CSLB - LAW AND BUSINESS EXAM QUESTIONS
2 types of qualifying individuals for each type of license - 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? - Answer -"Notice of disassociation" and "application for replacing qualifying
individual".
Within 20 days
Or license automatically suspended
Responsible Managing Employee (RME) - 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 owns at least 20% of licensee 3) majority of officers/partners of
other one also are those of 1st
Responsible Managing Officer (RMO) - Answer -Officer of Corp
Journeyman - Answer -A person who has completed an apprecnticeship program or is
an experienced worker, not a trainee, and is fully qualified to perform the trade without
supervision.
Foreman/Supervisor - 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 - 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 or $4,500, whichever is greater, and county jail min 90 days.
Penalty for advertising for work outside of your license - Answer -fine of $700-$1000
Penalty for hiring unlicensed sub or allowing use of license - Answer -Citation from
registrar and civil penalty up to $15,000
, Penalty for deliberate fraudulent use of contractor's license - Answer -Up to $10,000
and/or one year jail
Bond must be filed with _ within _ days of effective date of bond. - Answer -CSLB ; 90
Contractor's Bond amount - Answer -$15,000
Performance Bond - Answer -guarantees job will be completed according to building
plans and specs. If work is unacceptable or project is abandoned, bonding company
can hire another contractor to complete the work or settle for damages.
Payment Bond - Answer -Guarantee to the owner that no liens for materials or labor will
be filed against the property.
Contract Bond - Answer -Guarantees both job completion and payment of all labor and
materials.
Bid Shopping - Answer -When prime contractor discloses sub's bid to other subs to get
them to lower their price.
Bid Peddling - Answer -When a sub whose bid wasn't chosen lowers bid in attempt to
induce contractor to pick them instead.
The Listing Law - Answer -Applies to state and local public works projects.
Requires contractor to include in their bid name, place of business, and license # of
each sub whose bid is .5% or more of total bid or $10,000 or more, whichever is
greater, and the portion of work performed by each sub.
If contractor violates, public entity may cancel contract or assess penalty of not more
than 10% of amount of subcontract involved. May also be subjected to discipline by
CSLB.
If material change is made by public entity to its invitation to bid w/in 72 hours of bid
closing, what has to happen? - Answer -Must extend deadline by no less than 72
hours.
Reasons public entity can give consent for contractor to substitute a sub. - Answer -
Failure to execute contract
Insolvency
Failure to perform subcontract
Failure to furnish bonds
Clerical error
Unlicensed
Failure to perform work
Failure to pay prevailing wages
Not qualified
2 types of qualifying individuals for each type of license - 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? - Answer -"Notice of disassociation" and "application for replacing qualifying
individual".
Within 20 days
Or license automatically suspended
Responsible Managing Employee (RME) - 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 owns at least 20% of licensee 3) majority of officers/partners of
other one also are those of 1st
Responsible Managing Officer (RMO) - Answer -Officer of Corp
Journeyman - Answer -A person who has completed an apprecnticeship program or is
an experienced worker, not a trainee, and is fully qualified to perform the trade without
supervision.
Foreman/Supervisor - 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 - 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 or $4,500, whichever is greater, and county jail min 90 days.
Penalty for advertising for work outside of your license - Answer -fine of $700-$1000
Penalty for hiring unlicensed sub or allowing use of license - Answer -Citation from
registrar and civil penalty up to $15,000
, Penalty for deliberate fraudulent use of contractor's license - Answer -Up to $10,000
and/or one year jail
Bond must be filed with _ within _ days of effective date of bond. - Answer -CSLB ; 90
Contractor's Bond amount - Answer -$15,000
Performance Bond - Answer -guarantees job will be completed according to building
plans and specs. If work is unacceptable or project is abandoned, bonding company
can hire another contractor to complete the work or settle for damages.
Payment Bond - Answer -Guarantee to the owner that no liens for materials or labor will
be filed against the property.
Contract Bond - Answer -Guarantees both job completion and payment of all labor and
materials.
Bid Shopping - Answer -When prime contractor discloses sub's bid to other subs to get
them to lower their price.
Bid Peddling - Answer -When a sub whose bid wasn't chosen lowers bid in attempt to
induce contractor to pick them instead.
The Listing Law - Answer -Applies to state and local public works projects.
Requires contractor to include in their bid name, place of business, and license # of
each sub whose bid is .5% or more of total bid or $10,000 or more, whichever is
greater, and the portion of work performed by each sub.
If contractor violates, public entity may cancel contract or assess penalty of not more
than 10% of amount of subcontract involved. May also be subjected to discipline by
CSLB.
If material change is made by public entity to its invitation to bid w/in 72 hours of bid
closing, what has to happen? - Answer -Must extend deadline by no less than 72
hours.
Reasons public entity can give consent for contractor to substitute a sub. - Answer -
Failure to execute contract
Insolvency
Failure to perform subcontract
Failure to furnish bonds
Clerical error
Unlicensed
Failure to perform work
Failure to pay prevailing wages
Not qualified
