Surety Bond Encyclopedia

Wage and Welfare Bond - Pipe Fitters Local No. 597 in Illinois

Brief Summary

For a contractor signed to Pipe Fitters Local 597, this bond is what keeps the agreement in place. The Local 597 agreement lets the Union cancel it as to any employer that fails to procure and maintain the required surety bond, which means losing access to Local 597 fitters. Getting the bond written and keeping it in force is a small cost against that.

Contractors signatory to the Pipe Fitters Local No. 597 collective bargaining agreement in the Chicago area must procure and maintain a surety bond as described in Article XI, Section (c) of the agreement. The bond guarantees payment of wages and of contributions owed to the Local 597 benefit funds. Under Article III, Section 5(b), failure to keep the bond in place is grounds for the Union to cancel the agreement as to that employer. Pipe Fitters Local No. 597 is the obligee. Confirm the current amount and bond form with the Union or the Fund Office before the bond is issued.

We can help with all Illinois bonds!

How to Apply for a Wage and Welfare Bond:

Sign the Local 597 collective bargaining agreement or confirm your signatory status.
Ask the Union or the Fund Office for the bond amount and form required under Article XI, Section (c) of the current agreement.
Have the employer's exact legal name, address and federal employer identification number ready.
Complete the bond application with company and owner financial information for underwriting.
Pay the premium and receive the signed bond.
Deliver the original bond as the Union or Fund Office directs and keep it in force for as long as you are signatory.

Detailed Information About the Illinois Wage and Welfare Bond:

The bond is a condition of staying signatory

Contractors often treat this as a one time paperwork item. The agreement treats it as ongoing. Article III, Section 5(b) of the Local 597 collective bargaining agreement, as quoted in a March 19, 2013 federal court opinion in Board of Trustees of the Pipe Fitters Retirement Fund, Local 597 v. Global Mechanical Inc., lists three circumstances in which the Union may cancel the agreement as to an employer. One of them is that the employer fails to procure and maintain a Surety Bond as described in Article XI, Section (c). A lapsed bond is enough, even if contributions are current.

What the bond guarantees

Signatory employers report hours worked by covered employees every month and pay contributions to the trust funds for each hour at the negotiated rate. Local 597 sponsors a Retirement Fund, a Welfare Fund and a 401(k) plan. The wage and welfare bond backs those payment obligations. If the employer does not pay, the bond gives the Union and the funds a source of recovery up to the bond amount, and the employer must repay the surety.

What happens when payments run late

The same agreement makes it a violation, and cause for cancellation, if an employer fails after reasonable notice to furnish reports or pay Benefit Funds or Education Fund contributions or Wage-Work Assessments. The Union may cancel as to an employer that is more than 50% delinquent in its total contributions for any month and does not remit them within thirty days of written notice. Employers that report or pay late owe liquidated damages and interest for each month contributions remain unpaid, plus reasonable attorney's fees and costs.

Before the bond is issued

The bond amount and wording are set by Article XI, Section (c) of the agreement in force when you sign. Ask the Union at 312.829.4191 or the Fund Office at 312.633.0597 for the current amount, the required form and where the original bond should be sent.

Eligibility and Requirements for a Illinois Wage and Welfare Bond:

Pipe Fitters Local No. 597 named as obligee, along with any fund trustees the agreement requires.
Bond amount set by Article XI, Section (c) of the collective bargaining agreement in force.
Employer name on the bond matching the name on the signed agreement exactly.
Continuous coverage. Failure to procure and maintain the bond is grounds for cancellation of the agreement as to the employer.
Company and owner financial review by the surety. Larger bonds may call for business financial statements.

Illinois Wage and Welfare Bond FAQs:

What happens if our bond lapses?

Under Article III, Section 5(b) of the Local 597 agreement, an employer's failure to procure and maintain a Surety Bond as described in Article XI, Section (c) is one of the circumstances in which the Union may cancel the agreement as to that employer.

How much does the bond have to be?

The amount is set by Article XI, Section (c) of the collective bargaining agreement in force when you sign. Get the current figure and form from the Union or the Fund Office before the bond is written.

What does the bond protect?

Payment of wages and the contributions owed to the Local 597 benefit funds, which include the Retirement Fund, the Welfare Fund and the 401(k) plan. Employers report hours monthly and pay contributions for each hour worked at the negotiated rate.

What does the agreement say about late contributions?

Late reports or contributions bring liquidated damages and interest for each month they remain unpaid, plus reasonable attorney's fees and costs. The Union may cancel the agreement as to an employer that is more than 50% delinquent for any month and does not pay within thirty days of written notice.

How do we report hours and contributions?

Signatory employers report hours and benefits through the employer online reporting system linked from the Local 597 Employers page, which also has remittance reporting instructions.