CSLB CONTRACTOR'S LAW &
BUSINESS EXAM with correct answers
An employer remits State disability taxes withheld from an employees wages to what agency? - **
VERIFIED ANSWERS **✔✔Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate contracts? - **
VERIFIED ANSWERS **✔✔National Labor Relations Act of 1935
A contractor has had a problem with employees stealing tools and equipment from job sites. When
conducting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to ask prospective employees about arrests not leading to convictions.
B. It is not legal to ask prospective employees about arrests not leading to convictions.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - ** VERIFIED ANSWERS **✔✔It is not legal to ask
prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court? - ** VERIFIED ANSWERS **✔✔If it is a dispute of
more than $25,000 it can be transferred to Superior Court.
Which would not have to be reported to DOSH immediately or within 24 hours?
A. Death from a three-story fall.
B. Drunken crane operator hits a high-voltage power line
,C. Car accident in which an employee steps onto a public road, gets hit by a car, and suffers a
concussion.
D. Employee falls off forklift and suffers a sever back injury. - ** VERIFIED ANSWERS **✔✔Car accident
in which an employee steps onto a public road, gets hit by a car, and suffers a concussion.
A general contractor has obtained bids from several subcontractors for a private project. He notices that
one bid is substantially lower than the rest. Is it ethical and a good business practice for this contractor
to inform the subcontractor that the bid is substantially lower than the bids of the other subcontractors?
- ** VERIFIED ANSWERS **✔✔Yes. If the contractor has reason to believe that the subcontractor has
made an error in preparing his bid, the contractor should notify the subcontractor of the apparent error,
but the contractor may not disclose the amounts of the other bids.
An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: -
** VERIFIED ANSWERS **✔✔The 31st of January.
After a job is completed, the owner decides to have additional work done. How should the contractor
proceed? - ** VERIFIED ANSWERS **✔✔Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to? - ** VERIFIED ANSWERS **✔✔Notify
the owner that the person or firm who sent the notice has improved the property.
Is it legal for a contractor to pay employees in cash? - ** VERIFIED ANSWERS **✔✔Yes, if the contractor
provides each employee with a wage deduction statement semimonthly or at the time of each wage
payment.
You are bidding on a job with plans drawn by the owner. You notice a code violation and bring it to the
attention of the owner. The owner declines to remedy the code violation and tells you not to worry.
What should you do? - ** VERIFIED ANSWERS **✔✔Decline to bid the work.
On a time-and-materials job, you should: - ** VERIFIED ANSWERS **✔✔Add profit and overhead to
labor and materials
Your employee sets a cabinet wrong. The cabinet falls from the wall and damages the client's counter
top. What should you do?
,A. Claim the damage on your general liability insurance policy.
B. Require the employee to pay for the damage to the countertop.
C. Tell the client to claim the damaged counter top on his or her homeowner's insurance policy.
D. No action is required: The client must assume the risk of damage. - ** VERIFIED ANSWERS
**✔✔Claim the damage on your general liability insurance policy.
Of the following, which is best for determining the number of hours required for different phases of a
project and for making sure the job is on schedule?
A. Bar graph and chart
B. Cash analysis chart
C. Review plans
D. Critical path method - ** VERIFIED ANSWERS **✔✔The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ** VERIFIED ANSWERS
**✔✔It is not legal for the contractor to require lie detector tests, but it would be legal for a federal,
state, or local public agency to require lie detector tests of their employees.
If a newly hired employee does not have a SSN, what should be done? - ** VERIFIED ANSWERS
**✔✔The employee must apply for a SSN.
How many times may you take the contractors license exam before your original application is voided? -
** VERIFIED ANSWERS **✔✔As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ** VERIFIED ANSWERS **✔✔30 days
before it expires.
The qualifying RME for a construction firm must work at least: - ** VERIFIED ANSWERS **✔✔A
qualifying RME for a construction firm must work at least 32 hours per week or 80% of the work week.
, The federal Employer Identification Number (EIN) is issued by the: - ** VERIFIED ANSWERS **✔✔The
Internal Revenue Service
Every employer of ______ or more full or part time employees must keep written health and safety
records for _______ years.
A. 1-3
B. 7-4
C. 10-3
D. 11-5 - ** VERIFIED ANSWERS **✔✔Every employer of 11 or more full or part time employees must
keep written health and safety records for 5 years.
After you have read the plans and specifications, what is the next important step in writing a bid?
A. Talk to and select subs.
B. Walk the job.
C. Call about materials, price, and availability.
D. Talk to the crew leader about labor. - ** VERIFIED ANSWERS **✔✔Walk the job.
Once a budget is finalized, the:
A. Contractor should stick to the budget no matter what happens.
B. Contractor should do the best possible job of staying within the budget.
C. Budget should be revised each month.
D. Budget should be referred to only if the business has cashflow problems. - ** VERIFIED ANSWERS
**✔✔The contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ** VERIFIED ANSWERS
**✔✔Owner, contractor, and joint control officer.
BUSINESS EXAM with correct answers
An employer remits State disability taxes withheld from an employees wages to what agency? - **
VERIFIED ANSWERS **✔✔Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate contracts? - **
VERIFIED ANSWERS **✔✔National Labor Relations Act of 1935
A contractor has had a problem with employees stealing tools and equipment from job sites. When
conducting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to ask prospective employees about arrests not leading to convictions.
