On September 21, an Iowa Appeals Court affirmed an award of $148,000 against a general contractor and its surety for unpaid benefit contributions owed to the Iowa Laborers District Council Health and Welfare Trust (Fund) by a subcontractor working on a school construction project.  The general contractor obtained a payment bond for the project and hired a subcontractor to perform masonry work on the project.  The subcontractor had a collective bargaining agreement with the union requiring it to make fringe benefit payments into the Fund.  The subcontractor failed to make the payments and the Fund brought suit seeking to recover the unpaid contributions under the general contractor’s payment bond.  The trial court held that the Fund brought a valid claim against the performance bond and the Appeals Court agreed.  Specifically, the Appeals Court concluded that unpaid benefit contributions are claims for “labor performed” under state law and were therefore covered by the performance bond.  This decision will probably cause general contractors to require subcontractors to obtain payment bonds for both wage and benefit fund contributions not paid by subcontractors.  In fact, surety companies providing payment bonds for general contractors may also request such requirements for subcontractors.                By Bill Harding, Chapter Attorney