Law and Business Test 1 Flashcards
A contractor forgot to renew a contractor’s license on time. He or she may renew the expired license anytime within ______ after its expiration date without reapplying for the license and fulfilling the exam or waiver request again.
5 years
What is the minimum fine for unlawful asbestos removal?
$1,000.00
To whom do you pay sales tax receipts?
State Board of Equalization
How long is the patent warrant?
4 years
How long is the latent warrant?
10 years
Account Receivable contains?
Retention
What is considered a fixed cost to a contractor?
Office Rent or a fixed amount that is usually due monthly.
What is considered a variable cost to a contractor?
Construction material or office supplies or costs that may vary.
To whom does the employer pay FUTA?
FUTA is a Federal Unemployment Tax and is made payable to IRS (Internal Revenue Service).
If a home solicitation presentation is made in Spanish, the home solicitation contract must be written in….?
Spanish
Who must pay for a pre-employment physical?
Employer
When should contractors renew their license?
Every two years
What is the overtime pay rate after 8 hours of work?
1.5 times the current rate
Who pays FICA?
50% employer and 50% employee
FICA also known as Social Security Tax
Which of the following should be included in a change order form?
Reason for change
What is the benefit of arbitration over litigation?
The cost of arbitration is cheaper than litigation
A contractor must be licensed when the total bid is over what amount?
$500
The Federal Employer Identification Number is issued by the:
Internal Revenue Service (All Federal numbers are issued by Federal agencies).
In small claims court you cannot be presented by an attorney. True or False?
True
Who publishes the material safety data sheet?
Manufacturer
The notice of cessation is filed after labor has ceased for…?
30 days
What is the maximum value of a gift which the home improvement sales person can give to a potential customer?
$5.00
Which of the following groups are not covered by DOSH? A. State employees B. Federal Employees C. County Employees D. Private Employees
Federal Employees (DOSH is a state agency and only covers groups within the State).
What is the maximum limit on a small claims court in California?
$7,500
Who must sign and date the contract?
The client and the contractor
After the lien is filed, what must the claimant do?
Take the lien to court in order to obtain a judgement against the property.
What is the purpose of the Mechanic’s Lien?
It encumbers the owners property as security until the bill is paid.
ABC company buys XYZ company. XYZ had just signed a three year collective bargaining agreement with a labor organization that contained a successor clause. Can ABC change the collective bargaining agreement?
ABC may not make any changes until the collective bargaining agreement expires in three years from when the previous owner signed the agreement.
What information is needed on a time card according to the Fair Labor Standard Act?
Social Security Number
Employees are not required to learn which of the following?
A. Their Job
B. How to conduct tailgate safety meetings
C. The safety procedures
D. All of the above
How to conduct tailgate safety meetings
In a construction business who is responsible for training a new employee?
The contractor
How many days does a subcontractor or supplier have to file a Mechanic’s Lien once a notice of completion has been recorded?
30 days (60 days for a prime contractor)
The “Notice to Owner” is given to…?
Let the owner know that the property can be liened.
An active contractor’s license is issued on January 7, 2012. On what date will the license expire?
January 31, 2014 (The license expires after two years at the end of the month).
Depreciation appears on the balance sheet as part of the…?
Fixed asset section
A notice of completion must be recorded within:
10 days after work is completed
The contractor cannot determine _________ without going to the job site.
The location of the electrical source
When a contractor loses money on a job, the contractor should investigate an important estimating system, trimming labor cost or using material more effectively. Which of the following is the best way to determine the sources of the information?
A. Cut down on the advertising cost
B. Cut down labor cost
C. Substitute the construction material with the cheaper material
D. Comparing the job cost record to the budget
Comparing the job cost record to the budget
What are the fixed costs in the construction business?
Expenses such as rent, managers salary, etc.
What does the ceiling limit mean in tax?
When it reached to ceiling limit the deduction will be the same.
What is the overtime pay rate after 12 hours per day?
2 times the rate
In liability insurance what does the occurrence basis mean?
After the insurance policy has expired, the claim will be covered. If you had an insurance policy when the accident occurred you will be covered, even if the claim is filed after the insurance policy as expired.
If an employee comes to work 20 minutes late how much time can an employer deduct from the wages?
Up to 30 minutes
What is the maximum number of hours a minor can work per day proceeding a school day?
4 hours
When should a contractor renew the contractor’s license bond?
30 days before it expires
When writing a home solicitation contract, the buyer signs the contract at a place other than the contractor’s place of business, what form must be included with the contract?
Notice of cancellation
How should a home owner notify a contractor regarding a claim for damages under the construction defect law?
By making a complaint to the CSLB
How often should the safety supervisor be at the job site?
It depends on the work being done
The best two methods of keeping track of job expenses are…?
Payroll journal and expense journal
A subcontractor must file a Mechanic’s Lien with the…?
County Recorder
What is the difference between fixed cost and overhead?
