Insurance & LiensQuestion 643 of 1605
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.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
b.Cancel the contractor license and re-apply once coverage is in place
c.Wait until the next license renewal to update the workers' comp status
d.Continue working under the exemption for up to 90 days while shopping for coverage
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 1605 questions free — no signup required.
Related questions on this topic
- On a private work of improvement, a direct (prime) contractor must record a mechanics' lien within how many days after completion of the work, when no notice of completion or cessation has been recorded?
- After recording a mechanics' lien on a private project, a claimant must file an action to enforce (foreclose) the lien within:
- Under Labor Code §3700, a California contractor that has even one employee must:
- A material supplier delivers $40,000 of lumber to a private construction project on July 1. To fully preserve mechanics' lien, stop payment notice, AND payment bond claim rights, the supplier must serve a preliminary notice under Civil Code §8200 on the owner, direct contractor, and construction lender no later than:
- On a PUBLIC works project, a subcontractor with unpaid invoices serves a 'stop payment notice' on the public entity under Civil Code §9358 (formerly known as a 'stop notice'). The effect is to:
- An owner wants to remove a $60,000 mechanics' lien recorded against the property so the property can be sold or refinanced. Under Civil Code §8424, the owner may obtain a release of the lien by recording a lien release bond in the amount of:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)