1 CSLB CONTRACTOR'S LAW & BUSINESS
EXAM QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) A+
GRADE ASSURED 2025-2026
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 organizePinto 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 condu
cting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to askPprospective employees about arrests not leadingPto 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 leadingPto convictions, but it would not be leg
al 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 fo
r aPfederal, 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.
WhichPwould 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.
A general contractor has obtained bids from several subcontractors for a private project. He notices that o
ne bidPis substantially lower than the rest. Is it ethical andPa good business practicePfor this contractor to in
form 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, t
he 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 proc
eed? - correct answer-Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for privatePwork 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 tim
e 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 at
tention of the owner. The owner declines to remedy the code violation and tells you not to worry. What sh
ould 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 clientPmust assume the risk of damage. - correct answer-
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 proj
ect 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-ThePcritical 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, butPit would be legal for a federal, state, or loc
al 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 youPtake the contractors license exam before your original application is voided? -
correct answer-As many times as necessary within 18 months.
WhenPshould a contractor renew the contractor's license bond? - correct answer-30 days before it expires.
The qualifying RME for a construction firm must work atPleast: - 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 record
s for years.
, A. 1-3
B. 7-4
C. 10-3
D. 11-5 - correct answer-
Every employer of 11 or more full or part time employees must keep written health andPsafety records for
5 years.
After you have read the plans and specifications, what is the next important step inPwriting 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. BudgetPshould 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.
WhenPpurchasingPinsurance, 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 andPcont
ractor. Which of the following steps would best prevent such problems?
A. Walk the job site with the owner.
EXAM QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) A+
GRADE ASSURED 2025-2026
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 organizePinto 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 condu
cting job interviews, may the contractor ask prospective employees about their arrest records?
A. It is legal to askPprospective employees about arrests not leadingPto 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 leadingPto convictions, but it would not be leg
al 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 fo
r aPfederal, 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.
WhichPwould 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.
A general contractor has obtained bids from several subcontractors for a private project. He notices that o
ne bidPis substantially lower than the rest. Is it ethical andPa good business practicePfor this contractor to in
form 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, t
he 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 proc
eed? - correct answer-Write a new contract and ask the owner to sign it.
The purpose of a 20-day preliminary notice for privatePwork 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 tim
e 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 at
tention of the owner. The owner declines to remedy the code violation and tells you not to worry. What sh
ould 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 clientPmust assume the risk of damage. - correct answer-
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 proj
ect 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-ThePcritical 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, butPit would be legal for a federal, state, or loc
al 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 youPtake the contractors license exam before your original application is voided? -
correct answer-As many times as necessary within 18 months.
WhenPshould a contractor renew the contractor's license bond? - correct answer-30 days before it expires.
The qualifying RME for a construction firm must work atPleast: - 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 record
s for years.
, A. 1-3
B. 7-4
C. 10-3
D. 11-5 - correct answer-
Every employer of 11 or more full or part time employees must keep written health andPsafety records for
5 years.
After you have read the plans and specifications, what is the next important step inPwriting 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. BudgetPshould 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.
WhenPpurchasingPinsurance, 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 andPcont
ractor. Which of the following steps would best prevent such problems?
A. Walk the job site with the owner.
