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Section 4 of 7

CSLB Workers' Compensation Insurance Practice Questions

10 free practice questions on workers' compensation insurance, part of the Insurance and Liens section (about 12% of the exam). Try each one, then open the answer: every choice is explained and the law is quoted.

Questions and answers

  1. Insurance and Liens

    1. Under Labor Code section 3700, which employers must secure the payment of workers' compensation for their employees?

    • A. Every employer in California except the state itself
    • B. Only employers that have five or more employees
    • C. Only employers that work in high-risk trades like roofing
    • D. Only employers with a yearly payroll over $100,000
    Show answer

    Correct answer: A

    • A. Every employer in California except the state itself

      Correct answer

      Section 3700 says every employer except the state must secure the payment of workers' compensation.

    • B. Only employers that have five or more employees

      Section 3700 sets no minimum number of employees. It covers every employer except the state.

    • C. Only employers that work in high-risk trades like roofing

      The rule is not limited to high-risk trades like roofing. It applies to every employer except the state.

    • D. Only employers with a yearly payroll over $100,000

      Section 3700 has no payroll limit. Every employer except the state must secure workers' compensation.

    Explanation

    Labor Code section 3700 says every employer except the state must secure the payment of workers' compensation. There is no minimum number of employees and no payroll limit. The rule is not limited to high-risk trades; it covers every employer.

    Source

  2. Insurance and Liens

    2. A stop order for missing workers' compensation coverage shuts down a contractor's work for 14 working days. One employee earns $250 per working day and loses all 14 days. Under Labor Code section 3710.1, how much must the employer pay this employee for the lost time?

    • A. $1,250
    • B. $2,500
    • C. $3,500
    • D. $5,000
    Show answer

    Correct answer: B

    • A. $1,250

      $1,250 uses 5 days, which is the time limit for holding a hearing, not the 10-day pay limit.

    • B. $2,500

      Correct answer

      The employer must pay for time lost, but not more than 10 days. So 10 x $250 = $2,500, even though the employee lost 14 days.

    • C. $3,500

      $3,500 pays all 14 days and ignores the 10-day limit on pay for lost time.

    • D. $5,000

      $5,000 uses 20 days, which is the time to ask for a hearing, not the 10-day pay limit.

    Explanation

    Labor Code section 3710.1 says an employee affected by the work stoppage must be paid by the employer for time lost, but not more than 10 days. Step 1: The employee lost 14 days, but pay is limited to 10 days. Step 2: 10 x $250 = $2,500. The $3,500 amount pays all 14 days and ignores the 10-day limit. The $1,250 amount uses 5 days, which is the time limit for holding a hearing, not the pay limit. The $5,000 amount uses 20 days, which is the time to ask for a hearing.

    Source

  3. Insurance and Liens

    3. A contractor hires a 17-year-old helper who is not a citizen of the United States. Under Labor Code section 3351, is the helper an employee for workers' compensation purposes?

    • A. No, because minors are not covered by workers' compensation
    • B. No, because only U.S. citizens are covered employees
    • C. Yes, because minors and non-citizens are both included
    • D. Yes, but only after the helper turns 18 years old
    Show answer

    Correct answer: C

    • A. No, because minors are not covered by workers' compensation

      Section 3351 says "employee" includes minors, so being 17 does not take the helper out of coverage.

    • B. No, because only U.S. citizens are covered employees

      Section 3351 says "employee" includes persons who are not citizens or nationals of the United States.

    • C. Yes, because minors and non-citizens are both included

      Correct answer

      Section 3351 defines an employee as every person in the service of an employer under a contract of hire, and it includes non-citizens and minors. So the 17-year-old helper is an employee.

    • D. Yes, but only after the helper turns 18 years old

      Section 3351 already includes minors, so the helper is an employee now. Age does not remove coverage, and the helper does not have to turn 18.

    Explanation

    Labor Code section 3351 defines an employee as every person in the service of an employer under a contract of hire. It says this includes persons who are not citizens or nationals of the United States, and minors (people under 18). So the 17-year-old helper is an employee for workers' compensation. Age and citizenship do not remove coverage.

    Source

  4. Insurance and Liens

    4. A construction worker files a claim form for a back injury at work. The employer does not accept or reject the claim. Under Labor Code section 5402, after how many days is the injury presumed (assumed) to be compensable (covered)?

    • A. 30 days
    • B. 45 days
    • C. 60 days
    • D. 90 days
    Show answer

    Correct answer: D

    • A. 30 days

      Thirty days is the time an employee generally has to give written notice of an injury under section 5400. Section 5402 uses 90 days after the claim form is filed.

