CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
An employer remits State disability taxes withheld from an employees wages to what agency? - ✔✔
correct answer Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate contracts? - ✔✔
correct 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. - ✔✔ correct 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? - ✔✔ correct 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. - ✔✔ correct answer Car accident in
which an employee steps onto a public road, gets hit by a car, and suffers a concussion.
,CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
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? - ✔✔ correct 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: - ✔✔ correct answer The 31st of January.
After a job is completed, the owner decides to have additional work done. How should the
contractor proceed? - ✔✔ correct 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? - ✔✔ correct 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? - ✔✔ correct 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? - ✔✔ correct answer Decline to bid the work.
On a time-and-materials job, you should: - ✔✔ correct 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. - ✔✔ correct answer Claim the
damage on your general liability insurance policy.
,CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
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 - ✔✔ correct answer The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ✔✔ correct 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? - ✔✔ correct answer The
employee must apply for a SSN.
How many times may you take the contractors license exam before your original application is
voided? - ✔✔ correct answer As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ✔✔ correct answer 30 days before
it expires.
The qualifying RME for a construction firm must work at least: - ✔✔ correct 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: - ✔✔ correct 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
, CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
C. 10-3
D. 11-5 - ✔✔ correct answer 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. - ✔✔ correct answer 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. - ✔✔ correct answer The
contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ✔✔ correct answer
Owner, contractor, and joint control officer.
When purchasing insurance, what is the best way to chose among different companies? - ✔✔
correct answer Cost and Coverage
Sometimes contracts can prove to be too vague to interpret without disagreement between owner
and contractor. Which of the following steps would best prevent such problems?
A. Walk the job site with the owner.
B. Review the plans and specifications with the owner.
C. Show the owner the critical path schedule.
BUSINESS EXAM
An employer remits State disability taxes withheld from an employees wages to what agency? - ✔✔
correct answer Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate contracts? - ✔✔
correct 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. - ✔✔ correct 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? - ✔✔ correct 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. - ✔✔ correct answer Car accident in
which an employee steps onto a public road, gets hit by a car, and suffers a concussion.
,CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
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? - ✔✔ correct 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: - ✔✔ correct answer The 31st of January.
After a job is completed, the owner decides to have additional work done. How should the
contractor proceed? - ✔✔ correct 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? - ✔✔ correct 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? - ✔✔ correct 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? - ✔✔ correct answer Decline to bid the work.
On a time-and-materials job, you should: - ✔✔ correct 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. - ✔✔ correct answer Claim the
damage on your general liability insurance policy.
,CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
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 - ✔✔ correct answer The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ✔✔ correct 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? - ✔✔ correct answer The
employee must apply for a SSN.
How many times may you take the contractors license exam before your original application is
voided? - ✔✔ correct answer As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ✔✔ correct answer 30 days before
it expires.
The qualifying RME for a construction firm must work at least: - ✔✔ correct 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: - ✔✔ correct 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
, CSLB CONTRACTOR'S LAW &
BUSINESS EXAM
C. 10-3
D. 11-5 - ✔✔ correct answer 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. - ✔✔ correct answer 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. - ✔✔ correct answer The
contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ✔✔ correct answer
Owner, contractor, and joint control officer.
When purchasing insurance, what is the best way to chose among different companies? - ✔✔
correct answer Cost and Coverage
Sometimes contracts can prove to be too vague to interpret without disagreement between owner
and contractor. Which of the following steps would best prevent such problems?
A. Walk the job site with the owner.
B. Review the plans and specifications with the owner.
C. Show the owner the critical path schedule.
