Insurance & LiensQuestion 643 of 690
A licensed contractor with no employees has filed an Exemption from Workers' Compensation with the CSLB. The contractor then hires an employee. Under Bus. & Prof. Code §7125 and §7125.4, what must the contractor do?
a.Wait until the next license renewal to update the workers' comp status
b.Obtain workers' compensation coverage and file a Certificate of Workers' Compensation Insurance with CSLB; the prior exemption is automatically void as soon as an employee is hired
c.Continue working under the exemption for up to 90 days while shopping for coverage
d.Cancel the contractor license and re-apply once coverage is in place
Explanation
Bus. & Prof. Code §7125 conditions a contractor's license on either having workers' comp coverage (if any employees) or a current exemption (if none). Under §7125.4, the exemption is void by operation of law the moment the contractor hires an employee, and the contractor must immediately obtain coverage and file the Certificate of Workers' Compensation Insurance with the CSLB. Waiting until renewal or operating uninsured for 90 days while shopping is a violation that triggers automatic license suspension. Cancellation/re-application is unnecessary — the license can be maintained by filing the certificate.
Law Reference: Bus. & Prof. Code §7125Practice all 690 questions free — no signup required.
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