LBExamPractice
Every section, shuffled
129 free questions, every section mixed together, in the shape of the real paper. Each one comes back with its explanation. Most carry the provision they rest on, as a link into the law on this site. The others are written from a standard form or a published guide, which is not law and is not reproduced here, so they carry the explanation alone.
All 129 free questions in this run
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A program administrator may enroll a Property Assessed Clean Energy (PACE) solicitor only on one of three criteria. Which is one of them?
The California Financing Law bars a program administrator from enrolling a PACE solicitor or agent unless that person satisfies at least one of three criteria, and holding a Contractors State License Board license in good standing is the first of them, alongside a home improvement salesperson registration in good standing and exemption from the license law.
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Diverting funds received for a specific construction project is cause for disciplinary action. What else does that same section cover?
The diversion rule reaches two separate acts, moving project money to another purpose and failing substantially to account for how funds received for the project were applied, so a contractor who cannot show where the money went faces discipline without any proof that it was spent on a different job.
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Under the California Labor Code, when are an employee's earned and unpaid wages due if the employer discharges the employee?
Labor Code section 201 makes the wages earned and unpaid at the time of discharge due and payable immediately, so an employer that holds the final check until the next payroll run is already late and exposed to the waiting time penalty.
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Which of the following jobs falls within the definition of home improvement in the Contractors State License Law?
The definition of home improvement reaches improvements of the land adjacent to a dwelling as well as the dwelling itself, and it expressly names swimming pools, including spas and hot tubs, so pool work at a residence is home improvement even though nothing inside the house is touched.
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An employee with no written contract for a definite period quits without giving any notice. When do that employee's wages become due and payable?
Labor Code section 202 gives the employer 72 hours to pay an employee who quits with no notice, and payment at the time of quitting is owed only where the employee gave 72 hours previous notice, so the notice is what moves the deadline.
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Failing in a material respect to complete a construction project is cause for discipline. Which price is the licensee held to?
The licensee is held to the price stated in the contract or in any modification of it, so a signed change order resets the figure that counts, and discipline follows a material failure to finish for that agreed price rather than an overrun the contractor absorbs.
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The work record every employing unit keeps must show each worker's status. Which workers appear on that record?
Section 1085 requires a true and accurate work record of all workers and their status as employed, on layoff or on leave of absence, and of the wages paid to each, so a laid-off worker still belongs on the record.
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What does the Labor Code say about an employer collecting back wages it has already paid an employee?
Labor Code section 221 makes it unlawful for an employer to collect or receive from an employee any part of wages already paid to that employee, and the section carries no exception for consent, so a signed acknowledgment does not make the clawback lawful.
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A city requires a building permit before repair work starts. What must each permit applicant sign about workers' compensation coverage?
Section 3800 requires every county or city that issues building permits to make each applicant sign a declaration under penalty of perjury verifying workers' compensation coverage or an exemption from coverage.
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Under the ABC test in the Labor Code, which of these is a condition the hiring entity must demonstrate?
Labor Code section 2775 treats a person providing labor or services for pay as an employee unless the hiring entity demonstrates freedom from its control and direction, work outside its usual course of business, and customary engagement in an independent trade of the same nature, so a contract label proves none of the three.
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A general contractor hires an unlicensed framer for a lump sum, calls him a subcontractor and issues a 1099. How is the framer classified?
Labor Code section 2750.5 creates a rebuttable presumption that a worker performing services for which a contractor license is required is an employee, and it makes holding a valid contractors license a condition of independent contractor status, so an unlicensed framer cannot be a subcontractor whatever the payment arrangement looked like.
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A licensee renews a contractor's license after it has already expired. How is the delinquency fee calculated?
Section 7137 of the Business and Professions Code, as amended effective January 1, 2026, sets the delinquency fee at 50 percent of the renewal fee where the license is renewed after expiration. Because it is a percentage, it moves with the renewal fee that applies.
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Where must an employer post a citation issued after a state safety inspection of the job site?
Each citation must be posted prominently at or near each place where the violation referred to in the notice occurred, so filing it in an office or pinning it to a distant board does not meet the posting duty.
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Where does the Contractors State License Law require a licensee to display the contractor license?
Section 7075 of the Business and Professions Code requires the license to be displayed in the licensee's main office or chief place of business, so the duty attaches to one place rather than to each jobsite.
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On an outdoor job site where drinking water is not plumbed or otherwise continuously supplied, how much water must the employer have at the beginning of the work shift?
Section 3395(c) requires water in sufficient quantity at the beginning of the work shift to provide one quart per employee per hour for drinking for the entire shift. An employer may begin the shift with less only where it has effective procedures for replenishment during the shift.
