A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, but the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cases of fraud?

A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, but the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cases of fraud?

• A. The subcontractor is solely liable
• B. The client is liable
• C. The employee bears the loss
• D. The prime contractor must take responsibility

Answer: (D)

The key idea is that when a subcontractor’s employee is injured on a project and the subcontractor has no workers’ compensation coverage, California law treats the prime contractor as the statutory employer and requires the prime contractor to provide workers’ compensation benefits. This ensures the injured worker can receive benefits even though the subcontractor skipped coverage, and it keeps the project protected by ensuring there’s an available source of compensation. The prime contractor’s insurance would cover the injured worker, and the prime contractor can pursue recoupment from the uninsured subcontractor later if possible. So, the statement that the prime contractor must take responsibility best describes the situation. The other options don’t fit this default arrangement: the subcontractor isn’t the sole liable party in this scenario, the client (owner) isn’t the standard bearer for coverage, and the employee isn’t left bearing the loss because workers’ compensation should provide benefits. The note about fraud is a caveat, but under normal circumstances the prime contractor bears the responsibility.

The key idea is that when a subcontractor’s employee is injured on a project and the subcontractor has no workers’ compensation coverage, California law treats the prime contractor as the statutory employer and requires the prime contractor to provide workers’ compensation benefits. This ensures the injured worker can receive benefits even though the subcontractor skipped coverage, and it keeps the project protected by ensuring there’s an available source of compensation. The prime contractor’s insurance would cover the injured worker, and the prime contractor can pursue recoupment from the uninsured subcontractor later if possible.

So, the statement that the prime contractor must take responsibility best describes the situation. The other options don’t fit this default arrangement: the subcontractor isn’t the sole liable party in this scenario, the client (owner) isn’t the standard bearer for coverage, and the employee isn’t left bearing the loss because workers’ compensation should provide benefits. The note about fraud is a caveat, but under normal circumstances the prime contractor bears the responsibility.