CSLB CONTRACTOR'S LAW & BUSINESS EXAM
1. To which agency does an employer send State disability taxes that have been deducted from an
employee’s pay?
- Answer: Employment Development Department
2. Which legislation grants employees the right to form unions and engage in contract negotiations?
- Answer: National Labor Relations Act of 1935
3. Is it permissible for a contractor to inquire about a potential employee's arrest history during job
interviews if issues like theft of equipment have arisen?
- A. It is permissible to ask about arrests that did not result in convictions.
- B. It is not permissible to ask about arrests that did not lead to convictions.
- C. Private employers may ask about non-conviction arrests, while city or county agencies may not.
- D. Private employers may ask about arrests that did lead to convictions, while public agencies may
not.
- Answer: It is not permissible to ask about arrests that did not lead to convictions.
4. Under what circumstances might a contractor take a case to Superior Court?
- Answer: If a dispute exceeds $25,000, it may be escalated to Superior Court.
5. Which incident would not require immediate reporting to the Division of Occupational Safety and
Health (DOSH) within 24 hours?
- A. A fatal accident from a fall of three stories.
- B. A crane operator under the influence hitting a high-voltage power line.
- C. An employee involved in a car accident after stepping onto a public road, resulting in a concussion.
- D. An employee falling off a forklift and sustaining a severe back injury.
- Answer: The car accident involving an employee who steps onto a public road and suffers a
concussion.
,6. When a general contractor receives bids for a private project and one bid is significantly lower than
others, should the contractor inform the subcontractor of this discrepancy?
- Answer: Yes, if the contractor suspects the subcontractor made a mistake in their bid preparation,
they should inform them of the apparent error, but should refrain from disclosing the amounts of other
bids.
7. By when must an employer provide an employee with their completed IRS Form W-2?
- Answer: By January 31st.
8. What should a contractor do when an owner decides to include additional work after the initial job is
finished?
- Answer: The contractor should draft a new contract and request the owner’s signature on it.
9. What is the purpose of a 20-day preliminary notice in private construction projects?
- Answer: To inform the property owner that the sender has contributed to the improvement of their
property.
10. Is it lawful for a contractor to pay employees in cash?
- Answer: Yes, as long as the contractor provides each employee with a wage deduction statement
either semimonthly or at the time of each payment.
11. If you notice a code violation while bidding and the owner refuses to fix it, what should your
response be?
- Answer: You should decline to submit a bid for the work.
12. On a time-and-materials job, what should be included in the billing?
- Answer: You should include profit and overhead in addition to labor and materials.
13. If an employee improperly installs a cabinet causing damage to a client's countertop, what is the
best course of action?
- A. File a claim through your general liability insurance.
- B. Make the employee compensate for the damage.
, - C. Advise the client to use their homeowner’s insurance.
- D. No action is required as the client bears the risk.
- Answer: File a claim through your general liability insurance.
14. Which tool is most effective for estimating the hours needed for various project phases and ensuring
that the project remains on schedule?
- A. Bar graph and chart
- B. Cash analysis chart
- C. Review of plans
- D. Critical path method
- Answer: The critical path method.
15. Can a contractor mandate lie detector tests for employees?
- Answer: No, contractors cannot require lie detector tests, although it is permissible for federal, state,
or local public agencies to do so.
16. If a newly hired employee lacks a Social Security Number (SSN), what action should be taken?
- Answer: The employee must apply for an SSN.
17. How many attempts are allowed to take the contractor's license exam before the original application
is voided?
- Answer: You may take the exam as many times as needed within an 18-month period.
18. When should a contractor initiate the renewal of their contractor license bond?
- Answer: 30 days prior to its expiration.
19. What is the minimum work requirement for a qualifying Responsible Managing Employee (RME) at a
construction firm?
- Answer: The RME must work at least 32 hours per week or 80% of a standard work week.
, 20. Which agency issues the federal Employer Identification Number (EIN)?
- Answer: 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 ✔️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. ✔️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. ✔️The contractor should
do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? ✔️Owner, contractor, and
joint control officer.
