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Texas Wage and Welfare Bond

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IBEW Local No. 520 – Wage Welfare Bond
IBEW Local No. 60 – Wage and Welfare ($10,000) Bond
IBEW Local No. 527 – Wage and Welfare Bond

Introduction

Texas Wage and Welfare refers to the financial obligations that employers—particularly those in unionized industries—have to pay their employees’ wages, fringe benefits, and union trust fund contributions as required by collective bargaining agreements (CBAs). These obligations often include health insurance, pension plans, training funds, and vacation pay.

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Explanation: Texas Wage and Welfare Bond

A Texas Wage and Welfare Bond is a type of surety bond required by labor unions, trade organizations, or in some cases, state entities, to ensure that a business—typically a contractor or subcontractor—pays its employees and union members their agreed-upon wages, benefits, and contributions to welfare or pension funds.

Purpose of the Bond

The Wage and Welfare Bond serves as a financial guarantee that the employer will:

  • Pay all wages and fringe benefits (such as health insurance, pension, or vacation funds) as outlined in collective bargaining agreements (CBAs)

  • Fulfill obligations to union trust funds and benefit plans

  • Compensate workers in the event of nonpayment or misappropriation

Read our Texas Railroad Commission Bond.

Who Requires This Bond?

This bond is commonly required when:

  • A unionized contractor is bidding or working on a project under a collective bargaining agreement

  • A union or trade group demands financial assurance from employers with whom they negotiate

  • A business with a history of wage violations is mandated to obtain the bond as a condition of continued operation or project award

Bond Amount

The bond amount is typically set by the union or trust fund and may vary based on:

  • Number of employees

  • Wage rates and benefit costs

  • Employer’s payment history

Amounts often range from $10,000 to $100,000 or more, depending on contractual obligations.

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Process of Getting a Texas Wage and Welfare Bond

Here’s a Step-by-Step Guide to obtaining a Texas Wage and Welfare Bond:

Step 1: Confirm Union Requirements
  • Contact the specific union (e.g., IBEW Local 520, 60, or 527)
  • Verify:
    • Bond amount (often $10,000 or more)
    • Obligee name (e.g., the union or its trust fund)
    • Official bond form, if required
Step 2: Choose a Licensed Surety Bond Provider
Step 3: Submit Bond Application

Provide the following:

    • Legal business name and structure

    • Employer Identification Number (EIN)

    • Union contract or CBA reference

    • Estimated payroll or employee count

    • Owner or officer information (for underwriting)

Step 4: Underwriting Review

  • The surety conducts a credit check and risk assessment

Step 5: Pay the Premium

  • Typical cost: 1%–5% of bond amount annually

Step 6: Receive and Sign the Bond

  • The surety issues the bond using the union’s required language

  • Contractor signs the bond (and sometimes must notarize it)

Step 7: File the Bond with the Union

  • Submit the original signed bond to the union office or fund administrator

  • Keep a copy for your records

Conclusion

The Texas Wage and Welfare Bond is a crucial financial guarantee that ensures employers fulfill their contractual obligations to pay union wages and benefits. Required by labor unions such as IBEW, this bond protects workers and trust funds from nonpayment, while reinforcing employer accountability under collective bargaining agreements. Maintaining an active bond is essential for union-affiliated contractors to operate legally and responsibly in Texas.

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Frequently Asked Questions (FAQs)

Is a credit check required?

Yes. Most surety companies require a soft credit check to assess risk and determine premium rates.

How long is the bond valid?

Wage and Welfare Bonds are generally issued for a 12-month term and must be renewed annually to maintain compliance.

What happens if the employer doesn’t pay?

The union may file a claim against the bond to recover unpaid wages or contributions. If the surety pays, the employer must reimburse the surety in full.

Who are the parties to the bond?

  • Principal: The employer or contractor

  • Obligee: The union or its trust fund

  • Surety: The bond company guaranteeing payment

Is the bond required for non-union contractors?

No. Wage and Welfare Bonds are typically required only for union contractors who are signatory to a Collective Bargaining Agreement (CBA). Non-union contractors are not subject to this requirement unless specifically mandated by contract.

Can the bond be transferred to another union or project?

No. Wage and Welfare Bonds are union-specific and often non-transferable. A separate bond may be required if working under a different union or jurisdiction.

Are Wage and Welfare Bonds required on public works projects?

Not automatically. While performance and payment bonds are required on public works jobs in Texas, Wage and Welfare Bonds are only required if union labor is involved under a CBA that mandates the bond.

See our Texas Notary Public Bond.