    • B. 45 days

      This shortens the period to 45 days. Section 5402 presumes the injury compensable if liability is not rejected within 90 days after the claim form is filed.

    • C. 60 days

      This shortens the period to 60 days. Section 5402 sets 90 days after the claim form is filed.

    • D. 90 days

      Correct answer

      Correct. Section 5402 says that if liability is not rejected within 90 days after the claim form is filed, the injury is presumed compensable.

    Explanation

    Labor Code section 5402 says that if liability is not rejected within 90 days after the date the claim form is filed, the injury is presumed compensable (covered by workers' compensation). After that, the employer can overcome the presumption only with evidence found after the 90-day period. Thirty days is the time an employee generally has to give written notice of an injury under section 5400, not the employer's deadline. The 45-day and 60-day periods are not the rule in section 5402.

    Source

  5. Insurance and Liens

    5. A contractor has no workers' compensation coverage. An injured employee sues the contractor in court for damages. The contractor says the employee was partly careless. Under Labor Code section 3708, can the contractor use this as a defense?

    • A. Yes, because the employee was partly at fault for the injury
    • B. Yes, but only if the employee was careless on purpose
    • C. No, because section 3708 says employee carelessness is not a defense
    • D. No, but the court cuts the employee's damages in half
    Show answer

    Correct answer: C

    • A. Yes, because the employee was partly at fault for the injury

      Section 3708 says it is not a defense to the employer that the employee was guilty of contributory negligence.

    • B. Yes, but only if the employee was careless on purpose

      Section 3708 allows no exception based on how careless the employee was.

    • C. No, because section 3708 says employee carelessness is not a defense

      Correct answer

      Correct. Section 3708 says the employee's contributory negligence is not a defense, and the injury is presumed to come from the employer's negligence.

    • D. No, but the court cuts the employee's damages in half

      Section 3708 does not cut the damages in half; it simply bars employee carelessness as a defense.

    Explanation

    Labor Code section 3708 applies when an injured employee sues an employer that did not secure workers' compensation. It says the employee's own carelessness (contributory negligence) is not a defense for the employer. It also presumes (assumes) the injury came from the employer's negligence, and the employer must prove otherwise. Section 3708 does not cut the damages in half, and it allows no exception based on how careless the employee was.

    Sources

  6. Insurance and Liens

    6. A worker is hurt on a job site. Under Labor Code section 5400, generally, within how many days after the injury must written notice of the injury be served on the employer?

    • A. 10 days
    • B. 30 days
    • C. 60 days
    • D. 90 days
    Show answer

    Correct answer: B

    • A. 10 days

      Wrong. Ten days does not appear in section 5400; written notice is generally due within 30 days after the injury.

    • B. 30 days

      Correct answer

      Correct. Section 5400 generally requires written notice of the injury to be served on the employer within 30 days after the injury.

    • C. 60 days

      Wrong. Sixty days does not appear in section 5400; the general deadline is 30 days after the injury.

    • D. 90 days

      Wrong. Ninety days is the time an employer has to reject a filed claim form under section 5402, not the section 5400 notice deadline of 30 days.

    Explanation

    Labor Code section 5400 says that, with some exceptions, a claim cannot go forward unless written notice of the injury is served on the employer within 30 days after the injury. The notice is signed by the injured person or someone on the person's behalf. The 90-day number is a different rule: it is the time an employer has to reject a filed claim form under section 5402. The 10-day and 60-day numbers do not appear in section 5400.

    Source

  7. Insurance and Liens

    7. A sole owner has an active B license and does all the building work alone. The owner employs one home improvement salesperson, who sells jobs for the business. According to the CSLB guide Get Licensed to Build, must the owner have proof of workers' compensation insurance?

    • A. No, because the salesperson does no construction work
    • B. No, because a sole owner may always file an exemption
    • C. Yes, but only if the salesperson works full time
    • D. Yes, because the owner employs a home improvement salesperson
    Show answer

    Correct answer: D

    • A. No, because the salesperson does no construction work

      Wrong. The guide requires proof of workers' compensation insurance when you employ home improvement salespersons, even if the salesperson does no building work.

    • B. No, because a sole owner may always file an exemption

      Wrong. A sole owner may file an exemption only when there are no employees and no other listed case applies; here the owner employs a salesperson.

    • C. Yes, but only if the salesperson works full time

      Wrong. The guide does not limit the home improvement salesperson rule to full-time salespeople.

    • D. Yes, because the owner employs a home improvement salesperson

      Correct answer

      Correct. The guide requires proof of current and valid workers' compensation insurance for an active license when you employ home improvement salespersons.