1. To which agency does an employer send State disability taxes that have been deducted from an
employee’s pay?
- Answer: Employment Development Department
2. Which legislation grants employees the right to form unions and engage in contract negotiations?
- Answer: National Labor Relations Act of 1935
3. Is it permissible for a contractor to inquire about a potential employee's arrest history during job
interviews if issues like theft of equipment have arisen?
- A. It is permissible to ask about arrests that did not result in convictions.
- B. It is not permissible to ask about arrests that did not lead to convictions.
- C. Private employers may ask about non-conviction arrests, while city or county agencies may not.
- D. Private employers may ask about arrests that did lead to convictions, while public agencies may
not.
- Answer: It is not permissible to ask about arrests that did not lead to convictions.
4. Under what circumstances might a contractor take a case to Superior Court?
- Answer: If a dispute exceeds $25,000, it may be escalated to Superior Court.
5. Which incident would not require immediate reporting to the Division of Occupational Safety and
Health (DOSH) within 24 hours?
- A. A fatal accident from a fall of three stories.
- B. A crane operator under the influence hitting a high-voltage power line.
- C. An employee involved in a car accident after stepping onto a public road, resulting in a concussion.
- D. An employee falling off a forklift and sustaining a severe back injury.
- Answer: The car accident involving an employee who steps onto a public road and suffers a
concussion.
,6. When a general contractor receives bids for a private project and one bid is significantly lower than
others, should the contractor inform the subcontractor of this discrepancy?
- Answer: Yes, if the contractor suspects the subcontractor made a mistake in their bid preparation,
they should inform them of the apparent error, but should refrain from disclosing the amounts of other
bids.
7. By when must an employer provide an employee with their completed IRS Form W-2?
- Answer: By January 31st.
8. What should a contractor do when an owner decides to include additional work after the initial job is
finished?
- Answer: The contractor should draft a new contract and request the owner’s signature on it.
9. What is the purpose of a 20-day preliminary notice in private construction projects?
- Answer: To inform the property owner that the sender has contributed to the improvement of their
property.
10. Is it lawful for a contractor to pay employees in cash?
- Answer: Yes, as long as the contractor provides each employee with a wage deduction statement
either semimonthly or at the time of each payment.
11. If you notice a code violation while bidding and the owner refuses to fix it, what should your
response be?
- Answer: You should decline to submit a bid for the work.
12. On a time-and-materials job, what should be included in the billing?
- Answer: You should include profit and overhead in addition to labor and materials.
13. If an employee improperly installs a cabinet causing damage to a client's countertop, what is the
best course of action?
- A. File a claim through your general liability insurance.
- B. Make the employee compensate for the damage.
, - C. Advise the client to use their homeowner’s insurance.
- D. No action is required as the client bears the risk.
- Answer: File a claim through your general liability insurance.
14. Which tool is most effective for estimating the hours needed for various project phases and ensuring
that the project remains on schedule?
- A. Bar graph and chart
- B. Cash analysis chart
- C. Review of plans
- D. Critical path method
- Answer: The critical path method.
15. Can a contractor mandate lie detector tests for employees?
- Answer: No, contractors cannot require lie detector tests, although it is permissible for federal, state,
or local public agencies to do so.
16. If a newly hired employee lacks a Social Security Number (SSN), what action should be taken?
- Answer: The employee must apply for an SSN.
17. How many attempts are allowed to take the contractor's license exam before the original application
is voided?
- Answer: You may take the exam as many times as needed within an 18-month period.
18. When should a contractor initiate the renewal of their contractor license bond?
- Answer: 30 days prior to its expiration.
19. What is the minimum work requirement for a qualifying Responsible Managing Employee (RME) at a
construction firm?
- Answer: The RME must work at least 32 hours per week or 80% of a standard work week.
, 20. Which agency issues the federal Employer Identification Number (EIN)?
- Answer: 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 ✔️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. ✔️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. ✔️The contractor should
do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? ✔️Owner, contractor, and
joint control officer.
