A contractor employs 5 workers and fails to provide workers compensation coverage. If discovered during a ROC investigation, what is the maximum potential fine?
Correct Answer
B) $50,000
With penalties of $2,000-$10,000 per employee, the maximum fine for 5 employees would be $50,000 (5 × $10,000).
Why This Is the Correct Answer
Under Arizona law, the Registrar of Contractors (ROC) can impose penalties of up to $10,000 per employee for failing to maintain required workers' compensation coverage. With 5 employees, the maximum total fine is 5 × $10,000 = $50,000. This per-employee penalty structure means the fine scales directly with workforce size.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 would imply a per-employee maximum of $20,000 (5 × $20,000), which exceeds the statutory cap of $10,000 per employee under Arizona workers' compensation enforcement.
Option C: $75,000
$75,000 does not correspond to a clean multiple of either the minimum ($2,000) or maximum ($10,000) per-employee penalty for 5 workers. This figure is not supported by the statutory formula.
Option D: $25,000
$25,000 would represent only $5,000 per employee, which falls below the $10,000 per-employee maximum. The question asks for the maximum potential fine, so the highest per-employee rate must be used.
Memory Technique
Think '$10K per worker, max fine.' Five workers × $10,000 each = $50,000. Use the phrase 'Ten grand a head' to remember the per-employee maximum, then multiply by headcount.
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