CSLB CONTRACTOR'S LAW & BUSINESS EXAM ANSWERED 100% CORRECT (2022/2023

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An employer remits State disability taxes withheld from an employees wages to what agency? - ANSWER Employment Development Department Which act establishes the rights of workers to organize into un... ions and negotiate contracts? - ANSWER 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. - 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? - ANSWER 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. - 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 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. An employer must furnish an employee with a completed IRS Form W-2 (Wage and Tax Statement) by: - ANSWER The 31st of January. 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. 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. 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. 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. On a time-and-materials job, you should: - 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 client must assume the risk of damage. - 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 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. 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. If a newly hired employee does not have a SSN, what should be done? - ANSWER The employee must apply for a SSN. 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. When should a contractor renew the contractor's license bond? - ANSWER 30 days before it expires. 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. The federal Employer Identification Number (EIN) is issued by the: - ANSWER 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 - ANSWER 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. - 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. Budget should be referred to only if the business has cashflow problems. - 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? - ANSWER Owner, contractor, and joint control officer. When purchasing insurance, what is the best way to chose among different companies? - ANSWER 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? A. Walk the job site with the owner. B. Review the plans and specifications with the owner. C. Show the owner the critical path schedule. D. Include a payment schedule in the contract and review other details of the contract with the owner. - ANSWER Review the plans and specifications with the owner. When an owner signs a receipt for a stop notice, it usually means the owner: - ANSWER The owner recognizes that a lien could be placed on funds. To whom do you report and pay sales tax? - ANSWER The Board of Equalization DOSH must investigate a complaint charging a serious violation of health or safety standards within: - ANSWER DOSH must investigate a complaint charging a serious violation of health or safety standards within two working days. By law, a "hard laborer" may not be younger than ______ years old. - ANSWER A hard laborer may not be younger than 16 years old. When is the last day a customer can cancel a contract that was signed on Friday, December 21st? - ANSWER The following Wednesday. The customer has the right to cancel 3 business days after the day the contract has been signed and delivered to the. In this case: Saturday Midnight day one. Monday midnight day two Wednesday Midnight day three. NOTE: Sunday and Tuesday were not business days since Tuesday was a holiday. Correct answer is Wednesday midnight. When a notice of completion has been filed, the original contractor has how many days to record a lien. - ANSWER 60 days to record a lien. Which of the following financial ratios is the strictest measure of liquidity? A. Quick Ratio B. Current Ratio C. Profitability Ratio D. Leverage Ratio - ANSWER The quick ratio is the strictest measure of liquidity. When should you let your attorney see a construction contract? - ANSWER After the contract is prepared but before it is signed. How often are FICA taxes reported and paid? - ANSWER Quarterly Business records must be kept and made available for inspection by the Registrar of Contractors for a period of _____ after completion of a construction project or operation. A. One year B. Two years C. Three years D. Five years - ANSWER Business records must be kept for 5 years. Funds withheld to guarantee completion of a project and correction of defects are called a(n): - ANSWER Retention Direct costs are $37,000, overhead is 12% and profit is 5%. What is the selling price? - ANSWER $44,578.31 Add the 12% overhead and 5% profit together, then subtract that from 100% (83%). Then divide the total direct cost ($37,000) by the remaining percentage (83%) = 445.7831. A mechanics' lien is a written document that must be signed and verified by the claimant. The first and third steps a contractor should take in filing a lien are listed below. Step 1: Obtain the exact legal description of the property. Step 2: Step 3: Find out if the person requesting the work of improvement is the owner. What is Step 2? - ANSWER Find out the name of the legal owner of the property as well as the percent of ownership. A mechanics' lien. Step 1: Obtain the exact legal description of the property. Step 2: Find out the name of the legal owner of the property as well as the percent of ownership. Step 3: Find out if the person requesting the work of improvement is the owner. What happens after an employee's taxable wages exceed $7,000? - ANSWER After $7,000, the employer does not pay FUTA. A subcontractor who does not serve a preliminary notice: A. May not serve a stop notice but may file a mechanics' lien. B. May not file a mechanics' lien but may serve a stop notice C. loses both stop and mechanics's lien rights D. Loses nothing because subcontractors are not required to serve preliminary notices. - ANSWER A subcontractor that does not serve a preliminary notice loses both stop notice and mechanics' lien rights. If a sales presentation is made in Spanish, the home solicitation contract: - ANSWER Must be in Spanish. Who pays FUTA? - ANSWER The employer pays FUTA until an employees taxable wages exceed $7,000. If