A contractor's employee is injured on a job site in Arizona. The contractor does not carry workers' compensation insurance as required. What is the potential penalty under Arizona law?
Correct Answer
A) Civil penalty of up to $1,000 per employee per day
Arizona law imposes civil penalties of up to $1,000 per employee per day for contractors who fail to maintain required workers' compensation coverage.
Why This Is the Correct Answer
Arizona law imposes a civil penalty of up to $1,000 per employee per day for every day that a contractor fails to maintain required workers' compensation coverage. This per-employee, per-day structure can rapidly accumulate into very large penalties, creating a strong financial incentive to maintain coverage at all times.
Why the Other Options Are Wrong
Option B: Warning letter for first offense
A warning letter is not the penalty for failure to carry required workers' compensation insurance. Arizona law imposes civil monetary penalties immediately upon violation — there is no first-offense warning system for this type of non-compliance.
Option C: Civil penalty of up to $500 and mandatory safety training
$500 with mandatory safety training does not reflect Arizona law. The statutory penalty is $1,000 per employee per day, and safety training is not prescribed as a substitute or addition to the financial penalty.
Option D: Suspension of contractor license for 30 days
A 30-day license suspension is not the primary penalty for workers' comp non-compliance. While the ROC can take licensing action, the specific statutory penalty cited in Arizona law for this violation is the civil monetary fine structure.
Memory Technique
No workers' comp = $1,000 per worker per day. Visualize each uninsured employee as a $1,000-per-day liability clock ticking from the moment coverage lapses.
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