Unions require this bond in order for them to be able to negotiate collective bargaining agreements with companies. If a union member does not abide by the obligations stated in the bond, the bond amount can be used to repay claims for wages, salaries, fringe benefits and compensation for services. Union dues and benefits are guaranteed to be paid by companies that contract with the union.
Each wage and welfare bond varies by state. Common bond terms that are used to refer to this bond are wage and fringe benefits bond, wage fund bond, and welfare fund bond. The bond legally binds 3 parties into a legal agreement; the surety bond. The obligee is the union requiring the bond, the principle is the union member required to buy the bond insurance, and the surety company is the underwriter that issues the bond. The financial guarantee that is provided by the bond is that the union member will uphold their duties as a union member.
Since this bond is a financial guarantee, the premium will be slightly higher than a regular commercial bond. Also, since there have been many claims made by unions in the past, surety companies want to make sure the bond applicant is financially and legally acceptable.
A separate bond for each union a business contracts services through is required. In the event of the principle failing to pay union dues for a certain time period, a claim against the bond can be filed so the union can collect their dues. The price for the bond is determined by the applicant’s personal credit.
Visit Surety1’s free online application to apply for this bond as well as many others.