CSLB CONTRACTOR'S LAW & BUSINESS
EXAM | QUESTIONS AND CORRECT
ANSWERS RATED A+ | 2025/2026 GUIDE
Some counties have an additional sales tax added to the base rate.
Which of the following is a correct statement regarding this additional
tax?
A. This additional tax does not apply to contractors.
B. You do not have to pay this additional tax if your home office is in
another county.
C. You may pay the additional tax charged in your county if the rate is
lower than the county where the materials were purchased.
D. You must pay the additional tax in the county where the materials
were purchased. - Correct Answer - You must pay the additional tax in
the county where the materials were purchased.
A notice of completion must be recorded within: - Correct Answer - A
notice of completion must be recorded within 10 days after work is
completed.
Insured employers must report every work-related illness or injury to
their workers' compensation carrier within _____ of the incident.
A. 24 hours
B. 2 days
C. 5 days
,D. 10 days - Correct Answer - Any work related illness or injury must be
reported to the workers compensation insurance company within 5 days.
Which of the following may NOT be deducted from an employee's
paycheck?
A. SDI
B. FICA
C. Medicare Tax
D. Workers' compensation insurance premiums - Correct Answer -
Workers compensation insurance premiums
Who is responsible for safety equipment actually being put to use on the
jobsite? - Correct Answer - The contractor is responsible for ensuring
safety equipment is actually put to use.
An employer who receives a citation for a serious violation of Cal/OSHA
regulations can be assessed a penalty of up to _____ for each violation.
- Correct Answer - Cal/OSHA can assess a penalty for a serious citation
for up to $25,000 for each violation.
Of the following, who may not approve a set of plans in the State of
California?
A. Architect
B. Interior designer
C. Engineer
D. Owner-builder - Correct Answer - An interior designer can not
approve a set of plans in the State of California
,After a home improvement contract is signed, the contractor must
substantially begin work within how many days of the date specified in
the contract? - Correct Answer - Within 20 days of the date specified in
the contract.
Which building code should a contractor follow? - Correct Answer - A
contractor should follow all local building codes.
A prime contractor decides to sub out the electrical work. How would the
prime determine what price to add for the electrical work? - Correct
Answer - The prime gets a firm bid from the subcontractor.
In the absence of a collective bargaining agreement, two employees filed
a written complaint with DOSH because of unsafe working conditions.
The contractor discovered who the employees were and fired them
because of the complaint. What would probably happen if the employees
appealed the termination? - Correct Answer - The contractor must
reinstate the employees and reimburse them for lost wages and benefits.
A contractor has been turned in to DOSH by an employee for a safety
violation. The contractor wants to find out who reported the violation and
asked DOSH for the employee's name. What will DOSH likely do? -
Correct Answer - Unless requested otherwise, DOSH will keep
confidential the name of any person making a complaint, and no
retaliation may be directed at the employee if the employee's identity is
discovered.
A licensed contractor contracts with a building owner to do a $900
improvement. When applying for a building permit, the contractor checks
, the owner-builder box on the declaration form. Which of the following
statements is correct?
A.nThe contractor may check the box to avoid insurance charges.
B. The contractor should check the box so that the owner-builder
verification will be mailed to the owner.
C. The contractor may check the box because the contractor is the
owner's employee.
D. The contractor may not check the owner-builder box because the
owner contracted for the improvement. - Correct Answer - The contractor
may not check the owner-builder box because the owner contracted for
the improvement.
_____, although usually the largest single item in a bid, can be fairly
accurately determined. - Correct Answer - Materials
What is the maximum number of exemptions an employee can put on
their W-4 before you have to send the form to the IRS? - Correct Answer
- An employee can put 10 exemptions on their W-4 before you have to
send the form to the IRS.
Star Construction moved to a new office but never filed a change-of-
address form with the Registrar. Consequently, Star never received a
renewal application. If Star fails to renew its license within three years of
the date of expiration, Star will have to? - Correct Answer - Pay a
delinquency fee to renew license.
