Employment and Labor

Why This Matters on the Exam

Listen carefully: Employment and labor law violations will cost you serious money and your license. Minimum fine is $5,000 per violation. We're talking class action lawsuits, licensing board discipline, fines that will make your head spin. The California licensing board tests this hard because violations are common. Contractors get hammered for misclassifying employees, not paying overtime, missing breaks, and wage theft—whether intentional or not. You need to know the ABC test, wage and hour laws, meal and rest break requirements, and anti-discrimination rules. These aren't optional. They directly affect your business operations and your legal compliance.

What You Must Know

Workers compensation insurance is mandatory for any employee you hire. Period. California uses the ABC test to determine if someone is an employee or independent contractor—misclassify them and you're liable for unpaid wages, overtime, damages, and penalties. You must pay at least minimum wage, including apprentices. Overtime is 1.5x regular wage for hours over 8 per day or 40 per week, and 2x for hours over 12 per day or when working more than six days in a week. Employees get paid meal and rest breaks. Meal breaks (30 minutes for 5+ hour shifts) are unpaid but required. Rest breaks (10 minutes per 4 hours) are paid. Final paychecks are due immediately upon termination. Anti-discrimination law prohibits treating employees differently based on protected characteristics. Wage records must be maintained for three years.