CSLB Law & Business ExamEmployment RequirementsEasy
A licensed contractor hires her first employee this week. Before the employee begins work, what must the contractor obtain and maintain to comply with California law?
- AA fidelity bond covering the employee's wages
- BA certificate of workers' compensation insurance or a certificate of self-insurance
- CA surety bond increase filed with the CSLB
- DA liability insurance policy naming the employee as insured
Show answer & explanationAnswer & explanation
Correct answer: B. A certificate of workers' compensation insurance or a certificate of self-insurance
California Labor Code requires any employer, including licensed contractors, to secure workers' compensation coverage (or approved self-insurance) before employing anyone, and the CSLB requires proof of this coverage to keep a license active.
Why the other options are wrong
- A. A fidelity bond protects against employee theft, not injury, and is not legally required.
- C. Increasing the contractor's bond is unrelated to hiring employees.
- D. General liability insurance does not satisfy the workers' compensation requirement.
Workers' Compensation Requirement
California employers must carry workers' compensation insurance (or be certified self-insured) as soon as they have one or more employees.
- Required before the employee starts work
- CSLB requires proof of coverage to issue/renew a license
- Failure to carry coverage can result in stop orders and criminal penalties
Memory trick: No work comp, no work start.