What is the penalty percentage for an employer failing to obtain workers compensation coverage?

• A. 10%
• B. 15%
• C. 20%
• D. 25%

Answer: (A)

The penalty percentage for an employer failing to obtain workers compensation coverage is 10%. This lower penalty rate is designed to encourage compliance without imposing overly severe financial burdens on businesses that may unintentionally neglect this requirement.

The rationale behind this percentage is rooted in the principle of promoting workplace safety and ensuring that employees are protected in the event of work-related injuries or illnesses. By imposing a 10% penalty, regulatory bodies aim to motivate employers to correct their non-compliance promptly rather than face an excessively punitive fine, which might discourage business operations or lead to closure.

Employers are strongly encouraged to maintain the required coverage to safeguard both their employees and their financial interests, as failure to comply can result in legal and financial repercussions beyond just the penalty, such as liability for injuries and legal fees.