Law and Business Practice Exam 1 Vocabulary

Flashcards covering labor laws, accounting practices, safety regulations, and licensing requirements based on Law and Business Test 1.

Form I-9

The document required by the Immigration Reform and Control Act for all employees hired on or after November 6, 1986, to verify employment eligibility status.

Hard Laborer Age Limit

By law, a worker in this role may not be younger than $16$ years old.

Lawful Denial of Employment

A condition where an employer may legally refuse a job applicant, such as when the applicant has no work experience or no Social Security number.

Arrest Records Inquiry

A practice where it is not legal for a contractor to ask prospective employees about arrests that did not lead to convictions.

Joint Control Addendum

A home improvement contract document that must be signed by the owner, contractor, and joint control officer.

Home Improvement Down Payment Limit

Under the Business and Professions Code, a contractor is limited to taking a maximum of $1,000$ or $10\%$ of the total price, whichever is less.

Construction Contract Attorney Review

The recommended timing for legal review is after the contract is prepared but before it is signed by the contractor and the client.

Spanish Sales Presentation Rule

Requirement stating that if a sales presentation is made in Spanish, the home solicitation contract must also be in Spanish.

Home Solicitation Cancellation Policy

After a lawful cancellation, a contractor has within $20$ days to pick up unused materials delivered to the owner's property.

Critical Path Method

The best method for determining the number of hours required for different project phases and ensuring the job remains on schedule.

Building Code Violation Liability

If a contractor completes a project according to plans and a violation is later discovered, the architect is held responsible.

Change Order

A signed document obtained from the owner to authorize additional work after a job has been completed.

Toolbox or Tailgate Safety Meetings

Supervisory safety meetings required to be held at least once every ten working days.

DOSH Serious Violation Investigation

A mandate requiring DOSH to investigate complaints of serious health or safety standards within three working days.

Written Health and Safety Records Retention

Every employer of $11$ or more employees must keep these records for a period of $5$ years.

Workers' Compensation Injury Reporting

The requirement for insured employers to report work-related illnesses or injuries to their carrier within $5$ days of the incident.

Umbrella Policy

An insurance policy best suited for a contractor looking for coverage for a high degree of exposure to risk.

Cost Management System

A system that provides a cost history to analyze labor, material, and overhead costs.

Balance Sheet

A financial document that represents a company's financial position on a specified date.

Income Statement

A financial document that summarizes revenues, cost of sales, and operating expenses over a period of time.

IRS Form W-2

The Wage and Tax Statement that an employer must furnish to an employee by January 31.

Quick Ratio

The strictest measure of liquidity among financial ratios.

Employer Identification Number (EIN)

The federal identification number issued by the Internal Revenue Service (IRS).

FICA (Social Security)

A tax where the cost is split $50\%$ by the employer and $50\%$ by the employee.

FUTA (Federal Unemployment Tax)

A tax paid entirely by the employer; payments stop after an employee's taxable wages exceed $7,000$.

Wage Deduction Restrictions

Prohibition against deducting workers' compensation insurance premiums from an employee's paycheck.

California Department of Tax and Fee Administration

The agency responsible for receiving and processing sales tax reports and payments.

Accounts Receivable Error

An error that occurs when a receivable is posted to an accounts-payable account, though it has no effect on balancing the accounts receivable itself.

Direct Costs

Expenditures directly linked to a project, such as the field superintendent's salary, as opposed to office personnel or rent.

Qualifying RME (Responsible Managing Employee)

An individual for a construction firm who must work at least $32$ hours per week or $80\%$ of the work week.

License Renewal Grace Period

An expired license may be renewed within $5$ years without reapplying or re-taking the exam.

Business Records Inspection

Records must be kept and made available for the Registrar of Contractors for $5$ years after project completion.

Contractor's License Threshold

In California, a license is required if the total cost of a project is $500$ or more in labor and materials.

DBA (Doing Business As)

A fictitious business name obtained through city or county government by sole owners not using their legal name.

Unconditional Lien Release

A document ensuring that the owner's property covered by the release may not be liened.

Underground Service Alert Notification Center

The regional agency that must be notified before any digging, drilling, or boring at a job site.

Asbestos Inquiry Rule

Contractors must inquire if asbestos is present in any building constructed prior to 1978 before beginning work.

Child Support Withholding Max

The maximum percentage that may be withheld from an employee's paycheck for a child support order is $50\%$.

Retention

Funds withheld to guarantee the completion of a project and the correction of defects.

Notice of Cessation

A document that is only effective if labor has stopped for at least $30$ days prior to recording.

Notice of Completion Lien Window

Once this notice is filed, the original contractor has $60$ days to record a lien.

Operating Capital

Calculated as total current assets minus total current liabilities.

State of Emergency Cancellation Right

Clients have $7$ business days to cancel a contract for repairs resulting from an event for which a State of Emergency was declared.

Fire Extinguisher Travel Distance

The maximum allowed travel distance from any point of a work area to a fire extinguisher is $75$ feet.