Overhead always covers the fixed cost
If during excavation, you unearth human remains or burial artifacts at a construction site, what should you do?
Stop work immediately at that site and notify the Coroner.
Disabled access laws went into effect in _____ for public buildings and in _____ for private buildings.
1968 for public buildings
1970 for private buildings
On a large job what is the best way to make an efficient schedule?
Critical Path Method (CPM)
When the company ownership has changed, the collective bargaining agreement is effective for how long?
The agreement is binding for three years from when the previous owner signed the agreement
If asbestos is present in the building what should a contractor do as the good faith effort?
Inform the owner to check the presence of asbestos
What precautions must the contractor take with hazardous substances?
The contractor must adopt a code of safe practices that are related to work at each job site.
Dosh must investigate a complaint charging a serious violation within _____ working days.
3 working days (14 working days for non-serious complaints)
A contractor and a home owner signed a home solicitation contract. If the owner lawfully cancels the contract, how long does the contractor have to pick up any unused materials that were delivered to the owner’s property?
Within 20 days after cancellation
How often are Federal Unemployment Tax Acts deposits paid by most employers?
Quarterly
One of your customer’s accounts has gone past due for 30 days. What is the best method of handling it?
Begin to charge interest on the customers account
Any asbestos related work involving _____ square feet or more of surface area of asbestos containing materials requires special certification.
100 square feet
When must employees provide the contractor with a W-4 form?
When they start work (W-4 forms show withholding’s).
The ABC company has found itself in bad times and must convert its assets into cash to pay some outstanding debt. The ability to do this is called…?
Liquidity
How often are FICA taxes reported and paid?
Quarterly
The most important thing to include when advertising for construction work is…?
The contractor’s license number
If work on a job was completed two years ago, and the owner noticed some problems, then who should the owner contact?
The prime contractor (Patent or visible defects liable for up to four years, latent or structural defects liable for up to ten years)
What is the next step after building plans have been approved?
Schedule the job (Bid on job before submitting building plans)
Who is responsible if an employee installs a cabinet that falls and damages the countertop?
Contractor
The owner complains about workmanship on a completed project which is not critical to the timely completion of the whole project. You are in the middle of the critical phase of the project. If the complaint is reasonable and requires correction what should be your response?
Tell the owner that the complaint is valid and correction will be made after the critical phase is completed.
Bonds are often required on larger jobs. What is the percentage that a bond company might charge based on the contract price?
1-2%
Which of the following statements is/are true?
a. Payment bonds guarantee payment of all labor and material.
b. Performance bonds guarantee that the project is completed according to plans and specifications.
c. Contract bonds guarantee both job completion and payment of all labor and material.
d. All of the above are true.
All of the above are true
Where would a contractor obtain a surety bond?
Insurance agent
James Johnson is the RME for Y Corporation. He works there during the week. During the weekend, he works for his own construction business that is under a different name and license number. Is this an acceptable practice for James Johnson?
No, James may only qualify for Y Corporation’s license in this case.
The qualifying RME for a construction firm must work at least…?
32 hours per week or 80% of the work week
Which of the following is true concerning a stop notice?
a. It is used on public and private jobs
b. Must be delivered to the owner personally or left at the owner’s residence with some person in charge or delivered to the architect
c. It is a lien on funds that obligates the person holding construction funds to withhold sufficient funds to satisfy the amount in the stop notice.
d. All of the above
All of the above
Which of the following is a required order to file a mechanic’s lien?
a. A description for the site sufficient for identification
b. Name of the owner and the amount of the claim
c. The kind of labor furnished and the person who furnished the work.
d. All of the above
All of the above
If a contractor is operating as a corporation or a partnership and obtains a federal tax ID number, to whom should the contractor send the number?
The Contractors State License Board
If a contractor places a lien on the property and the property owner does not agree with that lien, then how could a property owner release the property from the lien?
The property owner can purchase a bond in the amount of one and a half times the amount of the lien.
Which of the following is true regarding the Employer ID number?
A. It is necessary when you apply for a partnership license.
B. It is recorded by the CSLB upon application for a license.
C. It is obtained from the IRS
D. All of the above
All of the above (Necessary when applying for a contractor’s license as a partnership)
If an alien applies for a position at your company and he is interested in the legalization of his/her status, he/she should be referred to whom?
Internal Revenue Service IRS
When you hire a sub-contractor, as opposed to an employee, what should you do?
If the sub-contractor does not provide a taxpayer ID number, you must withhold 20% of the payment of income tax. Also you must require the sub-contractor to complete form W-9 on which the individual must provide a social security number.
If a contractor notices a piece of equipment that does not meet current safety standards, then when may he use it?
When it does meet safety standards
When you are renovating or doing demolition jobs where the release or possible release of hazardous materials will be present, when must you report this to the EPA or AQMD?
Before the job begins
On a job site, a Cal/OSHA inspector discovers a piece of equipment that is hazardous. A temporary variance may be granted
If the equipment is new and can be fixed before use.
