What is a Wage Bond
Surety bonds come in many varieties, but the general purpose of these bonds is always to ensure that a person/people or entity/entities will be fairly compensated in the case of loss. Thus, a surety bond of any type serves as insurance against financial loss or another type of loss.
One type of surety bond that many employers purchase is a wage bond. This insurance is referred to by a few other terms as well, including wage and welfare bond, union bond, and fringe benefit bond. Essentially, this sort of bond ensures the delivery of dues, benefits, and packages that have been promised as part of a union agreement.
[What is a wage bond? We can help! If you are ready to get a union bond, or welfare bond…look no further. Contact our office today, and get yours today!]
What Are They Exactly?
Wage Bond Definition – They guarantee that employers will make their contribution to welfare funds. This guarantee also includes the payment of agreed wages, which is how the term “wage and welfare bond” gets its name. This sort of bond works as financial insurance, and it is a legal contract between three involved parties. The principal is the employer being bonded; the obligee is the union or other entity that requires the principal to be bonded; and the surety is the entity that underwrites the bond.
A fringe benefit bond may differ a bit from a welfare and wage. This type of bond may guarantee only that union benefits will be paid by the employer. Unlike a wage, it may not ensure that the employer will pay wages.
Who Needs one:
A variety of employers might be required to purchase a wage & welfare bond. These bonds are generally needed in industries such as transportation services, construction, and mining. Employers in other industries might also be required to secure wage surety bonds. The bonds typically seem most necessary in the construction industry. This is likely due to the fact that numerous liens in courts are based on construction workers going unpaid.
Repercussions for Not One:
If an employer is required to have a wage surety bond but doesn’t secure one, the result could be fines and penalties incurred. One example of such a requirement occurred in New York State: In 2015, Governor Cuomo announced that nail salons must purchase these bonds. This was done to protect the exploitation of those who work in such salons. Once this decree was made public, salon owners had to comply within 60 days or face penalties and fines.
If an employer has secured a union bond and doesn’t pay proper wages and benefits, the surety company ensures that such compensation will be paid to employees. However, the principal (employer) will ultimately still be held accountable by the surety for the unpaid benefits and wages.
The Value of a Wage & Welfare Bond
Union bonds serve a valuable purpose to innumerable workers. Those who put in time and labor at their jobs should reasonably expect to be paid. Such people should also expect to enjoy the benefits they have been promised. These bonds works as insurance for workers across the country. Surety by NFP can place any kind of union bond in any state…regardless of credit. Feel free to contact us today for more information.
Surety by NFP has been the union or fringe benefit bond leaders since 1984. Whatever you call this kind of bond, we can take care of your bonding needs regardless of what state you need to be bonded in. We have access to markets and carriers in all states. Should you have any questions regarding wage bond definition, or if you need one, feel free to contact our office. Our professional staff would appreciate answering any questions you may have.