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CSLB CONTRACTOR'S LAW & BUSINESS EXAM 1
STUDY GUIDE WITH COMPLETE 250 QUESTIONS
AND CORRECT AND SOLUTIONS JUST RELEASED
THIS YEAR
Question: 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.
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Question: 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.
Question: 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.
Question: 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.
Question: An employer must furnish an employee with a completed IRS Form W-2 (Wage and
Tax Statement) by: - CORRECT ANSWER✔✔The 31st of January.
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Question: 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.
Question: 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.
Question: 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.
Question: 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.
Question;An employer remits State disability taxes withheld from an employees wages to what
agency? - CORRECT ANSWER✔✔Employment Development Department
Question: Which act establishes the rights of workers to organize into unions and negotiate
contracts? - CORRECT ANSWER✔✔National Labor Relations Act of 1935
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Question: On a time-and-materials job, you should: - CORRECT ANSWER✔✔Add profit and
overhead to labor and materials
Question: 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.
Question: 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.
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SUCCESS!
CSLB CONTRACTOR'S LAW & BUSINESS EXAM 1
STUDY GUIDE WITH COMPLETE 250 QUESTIONS
AND CORRECT AND SOLUTIONS JUST RELEASED
THIS YEAR
Question: 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.
1
SUCCESS!
,Page 2 of 50
Question: 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.
Question: 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.
Question: 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.
Question: An employer must furnish an employee with a completed IRS Form W-2 (Wage and
Tax Statement) by: - CORRECT ANSWER✔✔The 31st of January.
2
SUCCESS!
,Page 3 of 50
Question: 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.
Question: 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.
Question: 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.
Question: 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.
Question;An employer remits State disability taxes withheld from an employees wages to what
agency? - CORRECT ANSWER✔✔Employment Development Department
Question: Which act establishes the rights of workers to organize into unions and negotiate
contracts? - CORRECT ANSWER✔✔National Labor Relations Act of 1935
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SUCCESS!
, Page 4 of 50
Question: On a time-and-materials job, you should: - CORRECT ANSWER✔✔Add profit and
overhead to labor and materials
Question: 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.
Question: 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.
4
SUCCESS!
