Wage And Welfare Bonds
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What you need to know about Wage And Welfare Bonds
Wage and welfare bonds (also known as union bonds or fringe benefits bonds) are legally binding agreements between three parties: businesses employing union members, labor unions, and a surety company.
The union is the Obligee and establishes the obligations that the business (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the business.
Businesses are required to post a wage and welfare surety bond to be eligible to hire members of a union. The bond guarantees that union members will be compensated according to the collective bargaining agreement.
When the surety company issues the bond, they provide the union a financial guarantee that union members will receive payment for financial losses resulting from a violation of the terms agreed upon in the collective bargaining agreement.
If the employer fails to meet the obligations set out by the union, the surety will pay out any damages up to the bond amount. The employer is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
Wage and welfare surety bond costs vary depending on the total bond amount and the premium rate. The union sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premium rates for wage and welfare bonds typically cost between 2% and 5% of the total bond amount. During the application process, the surety company evaluates your credit score, financial strength, and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a wage and welfare bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for wage and welfare surety bonds in popular states.
You’ll know if you need a surety bond because some entity will have required you to obtain one. They must also inform you of which specific bond type you’ll need. There are thousands of bonds across the country, all of which vary by state and industry.
Visit EZSuretyBonds.com to browse hundreds of bonds by state, type, or industry.
