Arizona Contractors License Practice Exam

Which entity is responsible for paying for workers' compensation in Arizona?

1. Employees, through payroll deductions

2. Employers, covering all costs

3. Insurance companies, as contracted

4. The state government, through taxes

The correct answer is: Employers, covering all costs

In Arizona, employers are responsible for paying for workers' compensation insurance, covering all associated costs. This system is designed to protect employees who might suffer job-related injuries or illnesses, ensuring they receive necessary medical care and compensation for lost wages as they recover. The rationale behind making employers responsible is to promote workplace safety and accountability. When employers know they will bear the financial burden of workers' compensation costs, they are incentivized to create safer working environments to minimize injuries and claims. While employees do not directly pay for workers' compensation through deductions, it's worth noting that some companies may choose to factor the costs of this insurance into their overall compensation and benefits offered to workers. Insurance companies also play a role as they provide the coverage to employers, but they are not the primary payers; instead, they act on behalf of the employers to manage claims and payout processes. The state government does not cover these costs through taxes; instead, it regulates the system and ensures compliance among employers.