A(n) ____ that fails to demonstrate financial security in compliance with workers compensation laws is subject to fines, civil penalties, prohibition to conduct business, and employee lawsuits without recourse to common-law defenses.

• A. Employer
• B. Contractor
• C. Employee
• D. Insurance carrier

Answer: (A)

The key idea here is the employer’s obligation to have workers’ compensation coverage or demonstrate financial security to support it. If an employer cannot show that they meet these requirements, the law imposes penalties such as fines, civil penalties, a prohibition on doing business, and the ability for employees to sue in court without the usual common-law defenses because workers’ comp is meant to be the exclusive remedy. This accountability sits with the employer since they are the party responsible for providing benefits and complying with the statute. Independent contractors aren’t the primary obligors unless they’re misclassified; employees are the beneficiaries and aren’t penalized in this way; and the insurance carrier isn’t the subject of these particular penalties for failing to demonstrate funding—its role is to provide coverage and stay solvent under regulatory rules.