The W-4 form is used to…?
Indicate the exact amount of FIT tax to withhold.
Which department of the government is responsible for implementing the employment eligibility verification requirement in the Immigration Reform and Control Act, and may require to present I-9 forms for each employee?
Immigration and Naturalization Service (INS)
Labor that is considered part-time is not subject to the same labor laws as full time employment. What amount of time is considered is considered full time employment?
30 hours per week or more
Which of the following is an acceptable hiring practice?
A. Hiring an American born person over a Chinese
B. Hiring a veteran over a non-veteran
C. Hiring a non-union employee over a union one
D. Hiring a 25 year old over a 55 year old
Hiring a veteran over a non-veteran
What is the purpose of a W-2 form?
For declaring income earned and taxes withheld. Employees use to prepare their taxes.
Which of the following describes an independent agent as opposed to an employee?
A. Person makes own hours and needs supervision
B. Person is licensed and supplies own tools
C. Person is not licensed but works for time and materials only
D. All of the above
Person is licensed and supplies own tools.
If you hire a trades person to subcontract work for time and material only for $300, and the person is not licensed, this is considered…?
A statutory employee, and withholding taxes must be deducted.
Is it legal for contractors to require employees to take a lie detector test?
It is not legal for the contractor to require them to take a lie detector test, but it would be legal for the government to require them.
If a contractor commits a serious violation of the contractor’s law, then the registrar can:
A. Fine the contractor up to $2000
B. Require the contractor to correct the project
C. Require the contractor to make restitution to the owner
D. All of the above
All of the above
If a stop notice is given on a private home construction job, then it is given to the lender with a bond in the amount of….?
One and a quarter the amount of the actual claim. (Release bond must be in the amount of one and a half times the amount of the lien)
All of the following are causes of disciplinary action except:
A. Entering into a contract with a contractor who is not licensed.
B. Allowing your license to be used by an unlicensed contractor.
C. Defaulting on your loan to your suppliers
D. During bankruptcy, settling obligations that you, as a contractor, acquired and settling for less than the full amount owed.
During bankruptcy, settling obligations that you, as a contractor, acquired and settling for less than the full amount owed.
Who cannot file a mechanic’s lien?
An unlicensed contractor who has done jobs for $500 or over.
When does a licensed contractor, who has a contract with a customer to build a home, have lien rights?
Contractor automatically has lien rights.
When should you let your attorney look at a construction contract?
After the contract is prepared and before you sign it.
What are the requirements for a home improvement sales person?
Must be 18 years of age and clear the background check. (He/she is allowed to work for multiple contractors and is not required to register with the Attorney General’s Office)
Which of the following statements is most correct?
A. A contractor must have a license number
B. A contractor’s license number must be on all forms that the company prints.
C. All of the advertising must include the contractors name, address, phone number.
D. The phone number of the Contractor State License Board must be on all advertising.
A contractor must have a license number (The license number must be on all advertising forms but does not need to be on all printed forms)
Which of the following would most likely place a bid out of range from other bids submitted for a job? A. Labor cost above 10% B. Overhead cost under 15% C. Overhead cost and profit over 10% D. Profit above 10%
Profit above 10%
What is not recommended if you get outbid by a lower bidder?
Lowering your bid to match other offers
Which item is most important when bidding? A. Profit B. Labor C. Material D. Overhead
Overhead (Assuming that labor and material are also covered)
When should large inventories be maintained?
Never
How do you open an account and establish a line of credit when you deal with suppliers?
Sign a note that you will pay your bill monthly.
Where do you attach a change order?
To the contract
Which of the following is the most correct when a contractor has a credit line established with a supplier:
A. The credit line was established based on the contractor’s repayment history, or reputation for paying debts when due.
B. The supplier can record a lien against the contractor’s equipment.
C. Credit lines are wise to have
D. The supplier can force the contractor to pay by offering discounts based on the future purchases.
The credit line was established based on the contractor’s repayment history, or reputation for paying debts when due.
Which of the following should be a part of a change order? A. The start date B. The increased profit percentage C. The name of any new sub-contractor D. The revised list of costs
The revised list of costs
If a subcontractor performs a job for a subcontractor and makes a hole in the wall, then who is responsible for the repairs of the hole after the job is completed and all contractors have been paid?
The prime contractor
What would be the next step after an engineer hands you a set of approved plans?
Re-check the plans
In most construction contracts, the retention may be held up for ____ days as a guarantee that the prime contractor pays the subcontractors and suppliers.
60 days (Retention held by customer is typically 10%)
What should you do if a customer cannot pay for the work you performed?
Offer the customer an extension until they can pay you. (Profit is usually 10%. Retention withheld usually exceeds that amount)
What is the significance of retentions?
Important because retention usually exceeds profit.
What should you do if a client is unhappy with your work?
Handle the problem in a timely manner when it comes up.
