Under California Labor Code Section 3700, which statement is correct regarding workers' compensation insurance for California contractors?
Correct Answer
B) Required for all contractors who have employees, with limited exceptions
California Labor Code Section 3700 mandates that all employers, including contractors, must carry workers' compensation insurance if they have employees. Very limited exceptions exist, such as sole proprietors with no employees. This requirement applies regardless of project type or number of employees.
Why This Is the Correct Answer
California Labor Code Section 3700 mandates that all employers — including contractors — carry workers' compensation insurance whenever they have employees. The only meaningful exception is a sole proprietor with zero employees. The requirement applies to all project types and any number of employees above zero.
Why the Other Options Are Wrong
Option A: Optional if contractor maintains general liability insurance
Workers' compensation is not optional even when a contractor carries general liability insurance. These are distinct coverages serving different purposes — GL covers third-party property damage and injury, while workers' comp covers the contractor's own employees. Holding one does not substitute for the other.
Option C: Only required for public works projects
Workers' compensation is not limited to public works projects. Section 3700 applies universally whenever employees are on the payroll, whether the job is a private residence, commercial building, or public infrastructure project.
Option D: Only required for contractors with more than 5 employees
There is no '5 employee' threshold in California workers' compensation law. Unlike some other states that exempt small employers, California requires coverage from the moment a contractor hires even one employee, making this threshold-based answer incorrect.
Memory Technique
Think 'One Employee = One Policy Required.' In California, the rule is binary: no employees = no WC needed; any employees = WC mandatory. No minimums, no exceptions based on project type.
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