Surety Bond Encyclopedia

Wage and Welfare ($100,000) Bond - International Association of Heat and Frost Insulators in Maryland

Brief Summary

A $100,000 wage and welfare bond lets an insulation contractor working under a Heat and Frost Insulators agreement in Maryland guarantee its payroll and benefit fund contributions without setting aside $100,000 in cash. You pay a premium, the union and its funds get a surety standing behind your contributions, and your working capital stays in the business.

Contractors who sign a collective bargaining agreement with the International Association of Heat and Frost Insulators and Allied Workers in Maryland can be required to post a $100,000 wage and welfare bond. The bond guarantees that wages and the fringe benefit contributions owed under the agreement get paid. It is a private bond given to the union side of the agreement, not a state license bond. Local 24, based in Laurel, serves Baltimore and Washington, D.C. Confirm the current bond form and exact obligee wording with the local or its fund office before the bond is issued.

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How to Apply for a Wage and Welfare ($100,000) Bond:

Get the bond requirement in writing from Local 24 or the fund office, including the exact obligee name and any required bond form.
Use the company's legal name exactly as it appears on the signed collective bargaining agreement.
Provide owner names and home addresses for the personal credit review.
Provide recent business financial statements if the surety asks for them.
Sign the surety's indemnity agreement, pay the premium and receive the executed bond with the power of attorney.
Deliver the original bond where the local or fund office directs and keep a copy.

Detailed Information About the Maryland Wage and Welfare ($100,000) Bond:

This is not a Maryland license bond

Contractors often assume a bond with Maryland on it gets filed with a state agency. This one does not. The obligee is the union party to your collective bargaining agreement, the International Association of Heat and Frost Insulators and Allied Workers, acting through its Maryland local. Some agreements also want the trustees of the benefit funds named on the bond, so get the exact obligee wording from the local or fund office before anything is signed.

Why the funds ask for security

Federal law at 29 U.S.C. 1145 requires every employer obligated to contribute to a multiemployer plan under a collectively bargained agreement to make those contributions on the terms of the plan or agreement. When contributions go unpaid, 29 U.S.C. 1132(g)(2) has the court award the unpaid contributions, interest, an additional amount equal to the greater of that interest or liquidated damages set by the plan of up to 20 percent of the unpaid contributions, plus attorney fees and costs.

A judgment is only worth something if the contractor can pay it. The bond puts a surety company behind the contractor so the funds have someone solvent to collect from.

Who posts it and how much

The signatory contractor posts the bond. This listing is the $100,000 version. If the local or fund office tells you a different amount applies to your company, the bond has to match what they ask for.

Local 24

Insulators Local Union No. 24 is at 901 Montgomery Street, Laurel, Maryland 20707, and describes itself as serving Baltimore and Washington, D.C. Ask the local where it wants the original bond delivered.

How the premium is set

The surety prices the bond on the risk that it will have to pay a claim. It looks at the owners' personal credit, the company's financial statements, how long the company has been operating, and its record of paying payroll and benefit contributions on time. A contractor with clean books and a history of current contribution reports pays less than one with past delinquencies.

Eligibility and Requirements for a Maryland Wage and Welfare ($100,000) Bond:

Bond amount of $100,000 as listed, unless the local or fund office specifies a different figure.
Obligee wording that matches what the union or its benefit funds specify.
A surety company licensed to write surety bonds in Maryland unless the agreement says otherwise.
Personal indemnity from the owners of the contracting company.
Contribution reports and payments kept current, since unpaid contributions are what the funds claim against.

Maryland Wage and Welfare ($100,000) Bond FAQs:

Do I file this bond with the State of Maryland?

No. It is a private bond running to the union and, where the agreement requires it, the trustees of its benefit funds. No Maryland agency issues or holds it. Deliver the original wherever the local or fund office directs.

What does the bond actually cover?

Wages and fringe benefit contributions the contractor owes under the collective bargaining agreement. Under 29 U.S.C. 1132(g)(2), unpaid contributions can grow with interest, liquidated damages of up to 20 percent where the plan provides for them, and attorney fees. Whether those added amounts fall inside the bond depends on the wording of the bond form, so read it before you sign.

Why is the amount $100,000?

This listing is the $100,000 version of the bond. If the local or fund office tells you a different amount applies to your company, the bond must be written for that amount.

If the surety pays a claim, am I off the hook?

No. A surety bond is not insurance for the contractor. You and the owners sign an indemnity agreement, and the surety will seek repayment of anything it pays to the funds, plus its costs.

How long does the bond stay in place?

Ask the fund office whether the bond must stay in force for as long as you remain signatory to the agreement and how much notice it requires before a bond can be cancelled. Cancelling without a replacement can put you out of compliance with the agreement.