California Contractors License Exam : Ultimate Study Guide with Verified, Updated Questions and Answers

California Contractors License Exam : Ultimate Study Guide with Verified, Updated Questions and Answers What are unlicensed subcontractors considered when working on your job? - ANS Statutory employees. This means you can be held accountable for federal and state taxes that must be paid. Where must employers report all newly hired employees? - ANS New Hire Reporting Program within 20 days Who is responsible for obtaining Worker's Compensation Insurance? - ANS The employer. Businesses with employees are rquired to carry Worker's Comp Insurance. What is the most valuable advice given to new employers? - ANS File your taxes Is maintaining a healthy and fair workplace required? - ANS Yes. By law. Federal law that prohibits employers from discriminating against race, sex, color, or religion. - ANS Title 7 Federal law that prohibits employers from discriminating against disabilities. - ANS American Disabilities Act Law the prevents discrimination against age - ANS Age Discrimination Employment Act Federal law that provides regulation on workdays. - ANS Fair Labor Standards Act Federal law that preserves a qualified employee's position for personal or family health which includes maternity and paternity leave. - ANS Family and Medical Leave Act Who pays Federal Insurance Contributions Act, or FICA Taxes? - ANS Both the employer and the employee. This includes Social Security and Medicare. Who pays Federal Unemployment Taxes, or FUTA. - ANS The employer Who pays State Unemployment Taxes, or U.I. - ANS The employer Who pays Employment Training Taxes, or E.T.T. - ANS The employer Who pays Federal and State Income Taxes - ANS The employee Who pays for state disability insurance? - ANS The employee The basic hourly rate paid on public works jobs to a majority of workers engaged in a particular craft. - ANS Prevailing wages Program responsible for enforcing California laws and regulations for workplace safety. - ANS Cal OSHA Program that protects workers and the public from safety hazards. - ANS California Division of Occupational Health, DOSH What must employers establish, implement and maintain in the workplace to establish a safe and healthy place to work. - ANS I.I.P.P., Injury and Illness Prevention Program Where is it required for you to call to report a work related injury or fatality. - ANS OSHA Toolbox or tailgate safety meetings must be held how often? - ANS every 10 days This poster that must be displayed conspicuously in the workplace explains the basic requirements and procedures for compliance with the State's job safety and health laws and regulation. - ANS "Safety and Health Protection on the Job" poster What is the fine for not displaying the Safety and Health Protection on the Job poster? - ANS $7000 What provides information on every hazardous chemical? - ANS MSDS Can employers apply to have an alternative method of safety standards? - ANS Yes, as long as it provides equal or better safety than the State establishes. If you plan on demolishing a building that contains asbestos, who must you notify first? - ANS The E.P.A. If you are moving 50 lbs or more of asbestos you must have a certification for... - ANS hazardous waste hauler In what year did the E.P.A. ban asbestos containing products? - ANS 1989 In California, the lien law is applicable to what kinds of works of improvement? - ANS private How many posters are required to be posted at the workplace? - ANS Two. The Cal OSHA poster and the Code of Safe Practices poster. What word describes the measure of experience and skill level. - ANS Capability What does NEPA stand for? - ANS National Environmental Policy Act Who must be licensed as a contractor? - ANS Anyone who offers to or does construct/alter on any job that costs 500 dollars or more. Is anyone exempt from the requirements to have a license? - ANS Yes. - If project is less than $500. - Government or other public personnel on public projects. - Officers of a court within the scope of their office. - Public utilities under specified conditions. - Oil and gas operations done by owner or lessee. - Owner-builders who build or improve their own property if THEY do the work themselves, contract with a licensed contractor, or improve any item/main residence, resided there over a year prior to work completion, and prior to sale. - A seller of installed carpets who contracts with a licensed carpet installer and certifies it - Security alarm companies licensed by BSIS - Individuals who install Satellite antenna systems at residences Do I need to reside in California to get and keep a license? - ANS No. What kind of experience is required for a CA cont's license? - ANS At least 4 years of journey-level experience in the past 10 years before filing. How old do your have to be to get a contractors license. - ANS 18 What are the types of licenses issued? - ANS 5 types: Sole Owner, Partnership, LLC, Corporation, & Joint Venture. Joint Venture licenses are made up of 2 individual active licenses for a specific purpose. Does California recognize contractors licenses from other states or countries? - ANS No! To be a contractor in CA, you must apply for and be issued a license. CA has reciprocity with AZ, LA, NV, and UT, but you will still have to take the law & business exam. What charge is it to contract