A contractor's employee is injured on the job with medical costs of $15,000 and lost wages of $8,000. The contractor has no workers' compensation insurance. What is the contractor's liability?
Correct Answer
B) $23,000 plus penalties and potential criminal charges
Without workers' compensation insurance, the contractor is liable for all costs plus penalties and faces potential criminal charges under Oregon law.
Why This Is the Correct Answer
Option B is correct. When a contractor fails to carry required workers' compensation insurance in Oregon, they are personally liable for all costs the insurance would have covered—in this case $15,000 in medical costs plus $8,000 in lost wages, totaling $23,000. Beyond that, Oregon law imposes civil penalties and the violation can result in criminal charges. The uninsured contractor bears full financial and legal exposure.
Why the Other Options Are Wrong
Option A: $15,000 (medical only)
$15,000 (medical only) is incomplete. The contractor is liable for both medical costs AND lost wages. Limiting liability to medical costs ignores the statutory requirement to cover all workers' compensation benefits that an insured employee would have received.
Option C: No liability if employee was negligent
Employee negligence is not a defense under Oregon workers' compensation law. Workers' comp is a no-fault system—the employee receives benefits regardless of fault. An uninsured contractor cannot use the employee's own negligence to escape liability.
Option D: $23,000 (medical + wages)
$23,000 is the base amount, but without insurance, the contractor faces more than just the base costs. Oregon adds civil penalties on top of the actual costs, and criminal prosecution is also possible. Option D omits the critical penalty and criminal exposure.
Memory Technique
Think: 'No insurance = the bill plus the penalty bill.' In Oregon, skipping workers' comp doesn't just mean paying what insurance would have—it means paying that PLUS penalties and risking criminal charges. It's always worse than just the costs.
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Previous Question
A contractor performs $12,500 of electrical work on a residential addition in Oregon. The property owner refuses to pay the final invoice of $3,200. To perfect a construction lien under ORS 87, the contractor must record the lien claim in which location?
Next Question
A subcontractor files a lien for $8,000 but the general contractor's final payment from the owner was only $5,500. Under ORS 87, what is the maximum the subcontractor can recover from the owner?