, Question 1
A Class B contractor holds a $1.2 million contract and applies for a Class A
license. Under 18VAC50-22, which financial statement is required to
demonstrate the higher net worth threshold?
A. Compiled financial statement showing net worth of at least $45,000
B. Reviewed financial statement showing net worth of at least $90,000
C. Audited financial statement showing net worth of at least $45,000
D. Audited financial statement showing net worth of at least $90,000
Correct Answer: B - Reviewed financial statement showing net
worth of at least $90,000
RATIONALE
Class A requires a reviewed financial statement prepared by a CPA
showing a minimum net worth of $90,000, whereas Class B requires
only a compiled statement at $45,000. The reviewed level and higher
net worth are statutory under 18VAC50-22-40. Audited statements are
not mandated for Class A, and compiled statements are insufficient.
Question 2
A contractor receives a $50,000 progress payment on a project but fails to pay
a subcontractor $15,000. Under Virginia's trust-fund statute, what is the most
serious legal consequence?
A. Civil suit for breach of contract only
B. Class 6 felony for misuse of trust funds
C. Class 1 misdemeanor for failure to pay
D. Automatic license revocation by DPOR without hearing
Correct Answer: B - Class 6 felony for misuse of trust funds
Page 2
, RATIONALE
Virginia Code §54.1-1114 makes misuse of trust funds a Class 6
felony when a contractor uses funds for purposes other than the
project. Civil remedies and misdemeanor charges may also apply, but
the felony classification is the most serious. DPOR revocation requires
due process, not automatic action.
Question 3
A Virginia contractor is cited by OSHA for a willful violation resulting in a
fatality. Which statement best describes the impact on the contractor's DPOR
license?
A. OSHA violations are federal and cannot affect state licensure.
B. The violation must be reported to DPOR within 30 days and may be
grounds for disciplinary action.
C. Only repeated OSHA violations trigger DPOR review.
D. DPOR action requires a criminal conviction first.
Correct Answer: B - The violation must be reported to DPOR
within 30 days and may be grounds for disciplinary action.
RATIONALE
18VAC50-22-120 requires licensees to report certain regulatory
violations, and willful OSHA violations involving fatalities are
considered misconduct affecting licensure. DPOR may act
independently of criminal proceedings. Federal violations can indeed
impact state licensure.
Question 4
A Class A contractor's net worth drops to $70,000 during the license term.
What is the contractor's obligation under Board regulations?
A. No action required until renewal
B. Notify DPOR within 30 days and cease operating as Class A
C. Obtain a bond to cover the shortfall
Page 3
, D. Immediately surrender the license
Correct Answer: B - Notify DPOR within 30 days and cease
operating as Class A
RATIONALE
18VAC50-22-40 requires a Class A contractor to maintain the $90,000
net worth; if it falls below, the contractor must notify the Board within
30 days and cannot continue to operate at the Class A level. A bond is
not a substitute. Surrender is not automatically required.
Question 5
A Virginia contractor hires a worker as an independent contractor but controls
schedule, tools, and method of work. Under IRS and Virginia law, what is the
primary risk?
A. No risk if a written contract states independent contractor status
B. Reclassification as employee, leading to back taxes, penalties, and
DPOR discipline
C. Only federal tax liability, not state licensing issues
D. The worker must form an LLC to be legitimate
Correct Answer: B - Reclassification as employee, leading to back
taxes, penalties, and DPOR discipline
RATIONALE
Behavioral control indicates employee status regardless of contract
labels. Misclassification can result in IRS back taxes, Virginia
employment tax assessments, and DPOR disciplinary action for
violating labor laws. A written contract alone does not determine
status.
Question 6
A contractor files a mechanic's lien but fails to file suit to enforce it within the
statutory period. What is the effect?
Page 4
A Class B contractor holds a $1.2 million contract and applies for a Class A
license. Under 18VAC50-22, which financial statement is required to
demonstrate the higher net worth threshold?
A. Compiled financial statement showing net worth of at least $45,000
B. Reviewed financial statement showing net worth of at least $90,000
C. Audited financial statement showing net worth of at least $45,000
D. Audited financial statement showing net worth of at least $90,000
Correct Answer: B - Reviewed financial statement showing net
worth of at least $90,000
RATIONALE
Class A requires a reviewed financial statement prepared by a CPA
showing a minimum net worth of $90,000, whereas Class B requires
only a compiled statement at $45,000. The reviewed level and higher
net worth are statutory under 18VAC50-22-40. Audited statements are
not mandated for Class A, and compiled statements are insufficient.
Question 2
A contractor receives a $50,000 progress payment on a project but fails to pay
a subcontractor $15,000. Under Virginia's trust-fund statute, what is the most
serious legal consequence?
A. Civil suit for breach of contract only
B. Class 6 felony for misuse of trust funds
C. Class 1 misdemeanor for failure to pay
D. Automatic license revocation by DPOR without hearing
Correct Answer: B - Class 6 felony for misuse of trust funds
Page 2
, RATIONALE
Virginia Code §54.1-1114 makes misuse of trust funds a Class 6
felony when a contractor uses funds for purposes other than the
project. Civil remedies and misdemeanor charges may also apply, but
the felony classification is the most serious. DPOR revocation requires
due process, not automatic action.
Question 3
A Virginia contractor is cited by OSHA for a willful violation resulting in a
fatality. Which statement best describes the impact on the contractor's DPOR
license?
A. OSHA violations are federal and cannot affect state licensure.
B. The violation must be reported to DPOR within 30 days and may be
grounds for disciplinary action.
C. Only repeated OSHA violations trigger DPOR review.
D. DPOR action requires a criminal conviction first.
Correct Answer: B - The violation must be reported to DPOR
within 30 days and may be grounds for disciplinary action.
RATIONALE
18VAC50-22-120 requires licensees to report certain regulatory
violations, and willful OSHA violations involving fatalities are
considered misconduct affecting licensure. DPOR may act
independently of criminal proceedings. Federal violations can indeed
impact state licensure.
Question 4
A Class A contractor's net worth drops to $70,000 during the license term.
What is the contractor's obligation under Board regulations?
A. No action required until renewal
B. Notify DPOR within 30 days and cease operating as Class A
C. Obtain a bond to cover the shortfall
Page 3
, D. Immediately surrender the license
Correct Answer: B - Notify DPOR within 30 days and cease
operating as Class A
RATIONALE
18VAC50-22-40 requires a Class A contractor to maintain the $90,000
net worth; if it falls below, the contractor must notify the Board within
30 days and cannot continue to operate at the Class A level. A bond is
not a substitute. Surrender is not automatically required.
Question 5
A Virginia contractor hires a worker as an independent contractor but controls
schedule, tools, and method of work. Under IRS and Virginia law, what is the
primary risk?
A. No risk if a written contract states independent contractor status
B. Reclassification as employee, leading to back taxes, penalties, and
DPOR discipline
C. Only federal tax liability, not state licensing issues
D. The worker must form an LLC to be legitimate
Correct Answer: B - Reclassification as employee, leading to back
taxes, penalties, and DPOR discipline
RATIONALE
Behavioral control indicates employee status regardless of contract
labels. Misclassification can result in IRS back taxes, Virginia
employment tax assessments, and DPOR disciplinary action for
violating labor laws. A written contract alone does not determine
status.
Question 6
A contractor files a mechanic's lien but fails to file suit to enforce it within the
statutory period. What is the effect?
Page 4