without a license? - ANS Misdemeanor, meaning potential jail time, fines and administrative fines Are there educational requirements to obtain a contractors license? - ANS No What are the contractor's license classifications? - ANS Class A - Engineering. Class B - Building. Class C - Specialty Can technical training and apprenticeship training substitute the required training required for the 4 years needed. - ANS Yes. As long as the applicant has a minimum of 1 year of practical experience. Are all applicants required to submit to a background check? - ANS Yes What are the total fees I must pay to obtain a contractor license? - ANS $480.00. The non-refundable processing fee of $300 and the two year initial license fee of $180. Current fees are printed on the application forms and notices. How often do I have to renew my license? - ANS every two years Will I receive notice before my active license expires? - ANS Yes. 60 days, but remember it is your responsibility to know and renew without being reminded. What is the active license renewal fee? - ANS $360. You are required to renew every two years. Is there a fee for renewing an active license - ANS $180. Inactive licenses must be renewed how often? - ANS Every four years What is the minimum operating capital that you must have to qualify to be a contractor? - ANS $2500 If you are changing the business name or address, or changing the personnel or business type, how long do you have to notify the state of those changes? - ANS 90 days If you change owners or the business entity, changing the license structure, can you renew your license at the end of the year or do you need to apply for a new one. - ANS Apply for a new one. Can your old license be renewed? - ANS Yes. If your license has been expired between 3 to 5 years. Another name for the qualifier. - ANS The test-taker. Or the person whom the license is going to be issued. What is the qualifier called if he/she is an individual? - ANS The owner What is the qualifier called if he or she is a partner? - ANS Qualifying Partner. What is the qualifier called if he or she is an officer? - ANS RMO, Responsible Managing Officer What is the qualifier called if he or she is an employee? - ANS RME, Responsible Managing Employee How many hours is an RME, Responsible Managing Employee required to work. - ANS 80% or 32 hours How many licenses can an Owner or Qualifying Partner qualify for at a time. - ANS 3 How may licenses can an RME or RMO qualify for at a time? - ANS 1 Can you lend your license to someone? - ANS No. That would be punishable by law. What must be on file with CSLB before an active contractor's license can be issued? - ANS A current contractor bond($15,000 required for all classifications) or cashier's check A qualifying individual must have a $12,500 bond or cashier's check for: - ANS 1. Each RME. 2. Each RMO, unless the RMO owns 10%+ voting stock. 3. Each RME/RMO, unless they own 10%+ of the membership interest in the LLC Can you abandon a project without a legal excuse? - ANS No. This would be cause for disciplinary action. It is classified as "Breach of Contract". A contractor is not prohibited from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work is _____ and supplemental to the primary job. - ANS Incidental and supplemental to the primary job. Otherwise it must be performed by a sub. How many bonds can be in effect at a time? - ANS Only one. What happens if your surety company cancels a required bond? - ANS Your license will be suspended. What happens if the RMO is no longer at least 10% voting stock, a payment/judgment reduces the amount of a bond, or you fail to maintain a disciplinary bond? - ANS Your license will be suspended. How soon are you required to report a construction-related civil court judgment to CSLB? - ANS Within 90 days of the judgment date Under what conditions may you add a classification to your license? - ANS Only if your license is renewed and in good standing In drawing up contracts, contractors should pay strict attention to the requirements for _____ of notices and disclosures? - ANS Print typeface and point size Text in any printed form shall be in at least ______-point type - ANS 10-point type Can you use funds from one project to finish another? - ANS No. This falls under the category of Larceny and is a misdemeanor or felony. May a home improvement salesperson work for more than one contractor? - ANS Yes What are the qualifications for a home improvement salesperson? - ANS at least 18 years old. What are the main duties of a contractor who is also a manager? - ANS to plan and direct the major activities of the business; coordinate employee work and materials; and train, direct, and advise employees in supervisory and non-supervisory positions The Functional Areas of Management Include: - ANS Planning - DecisionMaking/Delegation - Standarization(efficiency/routine/pattern) - Controls(to warn manager when actual outcome is different than expectation) The Behavioral Aspects of Management Include: - ANS Human Relations - Cooperation - Responsibility - Communication - Executive Ability Who is responsible for making sure that the information that informs business decisions is complete and accurate? - ANS The manager What are the 6 Forms a business can take? - ANS Sole Ownership - General Partnership - Limited Partnership - Corporation - "S" Chapter Corp - LLC