An employer must file federal Form 1099-MISC to report payments of
_____ or more per calendar year to persons not treated as employees
EXAM | QUESTIONS AND CORRECT
ANSWERS RATED A+ | 2025/2026 GUIDE
Some counties have an additional sales tax added to the base rate.
Which of the following is a correct statement regarding this additional
tax?
A. This additional tax does not apply to contractors.
B. You do not have to pay this additional tax if your home office is in
another county.
C. You may pay the additional tax charged in your county if the rate is
lower than the county where the materials were purchased.
D. You must pay the additional tax in the county where the materials
were purchased. - Correct Answer - You must pay the additional tax in
the county where the materials were purchased.
A notice of completion must be recorded within: - Correct Answer - A
notice of completion must be recorded within 10 days after work is
completed.
Insured employers must report every work-related illness or injury to
their workers' compensation carrier within _____ of the incident.
A. 24 hours
B. 2 days
C. 5 days
,D. 10 days - Correct Answer - Any work related illness or injury must be
reported to the workers compensation insurance company within 5 days.
Which of the following may NOT be deducted from an employee's
paycheck?
A. SDI
B. FICA
C. Medicare Tax
D. Workers' compensation insurance premiums - Correct Answer -
Workers compensation insurance premiums
Who is responsible for safety equipment actually being put to use on the
jobsite? - Correct Answer - The contractor is responsible for ensuring
safety equipment is actually put to use.
An employer who receives a citation for a serious violation of Cal/OSHA
regulations can be assessed a penalty of up to _____ for each violation.
- Correct Answer - Cal/OSHA can assess a penalty for a serious citation
for up to $25,000 for each violation.
Of the following, who may not approve a set of plans in the State of
California?
A. Architect
B. Interior designer
C. Engineer
D. Owner-builder - Correct Answer - An interior designer can not
approve a set of plans in the State of California
,After a home improvement contract is signed, the contractor must
substantially begin work within how many days of the date specified in
the contract? - Correct Answer - Within 20 days of the date specified in
the contract.
Which building code should a contractor follow? - Correct Answer - A
contractor should follow all local building codes.
A prime contractor decides to sub out the electrical work. How would the
prime determine what price to add for the electrical work? - Correct
Answer - The prime gets a firm bid from the subcontractor.
In the absence of a collective bargaining agreement, two employees filed
a written complaint with DOSH because of unsafe working conditions.
The contractor discovered who the employees were and fired them
because of the complaint. What would probably happen if the employees
appealed the termination? - Correct Answer - The contractor must
reinstate the employees and reimburse them for lost wages and benefits.
A contractor has been turned in to DOSH by an employee for a safety
violation. The contractor wants to find out who reported the violation and
asked DOSH for the employee's name. What will DOSH likely do? -
Correct Answer - Unless requested otherwise, DOSH will keep
confidential the name of any person making a complaint, and no
retaliation may be directed at the employee if the employee's identity is
discovered.
A licensed contractor contracts with a building owner to do a $900
improvement. When applying for a building permit, the contractor checks
, the owner-builder box on the declaration form. Which of the following
statements is correct?
A.nThe contractor may check the box to avoid insurance charges.
B. The contractor should check the box so that the owner-builder
verification will be mailed to the owner.
C. The contractor may check the box because the contractor is the
owner's employee.
D. The contractor may not check the owner-builder box because the
owner contracted for the improvement. - Correct Answer - The contractor
may not check the owner-builder box because the owner contracted for
the improvement.
_____, although usually the largest single item in a bid, can be fairly
accurately determined. - Correct Answer - Materials
What is the maximum number of exemptions an employee can put on
their W-4 before you have to send the form to the IRS? - Correct Answer
- An employee can put 10 exemptions on their W-4 before you have to
send the form to the IRS.
Star Construction moved to a new office but never filed a change-of-
address form with the Registrar. Consequently, Star never received a
renewal application. If Star fails to renew its license within three years of
the date of expiration, Star will have to? - Correct Answer - Pay a
delinquency fee to renew license.
An employer must file federal Form 1099-MISC to report payments of
_____ or more per calendar year to persons not treated as employees
