A contractor discovers that a subcontractor is working without proper workers' compensation coverage on a Georgia project. What action should the contractor take?
Correct Answer
D) Immediately stop the subcontractor from working and verify coverage
Georgia law requires all contractors to have workers' compensation coverage. The general contractor must immediately stop uninsured subcontractors to avoid liability.
Why This Is the Correct Answer
Georgia law (O.C.G.A. § 34-9-121) places responsibility on general contractors to ensure that subcontractors maintain workers' compensation coverage. When a general contractor discovers an uninsured subcontractor, the legally correct and risk-mitigating action is to immediately stop the subcontractor from working and verify that proper coverage is obtained before work resumes. Allowing an uninsured subcontractor to continue creates direct liability for the general contractor.
Why the Other Options Are Wrong
Option A: Add the subcontractor to their own policy
Adding the subcontractor to the contractor's own policy is generally not an available or appropriate option mid-project, and it doesn't address the subcontractor's legal obligation to carry their own coverage. It could also misrepresent the employment relationship to the insurer.
Option B: Continue work and report after project completion
Continuing work and reporting after project completion is dangerous and legally improper. If an injury occurs in the interim, the general contractor faces full liability for the uninsured subcontractor's workers, plus potential criminal penalties for knowingly allowing uninsured work.
Option C: Reduce the subcontractor's payment to cover potential liability
Reducing payment to cover potential liability is not a legally recognized remedy. It is an informal workaround that does not satisfy the insurance requirement, could constitute a contract breach, and leaves the contractor fully exposed if an injury occurs.
Memory Technique
Think of it as a job site safety stop: 'No insurance? No work.' The general contractor acts as the gatekeeper. Any answer that allows work to continue is wrong. 'Discover + No Coverage = Stop Immediately.'
More Georgia Questions
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Which situation would require a Georgia contractor to obtain workers' compensation insurance?
A contractor receives a stop work order from the local building official. The contractor continues working despite the order. What is the typical penalty range?
A contractor's license expires on June 30th. They submit a renewal application on July 15th. What additional requirement must they meet?
A Georgia contractor completes work valued at $15,000 on March 1st. The property owner fails to pay. What is the deadline for filing a materialman's lien?
A contractor fails to pay workers' compensation premiums and coverage lapses. An employee is injured the next day. What is the contractor's liability?
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A contractor's annual payroll is $450,000. If the workers compensation rate is 8.5 per $100 of payroll, what is the annual premium?
What is the threshold amount above which a contractor must be licensed in Georgia?
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