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How does the Labor Code define a workday for the purposes of the hours of work and overtime rules?
Labor Code section 500 defines a workday as any consecutive 24 hour period commencing at the same time each calendar day, which is why the employer fixes when the workday starts and then measures the eight hour and 12 hour overtime thresholds against that fixed period.
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What are the maximum lengths for job-made single cleat and double cleat ladders?
Section 1676 caps a double cleat ladder at 24 feet in length and a single cleat ladder at 30 feet between supports, so the sturdier double cleat ladder carries the shorter limit. A double cleat ladder is required where a ladder is the only access for 25 or more employees or two-way traffic is expected.
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At what oxygen concentration by volume is a confined space atmosphere treated as oxygen deficient?
Oxygen deficiency means an atmosphere containing oxygen at a concentration of less than 19.5 percent by volume, and the separate hazard of oxygen enrichment starts above 23.5 percent, so the two figures bracket an acceptable atmosphere.
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Under the apprenticeship chapter of the Labor Code, what two things make a person an apprentice?
Section 3077 defines an apprentice as a person at least 16 years of age who has entered into a written apprentice agreement with an employer or program sponsor, so both the age floor and the written agreement are needed.
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Because hazardous chemicals are present at a workplace, the employer must develop, implement and keep which written program there?
Where hazardous chemicals are present, the employer must develop, implement and maintain at the workplace a written hazard communication program describing how labels, safety data sheets and employee training will be handled, and it must list the hazardous chemicals known to be present.
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Which employers must file the report of contributions, the quarterly return and the report of wages electronically?
Section 1088 requires all employers to file the report of contributions, the quarterly return and the report of wages electronically, and only an approved waiver for lack of automation, severe hardship or a federal exemption relieves that.
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How high must the top rail of a standard railing be, measured from its upper surface to the floor, platform, runway or ramp?
Section 1620(a)(1) sets a range rather than a single figure: the top rail must be not less than 42 inches and not more than 45 inches above the floor, platform, runway or ramp. Thirty-nine inches is only the height the top rail must not deflect below when a 200 pound load is applied downward.
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When may the director or an authorized representative inspect and copy an employing unit's payroll records?
Section 1092 makes the records open to inspection and subject to being copied by the director or an authorized representative at any time during the employing unit's business hours, so no notice or court process comes first.
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Before the board can check an applicant's criminal history, what must that applicant furnish with the contractor's license application?
Section 7069 of the Business and Professions Code requires the board to have every applicant furnish a full set of fingerprints for a criminal history record check, and the board uses them to obtain records from state and federal authorities.
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How long should an employer keep records of federal employment taxes, according to the Internal Revenue Service employer guide?
The Internal Revenue Service employer guide says to keep all records of employment taxes for at least four years and to have them available for review, and the file it describes covers wage payment dates and amounts, employee details and withheld amounts.
IRS Pub. 15 (2026), p. 9 Reference document, not law.
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Which of the following must appear on the itemized wage statement the Labor Code requires an employer to furnish?
Labor Code section 226 lists nine items an accurate itemized statement must show, and gross wages earned is the first of them, while the employee's identifier may show only the last four digits of the social security number.
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An injury or illness goes on the injury and illness log only when which three conditions are met?
Each fatality, injury and illness is recorded only when it is work related, is a new case, and meets one or more of the recording criteria, so all three conditions must hold together before an entry is made.
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Which outcome of a work related injury makes the case recordable under the general recording criteria?
A case meets the general recording criteria if it results in death, days away from work, restricted work or job transfer, medical treatment beyond first aid, or loss of consciousness, so treatment that goes past first aid is what makes an everyday injury recordable.
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Under the California construction safety orders, what must an employer do about the personal protective equipment those orders call for?
Section 1514(a) states that the employer shall require employees to use the required personal protective equipment, so the duty runs to enforcement and not only to handing the gear out, and the section provides no employee waiver of any kind.
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A licensed sole owner sells her contracting business, including its trade name and customer list. What may happen to her contractor license?
Section 7075.1 of the Business and Professions Code states that no license, whatever its type or classification, is transferable to any other person or entity under any circumstances, so buying a licensed business never buys the license.
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What minimum notice must an excavator give the Regional Notification Centers and known non-member owners of subsurface facilities before digging?
Section 1541(b)(2) requires all Regional Notification Centers in the area and all known non-member owners of subsurface facilities to be advised of the proposed work at least 2 working days before any digging or excavation starts. The period is a minimum, and the only relief stated is emergency repair work to subsurface facilities.
