What percentage penalty applies for failing to obtain workers' compensation coverage?

• A. 10%
• B. 15%
• C. 20%
• D. 25%

Answer: (D)

Penalty for not obtaining workers' compensation coverage. In California, employers must carry workers' compensation coverage for their employees, and failing to do so triggers a penalty equal to 25% of the premium that would have been due for the period of noncompliance. This sizable percentage acts as a strong deterrent to avoid coverage and protects employees by ensuring coverage is in place. For example, if the coverage would have cost $10,000 for a period, the penalty would be $2,500, in addition to any back premiums owed. The penalty is tied to the amount that would have been due for the period of noncompliance and can apply for each period of noncompliance, with possible additional penalties in some cases.