CSLB - LAW AND BUSINESS EXAM 2025-2026
QUESTIONS WITH 100% CORRECT ANSWERS
2 types of qualifying individuals for each type of license - CORRECT ANSWER --Individual -
Responsible Managing Employee (RME) or Owner
Partnership - Qualifying Partner or RME
Corporation - Responsible managing officer (RMO) or RME
LLC - RME, RMO, Responsible Managing member/manager
What must be filed w/CSLB if RME/RMO leaves? Within how long? If not, what happens? -
CORRECT ANSWER --"Notice of disassociation" and "application for replacing qualifying
individual".
Within 20 days
Or license automatically suspended
Responsible Managing Employee (RME) - CORRECT ANSWER --
Full time employee works at least 32 hours or 80% of operating time of biz, whichever is less.
May be used to qualify for individual, partnership, or corp license.
Never more than 3 licensees at one time.
Can only act as qualifier for 1 license at a time unless either: 1) other licensee is subsidiary 2) he/she ow
ns at least 20% of licensee 3) majority of officers/partners of other one also are those of 1st
Responsible Managing Officer (RMO) - CORRECT ANSWER --Officer of Corp
Journeyman - CORRECT ANSWER --
A person who has completed an apprecnticeship program or is an experienced worker, not a trainee, an
d is fully qualified to perform the trade withoutRsupervision.
Foreman/Supervisor - CORRECT ANSWER --
A person who has the knowledge/skill of a journeyman and directly supervises physical construction
What are penalties for contracting w/out a license - CORRECT ANSWER --- Misdemeanor offense
, -
1st offense may receive citation from registrar, potential sentence of up to 6 months in jail and/or $500
fine, which is accompanied by civil penalty of no less than $200 and no more than $15,000. May lessen
or waive if contractor obtains license within prescribed period of time.
- Felony charges for contracting w/out a license in emergency projects.
-
2nd offense found guilty of criminal offense which is punishable by civil penalty of 20% contract price o
r $4,500, whichever isRgreater, and county jail min 90 days.
Penalty for advertising for work outside of your license - CORRECT ANSWER --fine of $700-$1000
Penalty for hiring unlicensed sub or allowing use of license - CORRECT
ANSWER -- Citation from registrar and civil penalty up to $15,000
Penalty for deliberate fraudulent use of contractor's license - CORRECT
ANSWER -- Up to $10,000 and/or one year jail
Bond must be filed with _ within _ days of effective date of bond. - CORRECT ANSWER --CSLB ; 90
Contractor's Bond amount - CORRECT ANSWER --$15,000
Performance Bond - CORRECT ANSWER --
guarantees job will be completed according to building plans and specs. If work is unacceptable or proje
ct is abandoned, bondingRcompany can hire another contractor to complete the work or settle for dama
ges.
Payment Bond - CORRECT ANSWER --
Guarantee to the owner that no liens for materials or labor will be filed against the property.
Contract Bond - CORRECT ANSWER --Guarantees both job completion and payment of all labor and
materials.
Bid Shopping - CORRECT ANSWER --
When prime contractor discloses sub's bid to other subs to get them to lower their price.
QUESTIONS WITH 100% CORRECT ANSWERS
2 types of qualifying individuals for each type of license - CORRECT ANSWER --Individual -
Responsible Managing Employee (RME) or Owner
Partnership - Qualifying Partner or RME
Corporation - Responsible managing officer (RMO) or RME
LLC - RME, RMO, Responsible Managing member/manager
What must be filed w/CSLB if RME/RMO leaves? Within how long? If not, what happens? -
CORRECT ANSWER --"Notice of disassociation" and "application for replacing qualifying
individual".
Within 20 days
Or license automatically suspended
Responsible Managing Employee (RME) - CORRECT ANSWER --
Full time employee works at least 32 hours or 80% of operating time of biz, whichever is less.
May be used to qualify for individual, partnership, or corp license.
Never more than 3 licensees at one time.
Can only act as qualifier for 1 license at a time unless either: 1) other licensee is subsidiary 2) he/she ow
ns at least 20% of licensee 3) majority of officers/partners of other one also are those of 1st
Responsible Managing Officer (RMO) - CORRECT ANSWER --Officer of Corp
Journeyman - CORRECT ANSWER --
A person who has completed an apprecnticeship program or is an experienced worker, not a trainee, an
d is fully qualified to perform the trade withoutRsupervision.
Foreman/Supervisor - CORRECT ANSWER --
A person who has the knowledge/skill of a journeyman and directly supervises physical construction
What are penalties for contracting w/out a license - CORRECT ANSWER --- Misdemeanor offense
, -
1st offense may receive citation from registrar, potential sentence of up to 6 months in jail and/or $500
fine, which is accompanied by civil penalty of no less than $200 and no more than $15,000. May lessen
or waive if contractor obtains license within prescribed period of time.
- Felony charges for contracting w/out a license in emergency projects.
-
2nd offense found guilty of criminal offense which is punishable by civil penalty of 20% contract price o
r $4,500, whichever isRgreater, and county jail min 90 days.
Penalty for advertising for work outside of your license - CORRECT ANSWER --fine of $700-$1000
Penalty for hiring unlicensed sub or allowing use of license - CORRECT
ANSWER -- Citation from registrar and civil penalty up to $15,000
Penalty for deliberate fraudulent use of contractor's license - CORRECT
ANSWER -- Up to $10,000 and/or one year jail
Bond must be filed with _ within _ days of effective date of bond. - CORRECT ANSWER --CSLB ; 90
Contractor's Bond amount - CORRECT ANSWER --$15,000
Performance Bond - CORRECT ANSWER --
guarantees job will be completed according to building plans and specs. If work is unacceptable or proje
ct is abandoned, bondingRcompany can hire another contractor to complete the work or settle for dama
ges.
Payment Bond - CORRECT ANSWER --
Guarantee to the owner that no liens for materials or labor will be filed against the property.
Contract Bond - CORRECT ANSWER --Guarantees both job completion and payment of all labor and
materials.
Bid Shopping - CORRECT ANSWER --
When prime contractor discloses sub's bid to other subs to get them to lower their price.