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Within what time must a recordable injury be entered on Form 300 and the Form 301 incident report?
Each recordable injury or illness must be entered on both forms within seven calendar days of the employer receiving information that it occurred, so the clock runs from when the employer learns of the case rather than from the date of injury.
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For what period must the Form 300A annual summary of injuries and illnesses stay posted at the establishment?
The annual summary must go up no later than February 1 of the year following the year the records cover, and the posting must stay in place until April 30, so both ends of that window carry a duty.
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A responsible managing employee counts as actively engaged in the applicant's business only when working how much?
Section 7068 of the Business and Professions Code defines actively engaged as 32 hours per week, or 80 percent of the hours the business operates, whichever is less. Because the lesser figure governs, a business open 30 hours a week needs 24 hours.
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How often must a supervisory employee hold a toolbox or tailgate safety meeting with the crew on a California construction site?
Section 1509(e) requires supervisory employees to conduct toolbox or tailgate safety meetings with their crews at least every 10 working days, so a weekly meeting does more than the rule asks and a monthly one falls short of it.
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In any one-year period, one qualifying individual may serve as qualifier for at most how many separate firms?
Section 7068.1 of the Business and Professions Code, as amended effective January 1, 2025, caps a qualifying individual at no more than three firms in any one-year period, and that ceiling holds even where the common ownership, subsidiary or same-majority conditions are met.
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Which employers must establish and maintain an effective Injury and Illness Prevention Program (IIPP), and in what form?
Section 3203(a) requires every employer to establish, implement and maintain an effective Injury and Illness Prevention Program, and it states that the program shall be in writing, so neither the size of the employer nor the size of the job excuses the written document.
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Which project best fits the statutory description of a general engineering contractor's principal contracting business?
Section 7056 of the Business and Professions Code defines a general engineering contractor by fixed works requiring specialized engineering knowledge and skill, and it names levees and river control works. The test is the kind of work, so job size does not move a building into that branch.
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What must an employer tell a terminated employee about the employer-sponsored health coverage they had?
Section 2808 requires every employer, public or private, to notify an employee on termination of all continuation, disability extension and conversion coverage options they may remain eligible for, so the notice is automatic and covers all three.
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What is the amount, usually 10 percent, withheld from a contractor's progress payments until the project is satisfactorily completed and accepted?
Retention is the share of each progress payment held back until the project is satisfactorily completed and finally accepted, and the contractor has already earned that amount even though it has not yet been paid, so it is carried as an asset.
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How may an employer other than the state secure the payment of workers' compensation in California?
Labor Code section 3700 gives an employer two lawful routes, insurance written by one or more insurers authorized to write compensation insurance in this state or a certificate of consent to self-insure from the Director of Industrial Relations, so paying claims as they come in is not securing compensation.
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On a balance sheet, what sits on the right side, and what is the relationship between the two sides?
A balance sheet puts assets on the left and liabilities plus the owners' equity on the right, and the two sides are always equal, so a change on one side must be matched by a change on the other.
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What happens to a license when the licensee fails to maintain a sufficient bond required by the bonding article?
If a licensee fails to maintain a sufficient bond required by the article, the license is subject to suspension or revocation, so a lapsed bond puts the license status itself at risk rather than drawing a money penalty.
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A claimant backing a stop payment notice to a construction lender with a bond must post a bond of what amount?
A claimant may give a construction lender a stop payment notice accompanied by a bond equal to 125 percent of the claim, and that bond answers for the costs and damages the owner, direct contractor or lender suffers if the claimant loses.
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May a retailer advertise that it will absorb the sales tax, so that the tax is not added to the selling price?
The law prohibits a retailer from advertising or stating to the public or any customer that it will assume or absorb the tax, that the tax will not be added to the selling price, or that any part of it will be refunded, and a violation is a misdemeanor.
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What penalty follows a failure to observe a workers' compensation stop order served on an employer?
Failing to observe a stop order is a misdemeanor punishable by imprisonment in the county jail not exceeding 60 days or a fine not exceeding $10,000, or both, so working through the order carries its own criminal penalty.
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How must a retailer show the tax it is required to collect from a purchaser on a sales check?
The tax required to be collected by the retailer from the purchaser must be displayed separately from the list price, the price advertised in the premises, the marked price or other price on the sales check, so it cannot be folded into a single quoted figure.
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A new business keeps no books or records and has no annual accounting period. Which tax year must it use?
A business must use a calendar tax year where it keeps no books or records, has no annual accounting period, has a present tax year that does not qualify as a fiscal year, or is required to use a calendar year by the Internal Revenue Code or the income tax regulations.
