CSLB Law & Business Exam

C. A civil penalty may be imposed on the employer for failing to report within the required 8-hour window

Labor Code §6409.1 requires immediate reporting of a workplace fatality within 8 hours; failure to comply subjects the employer to a civil penalty (up to $5,000) independent of any penalties related to the underlying safety violation that caused the injury.

D. $42

FUTA tax applies only to the first $7,000 of wages paid per employee annually. At the net rate of 0.6% (after the standard 5.4% state credit), the tax equals $7,000 x 0.006 = $42, regardless of the employee's total annual wages.

B. The property owner, the general contractor, and the construction lender

A subcontractor or supplier who lacks a direct contract with the owner must serve the preliminary notice on the owner, the direct (original) contractor, and any construction lender to preserve mechanics lien, stop payment notice, and bond claim rights. Missing any required party can limit the claimant's remedies against that specific party.

A. To review certified payrolls and investigate possible wage violations on the project

A Labor Compliance Program (LCP), whether run by the awarding body or DIR, monitors and enforces prevailing wage compliance by reviewing certified payroll records, conducting interviews, and investigating potential violations. It does not set wage rates, issue licenses, or act as a surety.

A. Readily accessible during each work shift

The Hazard Communication Standard requires that SDS be readily accessible to employees during each work shift when they are in their work areas, not just during orientation or upon special request.

B. 8%

Net profit margin = Net Profit ÷ Revenue = $32,000 ÷ $400,000 = 0.08, or 8%. This shows that 8 cents of every revenue dollar is retained as profit after all expenses.

B. The waiver never becomes effective because the payment was not actually received, so lien rights remain intact

A conditional waiver and release upon final payment only becomes effective once the payment is actually received, including when a check has cleared the bank. Because the check bounced, the condition was never satisfied, so the waiver never took effect and the contractor's lien rights remain fully intact.

D. Any resulting change to the estimated completion date of the project

A written change order must reflect all effects of the added work, including any resulting change to the completion date, so the homeowner has accurate information about the project's revised price and schedule.

B. $400

Under FIFO, the earliest units purchased are assumed used first. The first 100 units used come from the $6 batch, and the next 50 units used come from the $8 batch (100 + 50 = 150 used). This leaves 50 units remaining from the $8 batch: 50 × $8 = $400.

D. 3 years

Claims for unpaid wages, including overtime, arising under the Labor Code generally carry a three-year statute of limitations. A four-year period applies only to claims based on a written contract or brought under the Unfair Competition Law, which is distinct from a straightforward statutory wage claim.

B. Within 8 hours

California Labor Code §6409.1 and Title 8 CCR §342 require employers to immediately report any serious injury, illness, or death to Cal/OSHA, and 'immediately' is defined as no later than 8 hours after the employer knew or should have known of the incident.

A. Serving a stop payment notice on the construction lender

A stop payment notice is served on the construction lender (or owner on private jobs) to require withholding of construction funds sufficient to cover the unpaid claim, separate from a mechanics lien against real property.

D. $4,000, the value of work and materials actually furnished

Progress payments under California home improvement contract law may not exceed the value of the work completed and materials delivered at the time the payment is requested; here, only $4,000 in work has been performed, so that is the maximum lawful progress payment.

D. Midnight Tuesday, June 10

The three-business-day cancellation period excludes Sundays and legal holidays but includes Saturdays. Counting from Friday, June 6, the three business days are Saturday (6/7), Monday (6/9), and Tuesday (6/10), so the deadline is midnight on Tuesday, June 10.

D. The employer is out of compliance because the IIPP requires actual implementation, not just designation of authority

Title 8 CCR §3203 requires more than merely naming a responsible person on paper—the IIPP must be actively implemented, including timely correction of identified hazards. Failure to correct hazards, even with a designated responsible person, places the employer out of compliance.

C. A certificate stating an exemption from workers' compensation insurance

Contractors who have no employees may file a Certificate of Exemption from Workers' Compensation Insurance with CSLB instead of carrying a policy. If the contractor later hires employees, workers' compensation coverage becomes mandatory.

A. Two rest breaks

California law requires a paid 10-minute rest break for every 4 hours worked or major fraction thereof. An 8-hour shift divides into two 4-hour periods, entitling the employee to two 10-minute rest breaks.

D. Return them within 10 days after receipt of the cancellation notice

Under California Civil Code Section 1689.6, when a homeowner validly cancels a home improvement contract, the contractor must return any payments or property received within 10 days after receiving the cancellation notice, without deductions or fees.

D. Within 72 hours of her quitting

Labor Code Section 202 provides that an employee who quits without at least 72 hours' prior notice must be paid all wages due within 72 hours of quitting. If the employee gives at least 72 hours' notice, wages are due at the time of quitting.

C. The approximate dates when the work will begin and be completed

California law requires home improvement contracts to state the approximate start and completion dates so the homeowner has a reasonable expectation of the project timeline.

B. Yes, home improvement contracts of $500 or more must be in writing before work begins

California law requires that home improvement contracts of $500 or more be in writing and signed by both parties before work begins; a $2,500 oral flooring contract violates this requirement.

C. The salesperson's name and registration number

California requires that a home improvement contract negotiated by a registered salesperson identify that salesperson by name and registration number, allowing the homeowner and CSLB to verify the individual's registration status.

C. File a certification of exemption based on owning 100% of the corporate stock and holding an executive officer title

California allows an officer or director who owns 100% (or at least 15% with certain conditions) of a corporation's stock to file a valid waiver/certification with their workers' compensation carrier and CSLB to be excluded from mandatory coverage, but this requires an affirmative filing, not automatic exemption.

D. 25 feet

Cal/OSHA excavation standards require that in trenches 4 feet or deeper, a means of egress (ladder, ramp, or steps) be located so that no employee has to travel more than 25 feet laterally to reach it.

C. Apply for a new license under the corporate entity, since a license cannot be transferred between entity types

CSLB licenses are issued to a specific legal entity and cannot be transferred or converted between entity types (e.g., sole proprietorship to corporation). A new license application, with its own bond and qualifying individual, must be filed for the new entity.