LBExamWhat is the penalty for a first conviction for contracting without a license?
A $5,000 fine, six months in county jail, or both, at most.
Flashcards
CSLB Law and Business flashcards
50 free cards across the 7 exam sections, each one naming the statute, regulation or published guide it rests on. Reveal the back on any card. A free account keeps your place and brings the cards you missed back on a schedule.
Business Organization and Licensing · 7 cards / Free set
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True or false: A $900 job that needs a building permit is exempt from licensing.
False. The exemption needs a total price under $1,000 and no building permit.
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How many hours a week must a responsible managing employee (RME) work?
32 hours, or 80 percent of the business's operating hours if less. That is the weekly test for an RME being actively engaged.
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How long does a licensee have to replace a qualifier who leaves?
90 days from the date the qualifier disassociates. Without a replacement, the license is automatically suspended or the classification removed.
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How much is the contractor's bond a licensee must keep on file?
$25,000. It must be on file to issue, renew or keep a license.
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How much experience must a contractor license applicant have?
Four years in the class applied for, within the last 10 years. The experience must be as a journeyman, foreman, supervising employee or contractor.
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True or false: A sole owner is personally liable for any claim against the business.
True. The owner also has complete control and must find all the financing.
Business Finances · 8 cards / Free set
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Cash basis of accounting
Revenue counts when cash comes in; expenses count in the year paid, unless a different period is needed to clearly reflect income.
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Percentage of completion method
Reports profit and loss on each job as the work gets done.
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True or false: On a balance sheet, assets always equal liabilities plus stockholders' equity.
True. Assets sit on the left, liabilities and equity on the right.
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At what value does a balance sheet carry equipment and other fixed assets?
Original cost less accumulated depreciation. Current market value does not change the figure.
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Income statement
A summary of the company's operations over a period of time.
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Working capital
Total current assets minus total current liabilities.
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Quick assets
Total current assets minus inventories.
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Why is retention hard on a subcontractor who finishes early?
Retention is released only after the whole project is accepted.
Employment Requirements · 10 cards / Free set
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Form I-9
Employment Eligibility Verification. Every employer completes one for each new hire.
EDD DE 44 (2026), p. 109 Reference document, not law.
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What decides how often an employer deposits federal payroll taxes?
The tax it reported during the lookback period. How often it pays employees or makes deposits does not decide it.
IRS Pub. 15 (2026), p. 32 Reference document, not law.
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Which federal withholding form does an employer ask each new employee to complete?
Form W-4, for the current year.
IRS Pub. 15 (2026), p. 7 Reference document, not law.
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How long must a California employer keep records of daily hours and wages paid?
At least three years.
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True or false: A fired employee's final wages may wait until the next regular payday.
False. They are due immediately, at the time of discharge.
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When are final wages due to an employee with no fixed-term contract who quits without notice?
Within 72 hours of quitting. With 72 hours' notice, they are due at the time of quitting.
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Waiting time penalty
A day's wages for each day final pay is willfully late. It runs for no more than 30 days.
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By when must wages earned from the 1st to the 15th be paid?
Between the 16th and the 26th of the same month. Wages are due twice each calendar month, on regular paydays set in advance.
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List the three conditions of the ABC test for an independent contractor.
Free from the hirer's control; work outside its usual business; an established independent trade of the same kind.
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What rate is owed for the ninth to twelfth hours of a workday, or hours past 40 in a week?
At least one and one-half times the regular rate. The same rate covers the first eight hours of a seventh workday in one workweek.
Insurance and Liens · 5 cards / Free set
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How long after completion may an owner record a notice of completion?
Within 15 days after the date of completion. The owner must sign and verify the notice.
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Within how many days of first furnishing work must a claimant give preliminary notice?
20 days. A late notice covers only work from 20 days before it was served.
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When must a direct contractor record its mechanics lien?
90 days after completion, or 60 after a notice, whichever is earlier. It records only after finishing its contract; the notice is the owner's recorded notice of completion or cessation.
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When must a subcontractor or supplier record its mechanics lien?
90 days after completion, or 30 after a notice, whichever is earlier. It records only once its work ends; the notice is the owner's recorded notice of completion or cessation.
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How long does a lien claimant have to sue to enforce a recorded lien?
90 days after the claim of lien is recorded. Otherwise the lien expires and cannot be enforced.
Contract Requirements and Execution · 9 cards / Free set
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How soon must a prime contractor pay a subcontractor after getting a progress payment?
Within seven days, unless they agreed otherwise in writing.
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What total price makes a home improvement job need a home improvement contract?
Over $500 for all labor, services and materials.
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True or false: A home improvement change order may be signed once the extra work is underway.
False. It must be in writing and signed before that work starts.
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What is the largest down payment on a home improvement contract?
$1,000 or 10 percent of the contract amount, whichever is less.
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Apart from the down payment, how much may a home improvement contractor collect?
No more than the value of work done and material delivered.
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List what a change order must state to bind a home improvement buyer.
The scope of work, the amount added or subtracted, and the effect on payments or completion date.
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How long does a buyer have to cancel a home improvement contract solicited at home?
Midnight of the third business day after receiving the signed, dated copy. A senior citizen buyer has until the fifth business day.
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Critical path method
A schedule showing how a job's tasks depend on one another. It is named for the key path through every task to be completed.
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List three of the four types of builder and owner contracts.
Any three of: lump-sum, cost-plus, unit-price, guaranteed-maximum cost.
Public Works · 4 cards / Free set
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Above what amount must a direct contractor on public works give a payment bond?
$25,000, given and approved before work starts.
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Besides a license, what must a contractor have to bid on or perform public work?
Registration with the Department of Industrial Relations (DIR). It is also needed to be listed in another contractor's bid.
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True or false: Prevailing wages must be paid on a $1,000 public works project.
False. Projects of $1,000 or less are exempt.
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On a routine public works contract, what is the most retention a public entity may withhold in total?
5 percent of the contract price. No single payment may have more than 5 percent held back.
Safety · 7 cards / Free set
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Between what dates must the annual injury and illness summary be posted?
From February 1 to April 30 of the following year.
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Toolbox or tailgate meeting
A supervisor's safety meeting with the crew. It is held at least every 10 working days.
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When may employees work in an excavation with no cave-in protection?
Entirely in stable rock, or under 5 feet with no cave-in sign. A competent person must examine the ground to find no sign.
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How much notice must an excavator give the regional notification center before digging?
At least 2 working days. Known owners of underground lines who are not center members must be told too.
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IIPP
Injury and Illness Prevention Program. Every employer must set one up, carry it out and keep it effective.
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Which trenches need a permit from the Division of Occupational Safety and Health?
Trenches 5 feet or deeper that a worker must go down into.
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How soon must an employer report a serious work injury, illness or death?
Immediately, by phone or online. The report goes to the Division of Occupational Safety and Health.
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