    Explanation

    The CSLB guide lists the cases that require proof of current and valid workers' compensation insurance for an active license. One of them is "You employ home improvement salesperson(s)." So the owner needs coverage even though the salesperson does no building work. The guide does not limit this rule to full-time salespeople. A sole owner may file an exemption only when there are no employees and no other listed case applies.

    Sources

  8. Insurance and Liens

    8. A contractor is convicted a second time for failing to secure workers' compensation. Under Labor Code section 3700.5(c), what happens with the costs of the investigation?

    • A. The court may charge them, but it does not have to
    • B. The contractor is not charged them in addition to the fine
    • C. The contractor must be charged them, in addition to other penalties
    • D. The contractor is charged them only if a worker was hurt
    Show answer

    Correct answer: C

    • A. The court may charge them, but it does not have to

      Leaving the choice to the court applies only to a first conviction. On a later conviction the law says the person shall be charged the costs, which is required.

    • B. The contractor is not charged them in addition to the fine

      Section 3700.5(c) says the costs of investigation are charged in addition to any other penalties, not left out.

    • C. The contractor must be charged them, in addition to other penalties

      Correct answer

      Correct. Section 3700.5(c) says that upon a subsequent conviction the person shall be charged the costs of investigation in addition to any other penalties.

    • D. The contractor is charged them only if a worker was hurt

      The rule does not depend on whether a worker was hurt. A subsequent conviction alone requires the costs to be charged.

    Explanation

    Labor Code section 3700.5(c) says that upon a subsequent (later) conviction, the person shall be charged the costs of investigation in addition to any other penalties. "Shall" means it is required. Leaving the choice to the court applies only to a first conviction. The rule does not depend on whether a worker was hurt.

    Source

  9. Insurance and Liens

    9. A contractor with employees does not want to buy a workers' compensation policy from an insurer. Under Labor Code section 3700, what other way can this private employer secure the payment of compensation?

    • A. Post a $25,000 cash deposit with the CSLB
    • B. Get a DIR certificate of consent to self-insure
    • C. Have each employee sign a written coverage waiver
    • D. Buy a general liability policy that covers workers
    Show answer

    Correct answer: B

    • A. Post a $25,000 cash deposit with the CSLB

      A cash deposit with the CSLB is not one of the ways section 3700 lists to secure workers' compensation.

    • B. Get a DIR certificate of consent to self-insure

      Correct answer

      Besides insurance from an authorized insurer, section 3700 lets an employer get a certificate of consent to self-insure from the Director of Industrial Relations. The employer must prove it is able to self-insure and pay claims.

    • C. Have each employee sign a written coverage waiver

      Employee waivers are not one of the ways section 3700 lists to secure workers' compensation.

    • D. Buy a general liability policy that covers workers

      A general liability policy is not one of the ways section 3700 lists to secure workers' compensation.

    Explanation

    Labor Code section 3700 lists the ways to secure workers' compensation. Besides insurance from an authorized insurer, an employer may get a certificate of consent to self-insure (pay its own claims) from the Director of Industrial Relations (DIR). To get it, the employer must prove it is able to self-insure and pay claims. A cash deposit with the CSLB, a general liability policy, or employee waivers are not ways listed in section 3700.

    Source

  10. Insurance and Liens

    10. A contractor knew it had to carry workers' compensation but did not. This is its first conviction under Labor Code section 3700.5. The court finds that the premium (insurance cost) for the uninsured time would have been $12,000. What is the largest fine the court can order?

    • A. $10,000
    • B. $12,000
    • C. $22,000
    • D. $24,000
    Show answer

    Correct answer: D

    • A. $10,000

      $10,000 is only the minimum fine. The largest fine is double the $12,000 premium, which is $24,000.

    • B. $12,000

      $12,000 forgets to double the premium. The fine can be up to double the premium that would have been due.

    • C. $22,000

      $22,000 wrongly adds the $10,000 minimum to the $12,000 premium. The rule doubles the premium instead.

    • D. $24,000

      Correct answer

      The fine can be up to double the premium: 2 x $12,000 = $24,000. That is more than the $10,000 minimum, so $24,000 is the largest fine.

    Explanation

    Labor Code section 3700.5 allows a fine of up to double the premium that would have been due, but not less than $10,000. Step 1: The premium that would have been due is $12,000. Step 2: Double the premium: 2 x $12,000 = $24,000. Step 3: $24,000 is more than the $10,000 minimum, so the largest fine is $24,000. The $10,000 amount is only the minimum fine. The $12,000 amount forgets to double the premium. The $22,000 amount wrongly adds the $10,000 minimum to the premium.

    Source

Keep studying

Read the Section 4 study notes: Insurance and Liens

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