IRS Pub. 583, p. 5 Reference document, not law.
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An owner disputes a recorded claim of lien and wants the property released by recording a lien release bond. What must that bond be?
Civil Code section 8424 requires a lien release bond of 125 percent of the claim of lien, or of the amount the claim allocates to the property being released, and it must be executed by an admitted surety insurer.
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Which of the following is given a lien right by the Civil Code list of persons that provide work?
Civil Code section 8400 gives a lien right to any person that provides authorized work and names the direct contractor, subcontractor, material supplier, equipment lessor, laborer and design professional, so lessors and design professionals count alongside suppliers.
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A payment bond was recorded before the work of improvement was completed. When must an action on the bond be commenced?
Where a payment bond is recorded before the work of improvement is completed, the statute bars an action to enforce liability on the bond later than six months after completion, so a claimant that waits longer loses the bond claim.
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Under a cost-plus-a-fee construction contract, what does the customer pay the contractor for the goods furnished and installed?
A cost-plus-a-fee contract pays the contractor the cost of the goods rather than a marked-up selling price, plus a fee that may be either a lump sum or a percentage of those costs, so the customer pays no markup on the goods.
CDTFA Pub. 9, p. 7 Reference document, not law.
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Under the Sales and Use Tax Law, how many seller's permits must a person conducting business as a seller hold?
Every person desiring to engage in or conduct business as a seller in this state must file an application for a permit for each place of business, so a second yard or office needs its own permit. The permit issued is valid only for the person named and for business at the place designated in it.
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A claimant has recorded a valid claim of lien. Within what time must it commence an action to enforce that lien?
Civil Code section 8460 requires the enforcement action within 90 days after the claim of lien is recorded, and the claim expires and becomes unenforceable if the claimant lets that date pass.
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Before recording a claim of lien, giving a stop payment notice, or asserting a claim against a payment bond, a claimant must give preliminary notice to whom?
Civil Code section 8200 names three recipients, the owner or reputed owner, the direct contractor the claimant works under, and the construction lender if there is one, and compliance is a prerequisite to a valid lien claim or stop payment notice.
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An owner properly records and serves a notice of completion. How much time does the direct contractor then get to record its claim of lien?
Civil Code section 8412(b) closes the direct contractor's window 60 days after the owner records a notice of completion or cessation, and that shortened date controls because the section runs to the earlier of it and 90 days after completion.
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An owner has just recorded its notice of completion. How quickly must it deliver copies to the direct contractor and to claimants that gave preliminary notice?
Civil Code section 8190 gives the owner 10 days from the date the notice is filed for record to deliver copies to the direct contractor and to every claimant that served preliminary notice, because those are the people whose lien deadlines the notice shortens.
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Labor has stopped on a private job. How long must that stoppage run, and still be running, for a notice of cessation to be available?
Civil Code section 8188 requires a continuous cessation of labor for at least 30 days before the recording, and the cessation must still be running on the day the notice is recorded, so work that restarts on day 28 resets the count.
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A private job reaches completion. How late after that date may the owner still record an effective notice of completion?
Civil Code section 8182 permits an owner to record a notice of completion on the date of completion or within 15 days after it, so a notice recorded later does not comply and never shortens anyone's time to record a claim of lien.
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A licensee commits a wilful or fraudulent act as a contractor. What else is needed before that act is cause for discipline?
Section 7116 sets two elements, a wilful or fraudulent act done as a contractor and substantial injury to another person as a consequence, so injury is not presumed from the act on its own.
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An owner accepts disputed work on a private project. Within what time must the retention relating to that work be paid?
Section 8816 requires the owner or direct contractor to pay the portion of the retention relating to disputed work within 10 days after accepting that work, which is a separate clock from the 10 days it has to accept or reject.
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Bidder's security accompanying a bid on a state contract must equal at least what share of the amount bid?
Section 10167 requires bidder's security equal to at least 10 percent of the amount bid, and a bid that arrives without one of the listed forms of security is not considered at all.
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For how long must a licensee keep the records of its contracting business open to the registrar's inspection?
Section 7111 makes it cause for discipline to fail to keep records available to the registrar for not less than five years after completion of the project they refer to, so the clock runs from completion rather than from signing.
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In an action between an owner and a swimming pool contractor over the pool contract, how are attorney's fees handled?
The statute directs the court to award reasonable attorney's fees to whichever side prevails, so the award does not depend on the contract carrying a fee clause and it runs to a winning contractor as readily as to a winning owner.
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What does a service and repair contract have to say about parts replaced during the service call?
