According to B&P Code Section 7110, what is the maximum penalty for a contractor who fails to maintain required workers' compensation insurance?
Correct Answer
D) $10,000 and license revocation
B&P Code Section 7110 establishes that failure to maintain required workers' compensation insurance can result in penalties up to $10,000 and license revocation.
Why This Is the Correct Answer
B&P Code Section 7110 establishes the penalty for failure to maintain required workers' compensation insurance at up to $10,000 and license revocation. This significant penalty reflects California's serious stance on protecting workers from on-the-job injuries without financial recourse.
Why the Other Options Are Wrong
Option A: $25,000 and permanent revocation
$25,000 and permanent revocation is incorrect. No such penalty amount or 'permanent' revocation language appears in Section 7110 for this specific violation. $25,000 exceeds the statutory maximum of $10,000 for this infraction.
Option B: $15,000 and two-year suspension
$15,000 and two-year suspension is incorrect. The penalty amount of $15,000 is above the $10,000 ceiling, and the consequence is revocation — not a two-year suspension. Mixing up the penalty amount and type of disciplinary action is a common trap.
Option C: $5,000 and license suspension
$5,000 and license suspension is incorrect. The penalty amount is too low ($5,000 vs. the correct $10,000) and the disciplinary action is described as 'suspension' rather than 'revocation.' Both elements are wrong.
Memory Technique
Associate workers' comp non-compliance with '$10K and gone' — $10,000 fine and the license is revoked (gone). The 'K' in '$10K' can stand for 'Killed' — your license is killed (revoked) for not protecting your workers.
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