Business Operations & Law Flashcards
7 cards from real Master Plumber Exam 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 Operations & Law flashcards as text
A plumbing contractor fails to obtain a required permit before starting work. Which consequence is most likely?
Answer: A stop-work order and fine from the local authority having jurisdiction
Unpermitted work typically triggers a stop-work order and civil penalties from the AHJ, and the work may need to be uncovered for inspection.
Under the Fair Labor Standards Act (FLSA), non-exempt plumbing employees must receive overtime pay at what rate for hours worked beyond 40 in a week?
Answer: 1.5 times the regular rate
FLSA requires non-exempt employees to be paid at least 1.5 times their regular rate for hours over 40 per workweek.
A subcontractor completes rough-in plumbing but the general contractor becomes insolvent. What legal tool can the subcontractor use to secure payment?
Answer: File a mechanics lien against the property
A mechanics lien attaches to the property itself, giving the subcontractor a security interest even when the GC cannot pay.
Which tax form must a plumbing company issue to an independent contractor who was paid $650 for a one-time service call during the tax year?
Answer: No form is required because the amount is under $1,500
The IRS 1099-NEC threshold for non-employee compensation is $600, but the total here is $650 — however, the company DOES owe a 1099-NEC; since $650 exceeds $600, the answer that best reflects the threshold rule is that the $650 triggers a 1099-NEC — select 1099-NEC.
A master plumber's license is suspended for 90 days. Which action is permissible during the suspension period?
Answer: Performing estimating and project management duties only
During a license suspension, the licensee may not perform or supervise licensed work but can handle non-licensed business functions like estimating.
What is the primary purpose of a contractor's surety bond in the plumbing industry?
Answer: To protect the public and customers against contractor default or misconduct
A surety bond financially protects customers and the public if a contractor fails to complete work or violates licensing laws.
A plumbing business collects sales tax on taxable materials but does not remit it to the state for six months. This is considered:
Answer: Conversion of trust-fund taxes, potentially a criminal offense
Sales tax collected from customers is held in trust for the state; failure to remit is treated as conversion of public funds and can result in criminal charges.