What is required to sell tangible personal property? - ANS A Seller's Permit For a work-incurred injury/illness, an employer-contractor is REQUIRED to provide ______ and _____. - ANS Weekly benefit payments (indemnity) and necessary medical/hospital treatment If the employer has one or more employees, even part-time, they are required to insure for _______ - ANS worker's compensation claims What are the 3 types of bonds? - ANS Performance, Payment & Contract Bonds How soon must you file a complete report of an occupational injury/illness that results in lost time or requires medical aid? - ANS Within 5 days after the employer gains knowledge Every employer-contractor subject to the provisions of the workers' compensation laws MUST: - ANS - Give every new employee written notice of their right to worker's comp - Post in a frequented location a Notice to Employees poster - Post information regarding protections & obligations of employees Penalties for worker's comp noncompliance are: - ANS - Failure to secure payment of compensation required by law is misdemeanor, and license may be suspended/revoked. Also possibly a "stop order", restraining order, or penalty assessment order. Is it a crime to use false or misleading advertising? - ANS Yes. It is a misdemeanor. What is a joint venture license? - ANS Two or more qualifiers of different licenses who seek to combine their licenses and expertise for a specific project. What is "Cash Basis of Accounting"? - ANS revenue is recognized when cash is actually received, and expenses are deductible in the year paid (unless they should be taken in a different period to clearly reflect income) What is "Accrual Basis of Accounting" - ANS recognizes revenues when earned and expenses when incurred, regardless of when payment is received or made. Thus, this method allows the matching of revenues and associated expenses for individual periods of time. What does Direct Labor Burden include? - ANS all payroll taxes, insurance, and employee benefits associated with the labor payroll. How do you determine Pretax Income? - ANS the total operating expenses are subtracted from the sales of residences What is working capital? - ANS The difference between the total current assets and the total current liabilities Can a contractor collect more than the percentage already completed on the contract? - ANS NO What are the 2 sources of financing? - ANS Equity Funds(supplied by investors who acquire some control of the business & share of future profits) and Debt What are the four types of contractual agreements between the builder and owner? - ANS the lump-sum, the cost-plus, the unit-price, and the guaranteed-maximum cost contract. How long is a joint venture valid for? - ANS 2 years after first given. If a QP leaves, what can the remaining party file to get more time? - ANS A continuance of up to 1 year in order to complete the project. If a QP leaves, the remaining party has __ days to report it to the state. - ANS 90 days What must qualifiers do every day regarding to the job site? - ANS visit the site daily. When must the subcontractors be paid? - ANS 7 days after each progress payment by the owner to the direct contractor. ____ is the task of preparing a detailed cost estimate for the job, including material. labor, overhead, as well as the profit or mark-up. - ANS Bidding Materials, labor, permits, loan fees, subs, are all considered what type of costs? - ANS Direct Costs Office space rent, office supplies, advertising, staff, insurance, and utility bills are considered what type of costs? - ANS Overhead costs Equipment maintenance, truck maintenance, lubrication, tools, fuel, equipment are considered what type of costs? - ANS Indirect Costs Written offers from contractors to undertake a construction job in return for a sum of money which can be negotiated, limited or selective competition, or an open competition. - ANS Construction bid The 3 essential estimates needed to determine your "mark up" - ANS Gross Income, Overhead expenses, Net profit desired. The industry average for Net profit percentage is... - ANS 6% What is the formula for determining "mark up". - ANS OE + NP = A1...GI - A1= JC...GI / JC = Mark up Where is the best place to look for bidding advice? - ANS Recent job history. Do sales tax costs need to be included in the bid estimate? - ANS Yes If the subs bid is too low, should you let him know? - ANS Yes, it is ethical and good practice to call the sub and inform him when the bid is too high or low. Should you build against code if the customer insists? - ANS No. It is illegal to build against code. Should you bid against other companies or against the job? - ANS Always bid against the job. Doing otherwise will cause you troubles in paying subs, materials, and equipment needed. Should you take your time and double check everything before leaving a quote or just get it done quickly? - ANS Take your time and be critical, ensure you understand all aspects of the plan, walk the job and double check the bid estimate. An agreement with specific terms between two or more people for performance and compensation. - ANS Contract A contract is not enforceable unless it has ___ signatures? - ANS 2. The customer and the contractor. What is the standard contract used by customers and contractors? - ANS Home Improvement Contract. It establishes and agreement between the customer and