CSLB CONTRACTOR'S LAW & BUSINESS EXAM 2025
Correct Questions & Answers.
An employer remits State disability taxes withheld from an employees wages to what
agency? - ANS-Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate
contracts? - ANS-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. - ANS-It is not
legal to ask prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court? - ANS-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. - ANS-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? - ANS-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: - ANS-The 31st of January.
After a job is completed, the owner decides to have additional work done. How should
the contractor proceed? - ANS-Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to? - ANS-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? - ANS-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? - ANS-Decline to bid the work.
On a time-and-materials job, you should: - ANS-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. - ANS-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 - ANS-The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ANS-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? - ANS-The
employee must apply for a SSN.
, How many times may you take the contractors license exam before your original
application is voided? - ANS-As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ANS-30 days before it
expires.
The qualifying RME for a construction firm must work at least: - ANS-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: - ANS-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 - ANS-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. - ANS-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. - ANS-The
contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ANS-
Owner, contractor, and joint control officer.
When purchasing insurance, what is the best way to chose among different companies?
- ANS-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?
Correct Questions & Answers.
An employer remits State disability taxes withheld from an employees wages to what
agency? - ANS-Employment Development Department
Which act establishes the rights of workers to organize into unions and negotiate
contracts? - ANS-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. - ANS-It is not
legal to ask prospective employees about arrest not leading to convictions.
Why would a contractor have a case in Superior Court? - ANS-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. - ANS-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? - ANS-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: - ANS-The 31st of January.
After a job is completed, the owner decides to have additional work done. How should
the contractor proceed? - ANS-Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for private work is to? - ANS-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? - ANS-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? - ANS-Decline to bid the work.
On a time-and-materials job, you should: - ANS-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. - ANS-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 - ANS-The critical path method.
Is it legal for a contractor to require employees to take a lie detector test? - ANS-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? - ANS-The
employee must apply for a SSN.
, How many times may you take the contractors license exam before your original
application is voided? - ANS-As many times as necessary within 18 months.
When should a contractor renew the contractor's license bond? - ANS-30 days before it
expires.
The qualifying RME for a construction firm must work at least: - ANS-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: - ANS-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 - ANS-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. - ANS-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. - ANS-The
contractor should do the best possible job of staying within budget. `
Who must sign a joint control addendum to a home improvement contract? - ANS-
Owner, contractor, and joint control officer.
When purchasing insurance, what is the best way to chose among different companies?
- ANS-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?
