Surety bonds come in a wide variety of different shapes and sizes. Financial guarantee bonds are generally intended to ensure payment for services. A union wage and welfare bond in Arizona is a type of financial guarantee surety bond that guarantees local union chapters payment, contribution to funds, and employee benefit packages.
Also known as union bonds, wage bonds, or wage and welfare bonds, this form of surety bond always involves three different parties. The first is the principal, which is the employer or business who intends to hire union members. The second is the obligee, or beneficiary party. In the case of union bonds the obligee is always the local union chapter. Finally a surety is required to underwrite and issue the bond.
Most unions require a Union Wage and Welfare Bond in Arizona before allowing members to be hired by an employer. As a result this form of financial guarantee bond is one of the most commonly written in the state. Typically a bargaining process precedes the setting of the bond rate, allowing employers and union chapters to collectively determine both the amount and conditions of the bond. In comparison to less common forms of financial guarantee bonds union wage bonds typically have comparatively low rates, with premiums as low as 1% of the bond amount for employers with good credit.
Prior to underwriting the bond a surety agent or company will review the client’s application and financial status. This always includes a credit check and may require that additional documents be filed for review. Obtaining welfare bonds often requires that a collateral be placed, particularly in instances where the client does not have excellent credit scores.
The primary advantage of taking out a union bond lies in an employer’s subsequent ability to hire union members as employees. The practice is most common among skilled laborers, as union members are generally more proficient in their fields than non-members. The ability to hire employees that are members of a labor union can drastically improve a company’s work force, making the writing of a surety bond to ensure union pay and benefits well worth the cost and hassle. Browse our website for more information about these and other forms of surety bonds or to get a quote online today.
