In Louisiana, which of the following best describes the relationship between a general contractor and subcontractor regarding workers' compensation liability?
Correct Answer
D) General contractor may be liable if subcontractor lacks proper coverage
In Louisiana, a general contractor may become liable for workers' compensation benefits to a subcontractor's employees if the subcontractor fails to maintain proper workers' compensation coverage.
Why This Is the Correct Answer
Louisiana's workers' compensation statutes include a 'principal contractor' provision: if a subcontractor fails to maintain required workers' compensation coverage, the general contractor (as principal contractor) may become directly liable for benefits owed to the subcontractor's injured employees. This contingent liability encourages GCs to verify subcontractor insurance before work begins.
Why the Other Options Are Wrong
Option A: Liability is shared equally between general contractor and subcontractor
Liability is not shared equally. Under Louisiana law, the subcontractor bears primary responsibility for its own employees' coverage. The GC's liability is contingent — it only triggers when the subcontractor lacks coverage, not as a default equal share.
Option B: General contractor is always liable regardless of subcontractor's coverage
The GC is not always liable regardless of the subcontractor's coverage. If the subcontractor properly maintains workers' compensation insurance, the GC has no workers' comp obligation to the subcontractor's employees. Liability is conditional, not absolute.
Option C: General contractor is never liable for subcontractor's workers
The GC is not completely shielded from liability. This option overstates the GC's protection. Selecting it ignores Louisiana's principal contractor liability rule, which is specifically designed to protect injured workers when subcontractors are uninsured.
Memory Technique
Remember: GC = GUARANTOR of last resort. If the sub drops the ball on workers' comp, the GC catches it. Think of GC standing behind the sub — if the sub steps away (no coverage), the GC steps in. 'May be liable IF sub lacks coverage' = conditional backstop.
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A contractor has 12 employees with a total weekly payroll of $18,000. Using Louisiana's workers' compensation rate of $3.25 per $100 of payroll for construction, what is the weekly premium?
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A contractor in Louisiana completes $85,000 worth of work on a residential project. The owner pays $70,000 but disputes the remaining $15,000. If the contractor files a lien claim, what percentage penalty can be awarded if the contractor prevails in court?