The default sits with the buyer, because the statute requires the contract to state that the contractor must offer back any parts replaced during the call, and the contractor keeps them only where the buyer initials the checkbox allowing it.
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An owner who has withheld retention from the direct contractor must pay it out by what deadline once the work is complete?
Where an owner withholds retention from a direct contractor, the owner must pay it within 45 days after completion of the work of improvement, and the clock runs from completion rather than from an invoice or a demand.
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A contractor makes a substantial misrepresentation to procure a home improvement contract. Under the Contractors State License Law, what does that act amount to?
The statute lists substantial misrepresentation in the procurement of a home improvement contract among the acts that are a misdemeanor and whose commission is cause for disciplinary action, so the same conduct draws both a criminal charge and a license action.
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What is a stop work notice under the Civil Code rules on works of improvement?
A stop work notice is given by a direct contractor to an owner and warns that the contractor will stop work if the amount owed is not paid within 10 days after the notice is given, so the 10 days are the owner's chance to cure after the notice goes out.
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An owner receives a stop work notice from the direct contractor. What must the owner do, and by when?
The duty to pass the notice on to the construction lender sits on the owner and runs for five days from receipt, so the party funding the job learns quickly that the direct contractor has stopped for nonpayment.
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Section 7164 requires a contract and any changes to it to be in writing signed by both parties. Which project does that cover?
Every contract and any change to a contract between an owner and a contractor for the construction of a single-family dwelling to be retained by the owner for at least one year must be in writing signed by both parties, so the one-year retention test is what brings a project under the section.
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A direct contractor cancels its stop work notice after the claim is resolved. What must the contractor then do?
The contractor has to close the loop it opened, so the statute requires notice of the resolution or cancellation to be posted and given to the subcontractors in direct contractual relationship with the contractor, with an extra posting at the main office of the site where there is one.
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The home improvement article defines a senior citizen, for its cancellation rules, as an individual of what age or older?
The home improvement article defines a senior citizen as an individual 65 years of age or older, and that definition is what converts the ordinary three business day cancellation right into a five business day right.
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Under the Contractors State License Law, abandoning a construction project is cause for disciplinary action in which circumstance?
Abandonment of a construction project or operation is cause for disciplinary action where it is without legal excuse, so a contractor who stops for a reason the law recognizes, such as following the stop work notice procedure for non-payment, has not committed this violation.
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A private construction contract states that the Civil Code retention payment rules do not apply. What force does that clause carry?
The retention payment article states that waiving its provisions by contract is against public policy, so a clause switching those rules off does not bind the party entitled to the retention and the statutory deadlines and penalty still run.
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Unless the owner and direct contractor have agreed otherwise in writing, an undisputed progress payment is due within how long after notice demanding payment?
The owner must pay the direct contractor any progress payment as to which there is no good faith dispute within 30 days after notice demanding payment is given, and may withhold no more than 150 percent of a genuinely disputed amount.
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For how many years must payroll records showing daily hours worked, wages paid and piece-rate units earned stay on file?
Section 1174 requires those payroll records to be kept at a central location or at the establishments where the employees work, and in any case on file for not less than three years, so a shorter retention period leaves the employer short of the duty.
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Section 7159 imposes its contract rules on a residential job once the aggregate price for labor, services and materials passes what figure?
Section 7159 of the Business and Professions Code treats an agreement as a home improvement contract for that section only where the aggregate price for all labor, services, and materials exceeds $500, so the contract content rules start above that figure and splitting one job across two smaller papers does not avoid them.
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In a civil action for nonpayment of wages, from what date does the court's award of interest on the unpaid wages run?
Section 218.6 requires the court to award interest on all due and unpaid wages, and that interest accrues from the date the wages were due and payable rather than from any later step in the dispute.
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Which condition may an employer never place on an employee's use of paid sick days under the Labor Code?
Section 246.5 prohibits an employer from requiring, as a condition of using paid sick days, that the employee search for or find a replacement worker to cover the days taken, so the burden of covering the shift stays with the employer.
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Under the Labor Code article on payment of wages, what does the definition of wages say about how the amount is calculated?
Section 200 defines wages as all amounts for labor performed by employees of every description, whether the amount is fixed by time, task, piece, commission or any other method, so how the pay is worked out does not decide whether it is wages.
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Under the construction safety orders, what must an employer do for a worker who is being employed for the first time?
Workers who are first employed must be given instructions on the hazards and safety precautions applicable to the type of work in question and be directed to read the Code of Safe Practices, so the duty attaches at hire rather than at the next crew meeting.
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Under the Contractors State License Law, which of the following on its own makes a person a contractor?
