Insurance & LiensQuestion 457 of 1632

The Division of Labor Standards Enforcement discovers a contractor employing workers with no workers' compensation coverage. What immediate action can it take at the job site?

a.Issue a stop order prohibiting the use of employee labour
b.Revoke the contractor's CSLB licence right there on the spot
c.Seize the contractor's tools and equipment permanently
d.Order the property owner to pay the workers directly instead

Explanation

§3710.1 is the immediate remedy: where an employer has failed to secure the payment of compensation as §3700 requires, the director shall issue and serve a stop order prohibiting the use of employee labour until the employer complies, and it takes effect the moment it is served. The employer may protest in writing within 20 days and the hearing follows within five days, but the work stays stopped meanwhile, and any employee idled by the stoppage must be paid by the employer for the lost time, up to 10 days. The money follows: §3722(a) assesses $1,500 per employee employed when the order is served, §3722(b) assesses the greater of twice the premium that should have been paid or that same $1,500 per employee for the uninsured period, and §3700.5(a) makes the failure a misdemeanour carrying up to a year in county jail and a fine of up to double the premium but not less than $10,000 — rising under §3700.5(b) to triple the premium and not less than $50,000 on a second conviction. (b) belongs to the registrar and follows a disciplinary proceeding, not a site visit, though B&P §7127(a) lets the registrar issue its own stop order. (c) has no statutory basis, and (d) shifts to the owner a debt the statute puts on the employer.

Law Reference: Labor Code §3710.1; §3722(a)-(b); §3700.5(a)-(b); Bus. & Prof. Code §7127(a)

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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
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