Business and Law Principles Flashcards
7 cards from real Licensed Electrical Contractor practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business and Law Principles flashcards as text
What is 'retainage' in the context of construction contracts?
Answer: A percentage of each progress payment withheld by the owner until project completion
Retainage is typically 5-10% of each progress payment that the owner withholds and releases only after the project is substantially or fully completed to ensure contractor performance.
When a licensed electrical contractor takes on a project that requires permits, who is legally responsible for obtaining those permits?
Answer: The licensed contractor performing the electrical work
The licensed electrical contractor performing the work is legally responsible for obtaining the required electrical permits, as they are the license holder accountable to the AHJ.
Which of the following best describes the purpose of a 'performance bond' on a construction project?
Answer: It guarantees the contractor will complete the project according to the contract terms
A performance bond is a surety bond that guarantees the bonding company will ensure project completion if the contractor defaults on their contractual obligations.
Under the Fair Labor Standards Act (FLSA), non-exempt employees who work more than 40 hours in a workweek must be paid overtime at a rate of:
Answer: Time and a half (1.5x regular rate)
The FLSA requires non-exempt employees to receive at least 1.5 times their regular rate of pay for all hours worked beyond 40 in a single workweek.
A customer asks a contractor to perform work 'off the books' to avoid sales tax. Agreeing to this arrangement exposes the contractor to:
Answer: Criminal tax fraud charges, fines, and potential loss of license
Participating in tax fraud exposes a contractor to criminal prosecution, substantial fines, back taxes with penalties and interest, and potential revocation of their contractor's license.
What is the key distinction between 'accounts receivable' and 'accounts payable' in a contracting business?
Answer: Accounts receivable is money owed TO the business by customers; accounts payable is money the business OWES to suppliers and subcontractors
Accounts receivable represents money customers owe you for completed work, while accounts payable represents money you owe to your suppliers, subcontractors, and vendors.
A contractor's license is issued in the name of a qualifying individual who then leaves the company. What typically must happen for the company to continue operating legally?
Answer: The company must apply for a temporary permit and designate a new qualifying individual within the timeframe allowed by state law
Most states require the contracting company to promptly designate a new qualifying individual and notify the licensing board, with a limited grace period to prevent immediate business shutdown.