According to California Labor Code Section 3700, what is the minimum workers' compensation insurance requirement for a California contractor with employees?
Correct Answer
C) Coverage is required for all employees with no exceptions
California Labor Code Section 3700 mandates that every employer, including contractors, must secure workers' compensation coverage for all employees. There are no exceptions based on company size, project type, or payroll amount. Failure to maintain coverage is a criminal misdemeanor in California.
Why This Is the Correct Answer
California Labor Code Section 3700 requires every employer — including contractors of any size — to secure workers' compensation insurance for all employees. There are no size-based thresholds, project-type restrictions, or payroll minimums. Even a contractor with a single part-time employee must carry workers' compensation coverage. Failure to do so is a criminal misdemeanor and can result in license suspension by the CSLB.
Why the Other Options Are Wrong
Option A: Coverage is required only if the contractor's annual payroll exceeds $50,000
Coverage is not limited to contractors whose payroll exceeds $50,000. California imposes workers' compensation requirements from the moment the first employee is hired, with no payroll threshold. This option is entirely fabricated and has no basis in California law.
Option B: Coverage is only required for employees working on public works projects
Coverage is not limited to public works projects. Workers' compensation applies to all employees on all types of work — private and public, residential and commercial. The suggestion that only public works employees are covered would leave the majority of construction workers unprotected, which is contrary to the purpose of the law.
Option D: Coverage is optional if the contractor has fewer than 5 employees
The five-employee threshold does not exist in California workers' compensation law. There is no minimum employee count before coverage is required. Even sole proprietors who hire a single part-time helper must provide workers' compensation. Small business exemptions exist in some states but not in California.
Memory Technique
Workers' comp in California = ZERO exceptions for employees. Think: 'Every worker deserves protection on day one, job one.' The law has no threshold — it's all or nothing. One employee = mandatory coverage. Remember: failing to carry it is a CRIME (misdemeanor), not just a civil violation.
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