a contractor forgets to renew his or her license on time, the expired license may be renewed any time within _____ after its expiration without reapplying for a license and fulfilling the exam or waiver requirements again. - ANSWER Five years. How often are you required to pay sales tax? - ANSWER It depends on the expected amount of taxable sales. A contractor hires a subcontractor to demolish a concrete wall. Who is responsible for supplying safety goggles. - ANSWER Subcontractor How long does a client have to cancel a contract for repairs that are the result of an event for which a State of Emergency was declared? - ANSWER In a state of emergency, a client has 7 business days to cancel a contract for repairs. All of the following are causes for disciplinary action except: A. Allowing your license to be used by an unlined contractor. B. Entering into a contract with another contractor who is not licensed. C. During bankruptcy, setting obligations incurred as a contractor for less than the full amount owed. D. Willful or deliberate failure to pay money when due for materials or services. - ANSWER During bankruptcy, settling obligations incurred as a contractor for less than the full amount owed. What is the maximum allowed travel distance from any point of a work area to a fire extinguisher "Class "A"? - ANSWER 75 Feet The CSLB has established a mandatory arbitration program of verified companies in which the damage is: - ANSWER $12,500 or less. A contractor usually will not be held liable for a supplier going on strike, but if your supplier did go on strike what would you do? - ANSWER Contact the owner immediately. When you get an approved set of plans, what should you do first? - ANSWER Read any notes from the building department. A(n) _____ represents a company's financial position on a specified date. A. Balance Sheet B. Income statement C. Cash flow statement D. Profit plan - ANSWER A balance sheet. You are the qualifier for an active contractor's license. How do you inactivate the license? - ANSWER Write to CSLB, requesting that the license be made inactive. You are bidding as a prime contractor on a public works project. The work will not involve construction, improvement, or repair of streets, highways, or bridges. You will use subcontractors for part of the work. If you do not name a subcontractor for any part of the work: A. The contract is canceled B. You will do that part of the work yourself C. You may simply submit a name later D. the awarding authority will choose a subcontractor for you. - ANSWER You will do that part of the work yourself. John Meyers, a general contractor, had a contract with Mr. and Ms. Barnes to construct a gazebo and deck in their back yard. John was behind schedule and hired his 18-year-old son, Bart, to help on a part-time basis. After working on the project for a month, Bart slipped on a plank that John had laid across the deck but did not nail securely. As a result of the fall, Bart broke his leg. John is insured for workers' compensation, but Bart wants to sue his father for negligence in a civil action. Which of the following statements is CORRECT? A. John is not liable for damages in a civil action because the injured employee is his son. B. John is liable for damages in a civil action and must prove that the injury did not result from his negligence. C. In a civil action, John may use the defense that the injury was the result of the contributory negligence of his son. D. A civil action is not a possibility when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. This case would be handled by the Department of Industrial Relations. - ANSWER A civil action is not a possibility when the dispute involves a job-related injury, unless the employer is not insured for workers' compensation. This case would be handled by the Department of Industrial Relations. An applicant for a contractor's license receives a notice from the Contractors' State License Board, dated October 1, that the applicant passed the written exams. To receive an active license, the applicant must file a license bond and fee no later than: - ANSWER December 30th. You have 60 days to file a license bond. If an owner lawfully cancels a contract, how long does the contractor have to pick up previously delivered materials? A. Within 24 hours after cancellation B. Within 10 days after cancellation C. Within 20 days after cancellation D. It's too late: If the materials are delivered to the property before a notice of cancellation is received, the materials become property of the owner. - ANSWER If an owner lawfully cancels a contract, the contractor has 20 days to pick up previously delivered materials. Who is responsible for checking the site before the building inspector arrives? - ANSWER The contractor is responsible for checking the site before the inspector arrives. When is an employee allowed to view their own personnel file? - ANSWER When ever they wish to. The supplier of a potentially hazardous product must be able to provide a(n) _________ with that product. A. Material Safety Data Sheet B. Certificate for Use C. Injury Illness and Prevention Program D. Hazard Evaluation System Information Services bulletin. - ANSWER Material Safety Data Sheet Harry and Linda have done business as a licensed partnership. If Linda is a general partner, but not the qualifier, what must she do to get an individual license? - ANSWER If Linda was listed as a partner on the license and was actively engaged in the business for at least five of the past seven years, she may apply for a license with a waiver of the exam. Where is the Notice of Right to Cancel found on a home improvement contract? - ANSWER Near the client signature. An employee works 60 hours in one week. If the hourly wage rate is $12.00, what are the gross wages? - ANSWER $840 40 hours at $12.00 20 hours at $18.00 If you are planning to dig, drill, and bore at a job site, you should notify _____ before starting work. A. DOSH B. The Environmental Protection Agency C. The County Engineer D. The regional Underground Service Alert Notification Center - ANSWER The regional Underground Service Alert Notification Center (USA) Is it legal