CSLB Law & Business ExamInsurance and LiensEasy
A sole proprietor contractor with no employees wants to satisfy CSLB's workers' compensation requirement without purchasing a policy. What must the contractor obtain instead?
- AA performance bond covering employee injuries
- BA certificate of workers' compensation self-insurance
- CA certificate stating an exemption from workers' compensation insurance
- DA rider added to the general liability policy
Show answer & explanationAnswer & explanation
Correct answer: C. A certificate stating an exemption from workers' compensation insurance
Contractors who have no employees may file a Certificate of Exemption from Workers' Compensation Insurance with CSLB instead of carrying a policy. If the contractor later hires employees, workers' compensation coverage becomes mandatory.
Why the other options are wrong
- A. Performance bonds relate to contract performance, not employee injuries.
- B. Self-insurance certificates are for large employers, not exempt sole proprietors.
- D. General liability policies do not cover workers' compensation exposure.
Workers' Compensation Exemption
A contractor with no employees may file a certificate of exemption from workers' compensation insurance instead of purchasing a policy.
- Exemption applies only when there are no employees
- Must update CSLB if employees are later hired
- Failure to have required coverage can suspend a license
Memory trick: No employees, no exposure — file the exemption instead.