CSLB Contractor’s Law & Business Exam | 196
Verified Questions with 100% Correct Answers
| Updated 2025 Edition
1. You are bidding on a job with plans drawn by a homeowner. You notice that
the dimensions on the plans do not add up. What should you do? - Inform
the homeowner that you cannot bid until the numbers add up.
2. Disabled access laws went into effect in _____ for public buildings and in
_____ for private buildings. - 1968 for public buildings and 1970 for private
buildings.
3. Your bid on a job was accepted, but you inadvertently left out a part of that
job. What should you do? - The contractor is responsible for the work
wether or not it was included in the bid.
4. Who must pay for a pre-employment physical? - The employer must pay for
a pre-employment physical.
5. A contractor finds a 6" discrepancy on a set of plans. The contractor should:
- Contact the architect or the building designer.
6. An employer remits State disability taxes withheld from an employees
wages to what agency? - ANSWER Employment Development Department
7. Which act establishes the rights of workers to organize into unions and
negotiate contracts? - ANSWER National Labor Relations Act of 1935
8. 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.
1
, 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.
9. 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.
10.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.
11.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.
12.An employer must furnish an employee with a completed IRS Form W-2
(Wage and Tax Statement) by: - ANSWER The 31st of January.
13.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.
2
,14.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.
15.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.
16.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.
17.On a time-and-materials job, you should: - ANSWER Add profit and
overhead to labor and materials
18.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.
19.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.
20.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.
3
, 21.If a newly hired employee does not have a SSN, what should be done? -
ANSWER The employee must apply for a SSN.
22.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.
23.When should a contractor renew the contractor's license bond? - ANSWER
30 days before it expires.
24.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.
25.The federal Employer Identification Number (EIN) is issued by the: -
ANSWER The Internal Revenue Service
26.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.
27.After you have read the plans and specifications, what is the next important
step in writing a bid?
E. Talk to and select subs.
F. Walk the job.
G. Call about materials, price, and availability.
H. Talk to the crew leader about labor. - ANSWER Walk the job.
28.Once a budget is finalized, the:
I. Contractor should stick to the budget no matter what happens.
J. Contractor should do the best possible job of staying within the
budget.
K. Budget should be revised each month.
4
Verified Questions with 100% Correct Answers
| Updated 2025 Edition
1. You are bidding on a job with plans drawn by a homeowner. You notice that
the dimensions on the plans do not add up. What should you do? - Inform
the homeowner that you cannot bid until the numbers add up.
2. Disabled access laws went into effect in _____ for public buildings and in
_____ for private buildings. - 1968 for public buildings and 1970 for private
buildings.
3. Your bid on a job was accepted, but you inadvertently left out a part of that
job. What should you do? - The contractor is responsible for the work
wether or not it was included in the bid.
4. Who must pay for a pre-employment physical? - The employer must pay for
a pre-employment physical.
5. A contractor finds a 6" discrepancy on a set of plans. The contractor should:
- Contact the architect or the building designer.
6. An employer remits State disability taxes withheld from an employees
wages to what agency? - ANSWER Employment Development Department
7. Which act establishes the rights of workers to organize into unions and
negotiate contracts? - ANSWER National Labor Relations Act of 1935
8. 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.
1
, 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.
9. 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.
10.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.
11.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.
12.An employer must furnish an employee with a completed IRS Form W-2
(Wage and Tax Statement) by: - ANSWER The 31st of January.
13.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.
2
,14.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.
15.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.
16.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.
17.On a time-and-materials job, you should: - ANSWER Add profit and
overhead to labor and materials
18.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.
19.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.
20.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.
3
, 21.If a newly hired employee does not have a SSN, what should be done? -
ANSWER The employee must apply for a SSN.
22.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.
23.When should a contractor renew the contractor's license bond? - ANSWER
30 days before it expires.
24.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.
25.The federal Employer Identification Number (EIN) is issued by the: -
ANSWER The Internal Revenue Service
26.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.
27.After you have read the plans and specifications, what is the next important
step in writing a bid?
E. Talk to and select subs.
F. Walk the job.
G. Call about materials, price, and availability.
H. Talk to the crew leader about labor. - ANSWER Walk the job.
28.Once a budget is finalized, the:
I. Contractor should stick to the budget no matter what happens.
J. Contractor should do the best possible job of staying within the
budget.
K. Budget should be revised each month.
4