the contractor for the work being done. What is the required down payment for a contract? - ANS 10% or $1000. Whichever is less. Time given to the customer to cancel the contract? - ANS midnight of the 3rd business day. Time given to the contractor to return all money given by the customer back to him/her. - ANS 10 days, beginning on the day he or she cancels the contract. days given to the customer to make all materials left on the property available for pick up. - ANS 20 days The contractor has this many days from the declared start date, to start the job before breaching the contract. - ANS 20 days Contracts should always be in writing, but they must be in writing if the job costs more than ___. - ANS $500 What is a mechanics lien? - ANS A lien on a property What is a stop notice? - ANS A lien on funds A lien placed upon the property that received construction. It is filed by the contractor and is used if the contractor does not receive payment for their work and properly filed a Preliminary Notice. - ANS Mechanic's Lien Within _____ days after completion, you may record a Notice of Completion. - ANS 10 If no Notice of Completion or Cessation is recorded, and either: - ANS 1. Labor ceases and owner/agent uses the work of improvement 2. Owner/agent accepts improvement, then: (a) Within 90 days of the above, record a Claim of Lien, and File a Lien Foreclosure Action within 90 days Can you record a Mechanic's Lien and a Stop Payment Notice on private work? - ANS Yes Can you record a Mechanic's Lien and a Stop Payment on public work? - ANS No. A Mechanic's Lien is limited to private work. What must be filed to keep the right to a Mechanic's Lien? How many days do you have to file it? - ANS A Preliminary Notice Form must be filed within 20 days of signing the contract. Subcontractors, suppliers and anyone else who is going to participate in the job must also file a Preliminary Notice if they want to keep their right. Who files the Notice of Completion? How long does that person have? - ANS The owner. 15 days to file it. How many days does the contractor have to file a Mechanic's Lien? - ANS If the owner does not file a Notice of Completion within 15 days, contractor has 90 days. If the owner files within the proper time, Contractor has 60 days. Small claims courts can only handle cases that are less than what amount? - ANS An individual or small business owned by an individual can file up to 2 cases a year under $7500. Businesses and Corporations can file up to 2 cases a year under $5000 Can you appeal a decision mad in small claims court? - ANS Yes. Can you appeal a decision made in an arbitration hearing? - ANS No. In addition to Mechanic's Lien and a Stop Payment Notice you may also file a ___ ___ for Breach of Contract. - ANS Civil Suit Whats the name of the form that notifies people there is a pending lawsuit on their property. - ANS Lis Pendens If you file a lien, but then get paid, what should you do? - ANS File a lien release form. Awarding Authority is: - ANS the owner or the agent of the owner who awards an original building or construction contract, also known as the prime contract. This term is usually used with public works. Bonded Stop Notice is a - ANS bond that accompanies a stop notice to a construction lender and must be in a sum equal to 1-1/4 times the amount of the claim. must be delivered by certified mail or in person A Claimant is - ANS The person claiming or asserting the right to demand Claim of Lien (mechanics lien) is a - ANS written statement signed and verified by the claimant/claimant's agent that must state: 1. amount of claimant's demand 2. name of owner 3. labor, services, equipment, materials furnished by the claimant; 4. name of the person who employed the claimant 5. A description of the site Lien Foreclosure Action is a - ANS lawsuit to foreclose the mechanics lien Lis Pendens is - ANS a notice that a lawsuit is pending and that the lawsuit affects real property. It warns everyone who might acquire the property that they may be bound by an adverse judgment Notice of Cessation is - ANS a written notice, signed and verified by the owner/agent, stating: 1. Approx date labor stopped 2. Confirmation that no further labor has been done 3. name/address of owner 4. Nature of interest/estate 5. street address of site 6. name of contractor The Notice of Cessation must be recorded in the Office of the County Recorder of the county in which the site is located and will be effective only if labor has ceased continuously for at least - ANS 30 days before the recording Notice of Completion is - ANS a written notice, signed/verified by owner/agent stating: 1. Date job finished; 2. Name/address of owner; 3. Nature of the interest/estate 4. Street address of site 5. Name contractor The Notice of Completion must be recorded within - ANS 10 days Notice of Non-Responsibility is - ANS a written notice signed/verified by person who owns/has interest in the property, stating: 1. Desc of site 2 Name and nature of title/interest of purchaser/lessee 4.Statement that they will NOT be responsible for any claims If changes are made to the job and the original job is not complete yet, what form should be filed? - ANS A Contract Change Order Who has to ensure that the subcontractors are licensed and insured? - ANS Direct Contractor How many bathrooms must be provided for every 20 employees? - ANS One