A California B-General contractor's workers' compensation insurance policy lapses. According to California law, what action must the CSLB take regarding the contractor's license?
Correct Answer
D) Automatically suspend the license
Under California Business and Professions Code Section 7125, the CSLB must automatically suspend a contractor's license when workers' compensation insurance coverage lapses. This is mandatory and immediate, not subject to warning periods or alternative penalties, as worker safety is paramount under California law.
Why This Is the Correct Answer
California Business and Professions Code Section 7125 mandates automatic license suspension when workers' compensation insurance lapses. This is immediate and non-discretionary - the CSLB has no choice but to suspend the license. Worker safety is considered paramount, so there are no grace periods, warnings, or alternative penalties. The suspension remains in effect until proof of valid workers' compensation coverage is provided to the CSLB.
Why the Other Options Are Wrong
Option A: Impose a monetary fine only
California law does not provide for warning notices when workers' compensation insurance lapses. The suspension is immediate and automatic upon lapse, with no 30-day grace period or warning system in place.
Option C: Require additional bonding
Monetary fines alone are insufficient for workers' compensation lapses. The license must be suspended to prevent the contractor from operating without required worker protections. Fines may be additional penalties but cannot substitute for suspension.
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