A Nevada contractor's employee is injured on the job, resulting in $75,000 in medical expenses and $45,000 in lost wages. The contractor failed to carry workers' compensation insurance. What is the potential penalty under Nevada law?
Correct Answer
D) $5,000 fine plus liability for all costs
Nevada law imposes significant penalties including fines up to $5,000 plus full liability for all workers' compensation costs when contractors fail to carry required insurance.
Why This Is the Correct Answer
Nevada law (NRS Chapter 616C) imposes a fine of up to $5,000 for failure to carry required workers' compensation insurance, plus the contractor becomes directly liable for all workers' compensation costs — meaning all medical expenses and lost wage replacement the injured worker is entitled to. In this scenario, that is $75,000 in medical + $45,000 in wages = $120,000 in liability, on top of the $5,000 fine.
Why the Other Options Are Wrong
Option A: License suspension only
License suspension alone is insufficient under Nevada law. While the contractor's license may also be subject to suspension or revocation as a secondary consequence, the statute imposes monetary fines and full cost liability — not merely a license action. An answer of 'suspension only' dramatically understates the penalty.
Option B: $10,000 fine plus liability for all costs
$10,000 fine overstates Nevada's statutory fine amount. Nevada caps the administrative fine at $5,000 for this violation. The $10,000 figure might be confused with other states' penalty schedules or with OSHA citation amounts.
Option C: $25,000 fine plus liability for all costs
$25,000 fine significantly overstates the statutory cap. While $25,000 fines exist in some states and for repeat or egregious violations in other contexts, Nevada's workers' comp uninsured employer penalty is $5,000 plus liability — not $25,000.
Memory Technique
Nevada WC penalty = '$5K fine + you pay everything.' Remember '$5,000' as the Nevada magic number for uninsured employer fines. The liability portion is unlimited — you pay whatever the injured worker is owed. Think: small fine, unlimited liability.
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