colo.), the surety paid the face value of its bond and was dismissed from the case in December 2013. The funds kept going against the contractor, took a default judgment in July 2014, and on September 30, 2014 the court added $8,865 in attorney's fees under 29 U.S.C. 1132(g)(2)(D).

In an earlier case brought by the funds together with Pipefitters Local Union No. 208, Trustees of the Pipe Industry Health and Welfare Fund of Colorado v. BEK Systems, Inc., No. 08-cv-00742 (D. Colo. 2009), judgment of $30,401.97 entered against both the company and an individual defendant, jointly and severally.

What federal law adds on top of the contributions

Under 29 U.S.C. 1145, a contractor bound by a collectively bargained agreement must make its plan contributions on the plan's terms. When trustees win a collection action, 29 U.S.C. 1132(g)(2) requires the court to award the unpaid contributions, interest, the greater of additional interest or the plan's liquidated damages (up to 20 percent unless federal or state law allows more), plus reasonable attorney's fees and costs.

Before you buy

Ask the fund office or your UA local for the current required amount, the exact names of the funds to list as obligees, and whether the trustees use their own bond form. Get those details settled before the bond is issued.

Eligibility and Requirements for a Colorado Employee Fringe Benefits Bond:

Obligees named as the Colorado pipe industry trust fund trustees, worded as the fund office specifies.
Bond amount set by the trustees or the collective bargaining agreement, not by Colorado statute.
Coverage for fringe benefit contributions owed to the health and welfare, annuity, apprenticeship and related funds.
Principal name matching the contributing employer.
Owner indemnity to the surety, which seeks repayment of any claim it pays.

Colorado Employee Fringe Benefits Bond FAQs:

Is this a DORA or other Colorado state requirement?

No. The obligee is the group of private trust funds for the Colorado pipe trades. The trustees and the union agreement decide the amount and form.

If the surety pays the full bond, am I finished?

No. In the Expert Mechanical case in Denver federal court, the surety paid its bond limit and was let out of the case, but the funds still took a default judgment against the contractor and were awarded $8,865 in attorney's fees on top.

Can an owner be personally on the hook?

It has happened. In the 2009 BEK Systems case, the court entered judgment against the company and an individual defendant jointly and severally. Separately, sureties generally have owners sign an indemnity agreement promising to repay any claim the surety pays.

Which funds does the bond cover?

The funds named in your agreement and on the bond. In Colorado collection cases these have included the Pipe Industry Health and Welfare Fund of Colorado, the Colorado Pipe Industry Annuity and Salary Deferral Trust Fund, apprenticeship and training funds, and a vacation fund. Confirm the list with the fund office.

How is the premium figured?

On the bond amount, the owners' credit and the company's financial picture, including its history of paying on time. The quote comes after the application.