What is the penalty range for a California contractor who fails to carry required workers' compensation insurance?
Correct Answer
C) Both B and C are possible
Failure to carry workers' compensation insurance can result in substantial fines ($10,000 plus per-employee penalties), license suspension, and potential criminal charges as it's a violation of California law.
Why This Is the Correct Answer
California imposes multiple and overlapping penalties for failure to carry workers' compensation insurance. Penalties include substantial fines (up to $10,000 plus $1,500 per employee), mandatory license suspension by the CSLB, a stop-work order, and the violation is classified as a criminal misdemeanor (or felony for repeat offenders), opening the door to criminal charges. Because both the fine/per-employee penalty AND the criminal charges are correct, the answer that encompasses both is correct.
Why the Other Options Are Wrong
Option A: License suspension and criminal charges
While license suspension and criminal charges are indeed possible consequences, stating only this option omits the significant financial fines. This answer alone is incomplete.
Option B: $10,000 fine plus $1,500 per employee
The $10,000 fine plus $1,500 per employee is accurate, but this option alone omits the criminal charge possibility. Presenting only the financial penalties understates the full consequence spectrum.
Option D: $1,000 to $5,000 fine only
A '$1,000 to $5,000 fine only' greatly understates the penalties. California's actual fines are much higher ($10,000 minimum), and the penalties are not limited to a fine — license suspension and criminal charges are also possible.
Memory Technique
Think 'Triple Threat' for no workers' comp in California: (1) Big Fine ($10K + $1,500/employee), (2) License Gone (suspension), (3) Criminal Charges. All three can apply simultaneously.
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