B. It is not legal to ask prospective employees about arrests not leading to convictions.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - ** VERIFIED ANSWERS **✔✔It is not legal to ask
prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court? - ** VERIFIED ANSWERS **✔✔If it is a dispute of
more than $25,000 it can be transferred to Superior Court.
Which would not have to be reported to DOSH immediately or within 24 hours?
A. Death from a three-story fall.
B. Drunken crane operator hits a high-voltage power line
,C. Car accident in which an employee steps onto a public road, gets hit by a car, and suffers a
concussion.
D. Employee falls off forklift and suffers a sever back injury. - ** VERIFIED ANSWERS **✔✔Car accident
in which an employee steps onto a public road, gets hit by a car, and suffers a concussion.
A general contractor has obtained bids from several subcontractors for a private project. He notices that
one bid is substantially lower than the rest. Is it ethical and a good business practice for this contractor
to inform the subcontractor that the bid is substantially lower than the bids of the other subcontractors?
- ** VERIFIED ANSWERS **✔✔Yes. If the contractor has reason to believe that the subcontractor has
made an error in preparing his bid, the contractor should notify the subcontractor of the apparent error,
but the contractor may not disclose the amounts of the other bids.
An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: -
** VERIFIED ANSWERS **✔✔The 31st of January.
After a job is completed, the owner decides to have additional work done. How should the contractor
proceed? - ** VERIFIED ANSWERS **✔✔Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to? - ** VERIFIED ANSWERS **✔✔Notify
the owner that the person or firm who sent the notice has improved the property.
Is it legal for a contractor to pay employees in cash? - ** VERIFIED ANSWERS **✔✔Yes, if the contractor
provides each employee with a wage deduction statement semimonthly or at the time of each wage
payment.
You are bidding on a job with plans drawn by the owner. You notice a code violation and bring it to the
attention of the owner. The owner declines to remedy the code violation and tells you not to worry.
What should you do? - ** VERIFIED ANSWERS **✔✔Decline to bid the work.
On a time-and-materials job, you should: - ** VERIFIED ANSWERS **✔✔Add profit and overhead to
labor and materials
Your employee sets a cabinet wrong. The cabinet falls from the wall and damages the client's counter
top. What should you do?
,A. Claim the damage on your general liability insurance policy.
B. Require the employee to pay for the damage to the countertop.
C. Tell the client to claim the damaged counter top on his or her homeowner's insurance policy.
D. No action is required: The client must assume the risk of damage. - ** VERIFIED ANSWERS
**✔✔Claim the damage on your general liability insurance policy.
Of the following, which is best for determining the number of hours required for different phases of a
project and for making sure the job is on schedule?
A. Bar graph and chart
B. Cash analysis chart
C. Review plans
D. Critical path method - ** VERIFIED ANSWERS **✔✔The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ** VERIFIED ANSWERS
**✔✔It is not legal for the contractor to require lie detector tests, but it would be legal for a federal,
state, or local public agency to require lie detector tests of their employees.
If a newly hired employee does not have a SSN, what should be done? - ** VERIFIED ANSWERS
**✔✔The employee must apply for a SSN.
How many times may you take the contractors license exam before your original application is voided? -
** VERIFIED ANSWERS **✔✔As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ** VERIFIED ANSWERS **✔✔30 days
before it expires.
The qualifying RME for a construction firm must work at least: - ** VERIFIED ANSWERS **✔✔A
qualifying RME for a construction firm must work at least 32 hours per week or 80% of the work week.
, The federal Employer Identification Number (EIN) is issued by the: - ** VERIFIED ANSWERS **✔✔The
Internal Revenue Service
Every employer of ______ or more full or part time employees must keep written health and safety
records for _______ years.
A. 1-3
B. 7-4
C. 10-3
D. 11-5 - ** VERIFIED ANSWERS **✔✔Every employer of 11 or more full or part time employees must
keep written health and safety records for 5 years.
After you have read the plans and specifications, what is the next important step in writing a bid?
A. Talk to and select subs.
B. Walk the job.
C. Call about materials, price, and availability.
D. Talk to the crew leader about labor. - ** VERIFIED ANSWERS **✔✔Walk the job.
Once a budget is finalized, the:
A. Contractor should stick to the budget no matter what happens.
B. Contractor should do the best possible job of staying within the budget.
C. Budget should be revised each month.
D. Budget should be referred to only if the business has cashflow problems. - ** VERIFIED ANSWERS
**✔✔The contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ** VERIFIED ANSWERS
**✔✔Owner, contractor, and joint control officer.
