If you have an employee but no workers' comp, that is a misdemeanor crime and you can be arrested and lose your license.

• A. A misdemeanor with arrest and license loss
• B. No penalties
• C. A civil fine only
• D. Only a warning

Answer: (A)

In California, if you hire employees you must carry workers’ compensation insurance. Not having coverage for an employee is a violation of state law that can be charged as a misdemeanor. That means you could be arrested for the noncompliance. In addition, licensing authorities can take action against your license for this type of violation, up to suspension or revocation. So the scenario described—a misdemeanor with the possibility of arrest and loss of your license—best reflects the real penalties. The other options underestimate the consequences because the law can involve criminal penalties and licensing sanctions, not just fines, warnings, or no penalties.