Section 7026 of the Business and Professions Code makes a person a contractor by submitting a bid, offering to undertake the work, or claiming the capacity to undertake it, so an unlicensed bid breaks the law before any work starts.
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A contractor hires a salesperson who will be paid a percentage of the value of each contract she signs. What does the Labor Code require of that employment agreement?
Labor Code section 2751 requires a commission based contract of employment to be in writing, setting out the method by which commissions are computed and paid, and the employer must give the employee a signed copy and obtain a signed receipt for it.
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Which emergency telephone numbers must be posted near the job telephone, or otherwise made available to employees where the job site has no telephone?
The section lists four sets of numbers to post near the job telephone or switchboard, or otherwise make available where no job site telephone exists, and they are a physician plus at least one alternate if available, hospitals, ambulance services and fire protection services.
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Under the Contractors State License Law, when does a contractor's license issued by the board expire?
Section 7140 of the Business and Professions Code provides that a license expires two years from the last day of the month in which it was issued, or two years from the date the renewed license last expired. The term is measured to the end of that month.
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For workers' compensation purposes, how does the Labor Code treat a person rendering service for another?
Labor Code section 3357 presumes any person rendering service for another to be an employee unless the service is rendered as an independent contractor or the person is expressly excluded, which is why an employer arguing independent contractor status carries the burden in a workers' compensation claim.
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In what sum must an applicant or licensee file the contractor's bond the board requires before it issues or renews a license?
Section 7071.6 of the Business and Professions Code requires a contractor's bond of $25,000 as a condition precedent to issuing, reinstating, reactivating, renewing or maintaining a license. The $100,000 bond is the separate wage bond a limited liability company licensee carries.
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A limited liability company holding a contractor's license must file a surety bond for employees damaged by unpaid wages. In what amount?
Section 7071.6.5 of the Business and Professions Code requires a limited liability company licensee to have a $100,000 surety bond on file for employees damaged by unpaid wages, interest or fringe benefits. It sits on top of the $25,000 contractor's bond rather than replacing it.
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How much experience must an applicant for a contractor license show in the class applied for, and over what period?
The board's rule requires not less than four years of experience as a journeyman, foreman, supervising employee or contractor in the class applied for, gained within the 10 years immediately preceding the application, so trainee time outside that window does not count.
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The Labor Code requires every employer to keep a notice posted conspicuously at the place of work. What must that notice specify?
Labor Code section 207 requires the posted notice to specify the regular paydays and the time and place of payment, so every worker on the site can tell when and where wages will be paid without having to ask.
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Within what time must a licensee notify the registrar in writing of a change to recorded information, such as a business address?
Section 7083 of the Business and Professions Code requires a licensee to notify the registrar in writing, on the prescribed form, within 90 days of any change to information recorded under the chapter. A late notice takes effect only when received.
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A contractor's crew works in a city whose own minimum wage sits above the state figure. Which minimum wage governs those workers?
Section 1197 makes the minimum wage fixed by the commission or by any applicable state or local law the wage that must be paid, and paying less than that figure is unlawful, so the higher local rate governs.
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A new employee starts on Monday and the employer must verify eligibility for employment. What does the Internal Revenue Service (IRS) say that verification includes?
Internal Revenue Service (IRS) Publication 15 tells an employer that verifying a new employee's eligibility for employment includes completing the U.S. Citizenship and Immigration Services Form I-9, Employment Eligibility Verification, so the I-9 is the step the verification turns on.
IRS Pub. 15 (2026), p. 7 Reference document, not law.
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Under the fire protection and prevention article, who develops the fire protection program for construction work, and what does that duty carry with it?
The employer is responsible for developing a fire protection program to be followed throughout all phases of the construction work and for providing the fire fighting equipment the article specifies, and as fire hazards occur there must be no delay in providing that equipment.
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Permits from the California Division of Occupational Safety and Health (Cal/OSHA) cover trenches a person must descend into at what depth or greater?
A permit is required to construct a trench or excavation five feet or deeper into which any person is required to descend, so the depth and the need to enter the trench work together to trigger the permit.
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Under the Labor Code, when do the unpaid wages earned by striking employees become due and payable?
Section 209 provides that unpaid wages earned by striking employees become due on the next regular payday and must be paid without abatement or reduction, so the employer cannot hold the money until the dispute ends.
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Unless the location is otherwise protected, railings are required along unprotected open sides and edges at what height above the level underneath?
Railings must be provided along all unprotected and open sides, edges and ends of those locations where they stand 7 1/2 feet or more above the ground, floor or level underneath, unless the location is otherwise protected.
