Surety Bond Encyclopedia

Wage & Welfare Bond - Michigan Regional Council of Carpenters Interior Systems Local 1045 in Michigan

Brief Summary

Independent carpentry and interior systems contractors signing with the Michigan Regional Council of Carpenters usually have two choices: put cash into the Carpenters Guaranty Fund or post a surety bond. The bond keeps that cash in your business. If your firm is represented by a contractor association, check first, because the association's guarantee can stand in for your own bond.

Under Article X of the MRCC carpenters agreement with the Carpenter Contractors' Association of Detroit, each employer covered by an agreement with the Union either keeps a deposit in the Carpenters Guaranty Fund or posts a surety bond from a company licensed in Michigan, in a form acceptable to the Fringe Benefit Funds. The security covers claims against the fringe benefit funds and up to two weeks of wages paid by bounced checks. Employers represented by an association are covered by its guarantee instead. Confirm the amount and form for Local 1045 work with the Council before the bond is issued.

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How to Apply for a Wage & Welfare Bond:

Find out whether a contractor association represents your firm and already guarantees it.
Ask the Council or the fringe benefit funds which agreement covers your Local 1045 work and the security amount that applies.
Choose between a Carpenters Guaranty Fund deposit and a surety bond.
Get any required bond form from the Fringe Benefit Funds.
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 Michigan Wage & Welfare Bond:

Association members may not need their own bond

Article X of the 2012-2016 Carpenters Agreement between the Carpenter Contractors' Association of Detroit and the Michigan Regional Council of Carpenters, as amended and extended through May 31, 2019, says that as long as an employer is represented by the Association, the Association's guarantee is in lieu of the deposit or surety bond an individual employer would otherwise owe. Each Association stands surety in the amount of $25,000 for members that are Employers in Good Standing and $50,000 for members that are New Employers or Delinquent Employers, or provides a suitable bond instead.

Independent employers: deposit or bond

An employer not covered by an association guarantee has two options under Article X. It can deposit and maintain the amount the agreement schedules with the Carpenters Guaranty Fund, or it can post a surety bond in that amount, issued by a bonding company licensed to do business in Michigan and in a form acceptable to the Fringe Benefit Funds. The Guaranty Fund is a trust run by a joint committee of Union and Association representatives.

What the security covers

Article X says the security deposit is used to cover claims against the fringe benefit funds and up to two weeks of uncollected wages paid by checks the bank did not honor.

Local 1045 work

Interior Systems Local 1045 is part of the Michigan Regional Council of Carpenters. Ask the Council or the fringe benefit funds which agreement covers your Local 1045 work, what security amount applies to your firm, and whether they have a required bond form. Get the answers in writing before the bond is issued.

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 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.

Eligibility and Requirements for a Michigan Wage & Welfare Bond:

Employer covered by an agreement with the Michigan Regional Council of Carpenters.
Guaranty Fund deposit or a surety bond in the same amount.
Bond issued by a bonding company licensed to do business in Michigan.
Bond form acceptable to the Fringe Benefit Funds.
Association guarantee of $25,000 for members in good standing or $50,000 for new or delinquent members replaces the individual bond.

Michigan Wage & Welfare Bond FAQs:

Does every contractor have to post this bond?

No. Under Article X, an employer represented by a contractor association is covered by the association's guarantee in lieu of its own deposit or bond. Independent employers post a Guaranty Fund deposit or a surety bond.

How much is the bond?

For independent employers the agreement schedules the deposit amount, and the bond must equal it. Ask the Council or the fringe benefit funds for the figure that applies to your firm and get it in writing. Association guarantees are $25,000 for members in good standing and $50,000 for new or delinquent members.

What does it cover?

Claims against the fringe benefit funds, and up to two weeks of uncollected wages paid by checks the bank did not honor.

Can I deposit cash instead?

Yes. Article X lets an employer deposit and maintain the required sum with the Carpenters Guaranty Fund instead of posting a surety bond.

Does the surety need to be licensed in Michigan?

Yes. Article X calls for a bonding company licensed to do business in the State of Michigan, in a form acceptable to the Fringe Benefit Funds.

How is the premium set?

The surety looks at the bond amount, the owner's credit, and the company's finances and payment history. You get a quote after the application is underwritten.