An employee is injured on a Nevada construction site. The contractor's workers' compensation coverage has lapsed. What is the contractor's potential liability?
Correct Answer
C) Unlimited personal liability for all damages
Contractors without valid workers' compensation insurance face unlimited personal liability for workplace injuries, including medical costs, lost wages, and other damages.
Why This Is the Correct Answer
In Nevada, contractors who allow their workers' compensation insurance to lapse lose the protection of the exclusive remedy doctrine. Without valid coverage, they are exposed to unlimited personal liability for all damages arising from workplace injuries, including medical expenses, lost wages, pain and suffering, and any other damages awarded by a court.
Why the Other Options Are Wrong
Option A: Limited to medical expenses only
Limiting liability to medical expenses only is not accurate. Once workers' comp coverage lapses, the contractor is not shielded by the workers' compensation system's limits and faces full tort liability, which includes much more than medical expenses.
Option B: No liability if employee was negligent
Employee negligence (contributory or comparative negligence) might reduce damages in a civil suit but does not eliminate the contractor's liability when coverage has lapsed. The contractor cannot use employee negligence as a complete defense in this context.
Option D: Limited to $50,000 maximum
There is no $50,000 cap on liability for uninsured contractors in Nevada. The absence of workers' comp coverage removes statutory liability limits entirely, exposing the contractor to unlimited personal liability.
Memory Technique
Workers' comp = shield. No workers' comp = no shield = unlimited liability. Think of it as armor: take off the armor, you're fully exposed.
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