Which of the following scenarios would require workers' compensation coverage under California law?
Correct Answer
C) A corporation with one employee who is also the owner
Corporations must carry workers' compensation insurance for all employees, including owner-employees, regardless of ownership percentage.
Why This Is the Correct Answer
California Labor Code Section 3700 requires corporations to carry workers' compensation insurance for all employees, including owner-employees. Unlike sole proprietors, LLC members, or partners who may qualify for exemptions, a corporate officer who is also an employee must be covered — the corporate entity creates an employer-employee relationship that triggers mandatory coverage.
Why the Other Options Are Wrong
Option A: A sole proprietor working alone
A sole proprietor working alone with no employees is exempt from workers' compensation requirements under California law. They are not their own 'employee' in the legal sense and may waive coverage for themselves.
Option B: An LLC with one member-employee
An LLC with a single member-employee may qualify for an exemption under certain conditions. Single-member LLCs where the member is the only worker can sometimes operate without coverage, though this is a nuanced area — but it is less clearly required than for a corporation.
Option D: A partnership with two working partners only
A partnership where the only workers are the two partners themselves may qualify for an exemption. Partners are not employees of the partnership in the traditional sense, and the law provides exemptions for working partners with no other employees.
Memory Technique
Remember the hierarchy of coverage requirements: Corporation with any employee (even an owner) = MUST have coverage. Sole proprietors and working partners = MAY be exempt. The corporate structure removes the 'owner exemption.'
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