Future Business Leaders of America (FBLA) Business Law Practice Exam

What is a possible outcome if an employer fails to carry workers' compensation insurance?

1. They may receive a tax rebate

2. They may face legal penalties

3. They will owe no liability for workplace injuries

4. They will automatically qualify for state assistance

The correct answer is: They may face legal penalties

If an employer fails to carry workers' compensation insurance, one significant outcome is the possibility of facing legal penalties. Workers' compensation laws are designed to protect employees who suffer job-related injuries or illnesses by providing them with benefits regardless of fault. Each state mandates that employers have this coverage, and noncompliance can lead to various consequences. Legal penalties may include fines and other sanctions imposed by state agencies responsible for enforcing workers' compensation laws. In some cases, employers could also face civil lawsuits from injured workers, which can expose them to potentially significant financial liabilities that workers’ compensation insurance would typically cover. Thus, the requirement for employers to obtain this insurance is not only a legal obligation but also serves to safeguard both the employees and the employer from unforeseen costs related to workplace injuries. While tax rebates, lack of liability, or automatic qualification for state assistance might seem advantageous, they do not reflect the reality of the requirements and risks associated with failing to maintain workers' compensation insurance.