1
CSLB CONTRACTOR'S LAW & BUSINESS EXAM
Questions with Answers (100% Correct Answers)
An employer remits State disability taxes withheld from an employees
wages to what agency?— Answer: Employment Development
Department
Which act establishes the rights of workers to organize into unions and
negotiate contracts?— Answer: 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.
© 2025 All rights reserved
,2
C. It is legal for a private employer to ask about arrests not leading to
convictions, but it would not be legal for city— Answer: It is not legal
to ask prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court?— Answer: 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.—
Answer: Car accident in which an employee steps onto a public road,
gets hit by a car, and suffers a concussion.
© 2025 All rights reserved
,3
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?— Answer: 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:— Answer: The 31st of January.
After a job is completed, the owner decides to have additional work
done. How should the contractor proceed?— Answer: Write a new
contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to?—
Answer: Notify the owner that the person or firm who sent the notice
has improved the property.
© 2025 All rights reserved
, 4
Is it legal for a contractor to pay employees in cash?— Answer: 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?— Answer: Decline to bid the work.
On a time-and-materials job, you should:— Answer: 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.
© 2025 All rights reserved
CSLB CONTRACTOR'S LAW & BUSINESS EXAM
Questions with Answers (100% Correct Answers)
An employer remits State disability taxes withheld from an employees
wages to what agency?— Answer: Employment Development
Department
Which act establishes the rights of workers to organize into unions and
negotiate contracts?— Answer: 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.
© 2025 All rights reserved
,2
C. It is legal for a private employer to ask about arrests not leading to
convictions, but it would not be legal for city— Answer: It is not legal
to ask prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court?— Answer: 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.—
Answer: Car accident in which an employee steps onto a public road,
gets hit by a car, and suffers a concussion.
© 2025 All rights reserved
,3
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?— Answer: 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:— Answer: The 31st of January.
After a job is completed, the owner decides to have additional work
done. How should the contractor proceed?— Answer: Write a new
contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to?—
Answer: Notify the owner that the person or firm who sent the notice
has improved the property.
© 2025 All rights reserved
, 4
Is it legal for a contractor to pay employees in cash?— Answer: 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?— Answer: Decline to bid the work.
On a time-and-materials job, you should:— Answer: 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.
© 2025 All rights reserved