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Under Labor Code section 232.5, what may an employer not require an employee to keep quiet about?
Section 232.5 prohibits an employer from requiring, as a condition of employment, that an employee refrain from disclosing information about the employer's working conditions, and it also bars discipline for making that disclosure.
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How does the sales tax apply when a contractor buys tools, gasoline and thread-cutting oil for use in its own business?
Contractors are the consumers of the supplies they use in their business, so tax applies to the sale of those supplies and tools to them and the items must not be purchased for resale.
CDTFA Pub. 9, p. 35 Reference document, not law.
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Who may register a complaint with the Division of Labor Standards Enforcement that an employee was paid below the minimum wage?
Section 1195 lets any person register the complaint, and the division must then investigate and take all proceedings necessary to enforce payment of a wage not less than the minimum.
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What does a payment bond on a construction project assure the property owner?
A payment bond stands behind the money owed for labor and materials, so it assures the owner that the people who supplied them will be paid and will not file liens against the property.
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What effect does the insured's bankruptcy have on a liability insurer's duty to pay damages for a loss during the policy?
A liability policy is read as providing that the insolvency or bankruptcy of the insured does not release the insurer from paying damages for injury or loss occurring during the life of the policy, so cover follows the loss rather than the contractor's finances.
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Under the license law a current workers' compensation certificate must be on file at all times. That requirement is a condition precedent to what?
Section 7125 of the Business and Professions Code (B&P Code), in the version in force since January 1, 2025, makes the certificate a condition precedent at all five moments, so a licensee must have one on file at all times and not only when the license is first issued.
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In a double-entry bookkeeping system, which side of each account carries debits and which carries credits?
In the double-entry system each account has a left side for debits and a right side for credits, so which side an amount is written on is fixed by whether it is a debit or a credit.
IRS Pub. 583 (12-2024), p. 15 Reference document, not law.
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A contractor keeps its books on the cash basis. When is revenue recognized and an expense deducted?
The cash basis counts revenue when the money arrives and allows an expense in the year it is paid, so the timing tracks payments rather than the work performed. A strict cash method therefore keeps neither receivables nor payables on the books.
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Federal tax rules let a contractor deduct a business cost only when it is both ordinary and necessary. What does the ordinary half ask?
The ordinary half is measured against trade practice, so a cost that other contractors in the same line of work regularly treat as normal passes it, and how vital the cost was to the business is not what the word asks.
IRS Pub. 334 (2025), p. 32 Reference document, not law.
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In the sales and use tax rules for construction contractors, what test decides that an item is materials?
Materials are what a contractor incorporates into real property, so the test is loss of identity: when combined with other tangible personal property, materials lose their identity and become an integral and inseparable part of the real property. Bricks, cement, lumber, piping and wiring are the listed examples.
CDTFA Pub. 9, p. 6 Reference document, not law.
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What does a balance sheet report about the financial position of a construction business?
The balance sheet is a statement of the financial condition of a business at a certain point in time, which is why it is often called a snapshot; the statement that summarizes what happened across a period is the income statement.
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How far ahead of the end of the policy period must a workers' compensation insurer give notice of nonrenewal?
The insurer must give notice of nonrenewal and its reasons at least 30 days but not more than 120 days before the policy period ends, so a notice sent five months out is as defective as one sent a week out.
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What period does an income statement cover, and what does its bottom line show?
The income statement covers a stretch of time, a year, a quarter or a month, and sets revenue against expenses to reach the profit or loss, so that figure is its last line and the reason the statement is prepared.
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How is working capital calculated from the current sections of a contractor's balance sheet?
Working capital is the gap between total current assets and total current liabilities, so it measures what would be left over once every current debt had been settled.
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A contractor names the contractor's bond it must file in its advertising. What does the license law make of that reference?
Any reference to a bond the license law requires, made in advertising, soliciting or other presentments to the public, is itself a ground for suspension, so naming that bond in an advertisement puts the license at risk even though the bond is genuine.
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A mechanics lien has priority over a mortgage, deed of trust or other encumbrance on the property that attached after which date?
Priority is measured from commencement of the work of improvement, so a lien outranks any mortgage, deed of trust or other encumbrance that attached after work started on the site, which is why a lender wants its deed of trust recorded before anything happens there.
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How does the Labor Code limit the time of service of a worker employed on a public work?
Section 1811 of the Labor Code limits the time of service of any worker employed on public work to eight hours in a calendar day and 40 hours in a calendar week, except as provided under section 1815, so the daily eight hour limit stands on its own and a private sector alternative workweek schedule does not displace it.
