A contractor's workers' compensation policy lapses on March 15th. The contractor continues working with employees until March 30th when a new policy takes effect. What penalty applies?
Correct Answer
D) $100 per day per employee
B&P Code Section 7125 imposes a penalty of $100 per day per employee for operating without required workers' compensation coverage. 15 days × $100 × number of employees.
Why This Is the Correct Answer
B&P Code Section 7125 imposes a penalty of $100 per day per employee for operating without required workers' compensation coverage. The per-employee, per-day calculation makes the penalty escalate rapidly depending on workforce size, reflecting the serious nature of leaving workers unprotected.
Why the Other Options Are Wrong
Option A: Automatic license suspension
Automatic license suspension is not the penalty structure described in B&P Code Section 7125 for this scenario. While CSLB may ultimately suspend a license for ongoing non-compliance, the statute specifies a monetary penalty calculated by employee count and days, not an automatic suspension.
Option B: $500 per employee for the entire period
$500 per employee for the entire period is not the penalty formula under B&P Code 7125. This amount is incorrect; the statute specifies $100 per day, not a flat $500 per employee.
Option C: $100 per day total
$100 per day total (not per employee) would drastically understate the penalty for contractors with multiple workers. The statute explicitly applies the $100 per day rate to each individual employee, making the workforce size a critical multiplier.
Memory Technique
Think '$100/day/employee — every worker counts every day.' The penalty scales like payroll: just as you pay each worker each day they work, you owe $100 for each worker each day they work without coverage.
More California Questions
A Class C-10 electrical contractor has annual gross receipts of $3.2 million. What is the required bond amount under current California law?
Under B&P Code Section 7125.4, what is the fee for initial Home Improvement Salesperson registration?
According to B&P Code Section 7125, what is the maximum penalty the CSLB can impose for contracting without a license?
A home improvement contract for $8,500 requires a 3-day right to cancel notice. The contract is signed on Tuesday at 2 PM. When does the cancellation period expire?
A contractor employs 15 workers across multiple job sites. The total annual payroll is $850,000 with a workers' comp rate of 4.1%. If they self-insure with a deposit requirement of 125% of estimated annual premium, what deposit is required?
A C-10 electrical contractor wants to perform plumbing work valued at $8,000 as part of a larger electrical project. Is this permissible under CSLB regulations?
A homeowner discovers that an unlicensed contractor performed $25,000 worth of work on their property. Under B&P Code Section 7031, what remedy is available to the homeowner?
A Class B general building contractor wants to perform electrical work valued at $750. According to the B&P Code, this contractor:
A contractor's qualifying individual leaves the company. How many days does the contractor have to replace them before the license becomes invalid?
According to B&P Code Section 7031, what happens to a contractor's right to payment if they perform work while unlicensed?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass