CSLB CONTRACTOR'S LAW & BUSINESS EXAM
COMPLETE QUESTIONS & ANSWERS(RATED A)
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.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - 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.
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.
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.
D. No action is required: The client must assume the risk of damage. - ANSWER Claim the damage on
your general liability insurance policy.
Of the following, which is best for determining the number of hours required for different phases of a
project and for making sure the job is on schedule?
A. Bar graph and chart
B. Cash analysis chart
C. Review plans
D. Critical path method - ANSWER The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ANSWER It is not legal for the
contractor to require lie detector tests, but it would be legal for a federal, state, or local public agency to
require lie detector tests of their employees.
If a newly hired employee does not have a SSN, what should be done? - ANSWER The employee must
apply for a SSN.
How many times may you take the contractors license exam before your original application is voided? -
ANSWER As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ANSWER 30 days before it expires.
The qualifying RME for a construction firm must work at least: - ANSWER A qualifying RME for a
construction firm must work at least 32 hours per week or 80% of the work week.
The federal Employer Identification Number (EIN) is issued by the: - 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 - ANSWER Every employer of 11 or more full or part time employees must keep written health
and safety records for 5 years.
When is the last day a customer can cancel a contract that was signed on Friday, December 21st? -
ANSWER The following Wednesday.
The customer has the right to cancel 3 business days after the day the contract has been signed and
delivered to the. In this case: Saturday Midnight day one. Monday midnight day two Wednesday
Midnight day three. NOTE: Sunday and Tuesday were not business days since Tuesday was a holiday.
Correct answer is Wednesday midnight.
When a notice of completion has been filed, the original contractor has how many days to record a lien. -
ANSWER 60 days to record a lien.
Which of the following financial ratios is the strictest measure of liquidity?
A. Quick Ratio
B. Current Ratio
C. Profitability Ratio
D. Leverage Ratio - ANSWER The quick ratio is the strictest measure of liquidity.
When should you let your attorney see a construction contract? - ANSWER After the contract is prepared
but before it is signed.
How often are FICA taxes reported and paid? - ANSWER Quarterly
COMPLETE QUESTIONS & ANSWERS(RATED A)
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.
C. It is legal for a private employer to ask about arrests not leading to convictions, but it would not be
legal for city or county agencies to ask about such arrests.
D. It is legal for a private employer to ask about arrests leading to convictions, but it would not be legal
for a federal, state, or local public agency to do so. - 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.
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.
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.
D. No action is required: The client must assume the risk of damage. - ANSWER Claim the damage on
your general liability insurance policy.
Of the following, which is best for determining the number of hours required for different phases of a
project and for making sure the job is on schedule?
A. Bar graph and chart
B. Cash analysis chart
C. Review plans
D. Critical path method - ANSWER The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ANSWER It is not legal for the
contractor to require lie detector tests, but it would be legal for a federal, state, or local public agency to
require lie detector tests of their employees.
If a newly hired employee does not have a SSN, what should be done? - ANSWER The employee must
apply for a SSN.
How many times may you take the contractors license exam before your original application is voided? -
ANSWER As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ANSWER 30 days before it expires.
The qualifying RME for a construction firm must work at least: - ANSWER A qualifying RME for a
construction firm must work at least 32 hours per week or 80% of the work week.
The federal Employer Identification Number (EIN) is issued by the: - 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 - ANSWER Every employer of 11 or more full or part time employees must keep written health
and safety records for 5 years.
When is the last day a customer can cancel a contract that was signed on Friday, December 21st? -
ANSWER The following Wednesday.
The customer has the right to cancel 3 business days after the day the contract has been signed and
delivered to the. In this case: Saturday Midnight day one. Monday midnight day two Wednesday
Midnight day three. NOTE: Sunday and Tuesday were not business days since Tuesday was a holiday.
Correct answer is Wednesday midnight.
When a notice of completion has been filed, the original contractor has how many days to record a lien. -
ANSWER 60 days to record a lien.
Which of the following financial ratios is the strictest measure of liquidity?
A. Quick Ratio
B. Current Ratio
C. Profitability Ratio
D. Leverage Ratio - ANSWER The quick ratio is the strictest measure of liquidity.
When should you let your attorney see a construction contract? - ANSWER After the contract is prepared
but before it is signed.
How often are FICA taxes reported and paid? - ANSWER Quarterly