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Under a California workers' compensation policy, what is the insurer's liability to a proper claimant for compensation the employer owes?
Every compensation policy is conclusively presumed to contain the clauses this article requires, and one of them makes the insurer directly and primarily liable to any proper claimant, so the claimant does not have to chase the employer first.
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Who must obtain the general prevailing rate of per diem wages for each craft needed on a public work, and from whom?
Section 1773 of the Labor Code requires the body awarding a contract for public work to obtain the general prevailing rate of per diem wages for each craft from the Director of Industrial Relations for the locality where the work is performed, so getting the rate is the awarding body's job and paying it is the contractor's.
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The general prevailing rate of per diem wages must be paid on all public works except projects at or below what amount?
Section 1771 of the Labor Code requires not less than the general prevailing rate of per diem wages for all workers employed on public works except on projects of $1,000 or less, so the exemption is measured against the size of the whole project and not against the size of any one subcontract.
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Whose bodily injury does commercial general liability insurance protect a contractor against liability for?
Commercial general liability insurance protects the insured contractor against liability to the public, employees excepted, for bodily injury, property damage or personal injury, because injury to an employee belongs to the workers' compensation line instead.
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In a set of business books, how does a journal differ from a ledger?
A journal is the book where each business transaction shown on the supporting documents is recorded, and a ledger is the book that contains the totals from all of the journals, organized into different accounts, so entries travel from the documents into the journals and from the journals into the ledger.
IRS Pub. 583, p. 13 Reference document, not law.
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On a public work in an apprenticeable craft, what is the lowest ratio of apprentice work to journeyman work a contractor may run?
Section 1777.5(g) of the Labor Code allows the ratio to be no higher than the one stipulated in the apprenticeship standards the contractor is bound by, but states that in no case may it be less than one hour of apprentice work for every five hours of journeyman work, so 1 to 5 is the floor.
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Besides a valid contractor license, what must a contractor have to bid on or perform a public work contract?
Section 1771.1(a) of the Labor Code provides that a contractor or subcontractor is not qualified to bid, to be listed in a bid proposal, or to perform any public work contract unless currently registered under section 1725.5, so a contractor license alone does not open public work and being listed in another firm's bid while unregistered breaks the rule.
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How long must a licensee have held an active California license before applying for blanket bond approval?
The rule requires two years of active licensure in California before the application goes in, and the same two-year condition is written into the home improvement contract statute, so a newly licensed business cannot buy its way past the downpayment and progress payment limits.
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Goods delivered under a cancelled home solicitation contract are still at the buyer's home. Who bears the risk during the 20-day period?
Cancellation moves the risk of loss back to the seller, because the Civil Code puts the goods at the seller's risk during the 20-day period and leaves the buyer with nothing beyond a duty of reasonable care over goods in the buyer's possession.
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How many subcontractors may a prime contractor list for each portion of the work defined in its bid?
Section 4104 states that the prime contractor lists only one subcontractor for each portion it has defined in its bid, so naming a backup or a second firm for the same portion breaks the listing rule.
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An awarding authority chooses to assess a penalty against a prime contractor that broke the subcontractor listing rules. What is the maximum penalty?
Section 4110 caps the penalty at 10 percent of the amount of the subcontract involved, so the measure is that subcontract and not the prime contract, and the authority may cancel the contract instead of assessing anything.
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A licensed prime contractor breaks the subcontractor listing rules. What may follow in addition to the awarding authority's penalty?
Section 4111 provides that a licensee's violation of the subcontracting chapter is grounds for disciplinary action by the Contractors State License Board in addition to the penalties in section 4110, so the two routes run alongside each other.
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What is the ceiling on a downpayment charged under a home improvement contract?
Where a downpayment is charged on a home improvement contract it may not exceed $1,000 or 10 percent of the contract amount, whichever is less, so the cap is $1,000 on a $30,000 job and $600 on a $6,000 job.
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Under the Civil Code home solicitation rules, what amount makes a sale away from trade premises a home solicitation contract?
A home solicitation contract is a sale, lease or rental of goods or services made somewhere other than appropriate trade premises for $25 or more including any interest or service charges, so the threshold sits far below the figure that turns a residential job into a home improvement contract.
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A home improvement salesperson violates the license law on a sale the employing contractor knew nothing about. What follows for the contractor?
A home improvement salesperson's violation is cause for disciplinary action against the employing contractor whether or not the contractor knew of or took part in the act, so knowledge is expressly irrelevant and a sale made behind the contractor's back is no answer.
These are the same free questions the section pages publish, in one order instead of one per section. To work one section on its own, start from practice by section.