for a contractor to hire professional strikebreakers to replace striking employees? - ANSWER No. The contractor is subject to a maximum fine of $1,000 and/or a maximum jail sentence of 90 days. You have been awarded a job. It requires two days for site preparation and one day for clean-up. The contract involves two separate tasks--one lasting seven days and the other 10 days. If the two tasks can be done simultaneously, for how many days should you schedule the job? A. 7 Days B. 13 Days C. 15 Days D. 20 Days - ANSWER 13 days as long as the jobs can be done simultaneously. A subcontractor or material supplier has 30 days to file a lien once a notice of completion has been recorded. - ANSWER A sub or material supplier has 30 days to file a lien once a notice of completion has been recorded. What possible reason would an owner have for requiring an unconditional lien release from a subcontractor? - ANSWER The owner's property covered by the release may not be liened. A prime contractor entered into a construction contract with a subcontractor. An employee of the subcontractor was injured, but unfortunately the subcontractor had not secured workers' compensation coverage. Which of the following statements best describes the situation, except in cases of fraud? A. The subcontractor is guilty, but the prime contractor is not responsible. B. The prime contractor is guilty, but the subcontractor is not responsible. C. Neither the prime contractor nor the subcontractor are responsible. D. The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. - ANSWER The subcontractor is guilty, but the prime contractor must take responsibility for the injuries. Your accountant advises you to set up a cost management system. What does a cost management system do? - ANSWER A cost management system gives a cost history to analyze labor and material costs. before beginning work, an employer or contractor must inquire whether asbestos is present in any building constructed prior to: - ANSWER 1978 What does it mean when a subcontractor signs a waiver and release form on a public works project? - ANSWER The subcontractor gives up the right to lien the construction funds. A contractor is looking for an insurance policy to cover a high degree of exposure to risk. Of the following, which policy would be the best for this purpose? A. Property B. General Liability C. Builder's Risk D. Umbrella - ANSWER Umbrella policy. But the umbrella policy would only cover the high degree of exposure if it was covered by one of the underlying policies. Which of the following is considered a direct cost? A. Telephone use by employees B. Personal Vehicle C. Insurance. D. Payroll Tax - ANSWER Payroll tax is considered a direct cost. How many days does a contractor have to notify the Registrar after being issued a workers' compensation insurance policy? - ANSWER A contractor has 90 days to notify the Registrar after being issued a workers' compensation insurance policy. When balancing the accounts receivable which of the following would have no effect? A. Posting to the wrong accounts-receivable account. B. Crediting instead of debiting the accounts-receivable account. C. Debiting instead of crediting the accounts-receivable account. D. Posting a receivable to an accounts-payable account. - ANSWER Posting to the wrong accounts-receivable account. What kind of discount do lumber yards and other supplies offer to contractors who pay their bill promptly? - ANSWER 1%-2% discount. Of the following, which document is usually delivered first in a transaction involving a home improvement contract? A. Three-day notice of right to cancel B. The contract C. "Notice to Owner" D. 20-Day preliminary notice - ANSWER The "Notice to Owner" At the time this question was written, the "Notice to Owner" was required to be given to the client "prior to entering into a contract with an owner for work specified as home improvement or swimming pool construction." Since then, several of the consumer protection laws covering Home Improvement Contracts have been revised to make them easier for the average homeowner to understand. The "Mechanics Lien Warning" has replaced the "Notice to Owner" and is included as part of the contract rather than given to the client in advance. Despite the changes in the laws, the CSLB still refers to "Notice to Owner" in several current publications as well as on their website. Without any evidence to the contrary, we must assume that the question may still be an active question in the database. If this question still appears as written here, then the correct answer is "Notice to Owner." A three-day notice of right to cancel is also included as part of the contract, but is not required if the contract is negotiated at the contractor's place of business. A 20-day Preliminary Notice is typically delivered by the subcontractor when he or she starts work, but can be delivered later. Ms. Gomez applies for a job. Of the following, the only reason an employer may lawfully deny her employment is: A. She is over 50 years of age B. She is Hispanic and everyone else is African-American or Caucasian C. Lifting is involved and she is a woman. D. She has no work experience or Social Security Number. - ANSWER No related work experience or social security number. What is the most likely reason to lose a bid? A. 10% added to profit. B. Vague specifications C. Prices from subs were not exact. D. Costs of materials were not obtained. - ANSWER Vague specifications. Which of the following procedures BEST ensures error-free bids? A. Working with an attorney B. Having another person draft the bid C. Discussing details of the bid with the supplier D. Rechecking the bid before submitting it to the client - ANSWER Rechecking the bid before submitting it to the client. A contractor, on his own initiative, changed the design of a building and carried out the change. The owner rejected the change and stated that the building has lost market value. If the owner takes the contractor to court and obtains a favorable judgment, the owner is: - ANSWER Due the cost of repairs or the loss of market value. [Show More]

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