General Contractor’s Surety Must Pay Out for Fringe Benefits to Subcontractors’ Workers

Not too many cases arise involving claims against surety bonds in public construction contracts, so a recent Appeals Court case may be of interest. G.L. c. 149, § 29 requires that a surety bond be secured for most public building and public works projects for payment by the contractor and subcontractor for labor and materials used on the projects. In New England Carpenters Central Collection Agency v. Arch Insurance Company, No. 25-P-74 (Appeals Court June 10, 2026), the plaintiff was an agency designated in a collective bargaining agreement (CBA) to collect money for fringe benefits that subcontractors were required to pay on behalf of carpenters employed on two public building projects.  

The General Contractor contracted with two subcontractors for carpentry work. All three were signatories to a CBA with the regional carpenters’ union, but the plaintiff agency was not, nor were the fringe benefit trustees for whom the plaintiff agency acted. The subcontractors were obligated under the CBA to make payment to the agency on behalf of the carpenters. In the event they defaulted, the CBA provided that the agency and the union could collect from the General Contractor. 

Section 29 provides different procedures for collecting from a general contractor depending on whether the claimant has a contractual relationship with the general or only with a subcontractor. One with a contractual relationship to a general contractor need not give written notice of a claim and has one year after last providing services to sue in Superior Court. One with only a contractual relationship with the subcontractor must provide written notice to the general contractor within 65 days of the last date services were provided.  

The agency notified the General Contractor that the subcontractors had defaulted but did so beyond 65 days. The trial court found that the agency was a third-party beneficiary of the CBA but regretfully concluded that in the absence of a contractual relationship, the notice was untimely. The Appeals Court disagreed, finding that the third-party beneficiary arrangement was a sufficient contractual relationship to excuse the agency from the 65 day deadline for notice. It did so based on both the broad term in the statute of a “contractual relationship” rather than “contract” or “privity” and on the broad remedial intent of the statute to ensure that laborers on public projects are paid. 

While the case does not directly involve the municipality itself, municipalities can be affected when disputes arise between contractors and subcontractors. Some knowledge of the scope of claims to be made against payment bonds may be helpful for procurement officers and those who oversee public construction projects.