CSLB CONTRACTORS LAW AND BUSINESS
2026 BUSINESS MANAGEMENT AND
OPERATIONS MODULE QUESTIONS
SOLUTIONS STRUCTURED SCRIPT
◉ What is the penalty for acting as a contractor without a license in
California?
Answer: it is a MISDEMEANOR
◉ What does the CSLB issue to a contractor for a minor violation as
a warning?
Answer: Advisory Notice
◉ How long are citations against licensed contractors disclosed to
the public?
Answer: 5 years
◉ What is the maximum allowable down payment for a home
improvement contract in California?
Answer: $1,000 or 10% of the contract price, Whichever is less
,◉ Home improvements contracts must include which of the
following?
Answer: •description of materials
•start and completion dates
•permissible delays
◉ Which business structures provides liability protection similar to
a corporation but has different tax treatment?
Answer: Limited Liability Company (LLC)
◉ What type of bond guarantees both job completion and payment
of all labor and materials?
Answer: Contract Bond
◉ What is the minimum liability insurance required for a limited
liability company (LLC) with 5 or fewer personnel?
Answer: $1 million
◉ What is the purpose of a disciplinary bond for a contractor?
Answer: To ensure compliance with licensing rules following
disciplinary action
, ◉ What agency is responsible for licensing and regulating
contractors in California?
Answer: Contractors State Licensing Board (CSLB)
◉ What is the main purpose of the contractors state license board?
(CSLB)
Answer: To protect consumers by regulating the construction
industry
◉ Which of the following violations could be lead to a contractors
license suspension?
Answer: •advertising without a license number
•failing to pay subcontractor
•poor workmanship
◉ Which license classification requires workers' compensation
insurance, even if the contractor has no employees?
Answer: C-39 Roofing
◉ Whats is the role of the Statewide Investigative Fraud Team?
(SWIFT)
Answer: To investigate unlicensed contractors activity
2026 BUSINESS MANAGEMENT AND
OPERATIONS MODULE QUESTIONS
SOLUTIONS STRUCTURED SCRIPT
◉ What is the penalty for acting as a contractor without a license in
California?
Answer: it is a MISDEMEANOR
◉ What does the CSLB issue to a contractor for a minor violation as
a warning?
Answer: Advisory Notice
◉ How long are citations against licensed contractors disclosed to
the public?
Answer: 5 years
◉ What is the maximum allowable down payment for a home
improvement contract in California?
Answer: $1,000 or 10% of the contract price, Whichever is less
,◉ Home improvements contracts must include which of the
following?
Answer: •description of materials
•start and completion dates
•permissible delays
◉ Which business structures provides liability protection similar to
a corporation but has different tax treatment?
Answer: Limited Liability Company (LLC)
◉ What type of bond guarantees both job completion and payment
of all labor and materials?
Answer: Contract Bond
◉ What is the minimum liability insurance required for a limited
liability company (LLC) with 5 or fewer personnel?
Answer: $1 million
◉ What is the purpose of a disciplinary bond for a contractor?
Answer: To ensure compliance with licensing rules following
disciplinary action
, ◉ What agency is responsible for licensing and regulating
contractors in California?
Answer: Contractors State Licensing Board (CSLB)
◉ What is the main purpose of the contractors state license board?
(CSLB)
Answer: To protect consumers by regulating the construction
industry
◉ Which of the following violations could be lead to a contractors
license suspension?
Answer: •advertising without a license number
•failing to pay subcontractor
•poor workmanship
◉ Which license classification requires workers' compensation
insurance, even if the contractor has no employees?
Answer: C-39 Roofing
◉ Whats is the role of the Statewide Investigative Fraud Team?
(SWIFT)
Answer: To investigate unlicensed contractors activity
