Tennessee Contractor License Exam — All Questions

A construction business is organized as a corporation. If the corporation is sued and cannot pay a judgment, what is generally at risk?

• a.The personal homes and bank accounts of every shareholder
• b.The personal assets of the highest-paid officer only
• c.The assets owned by the corporation itself, not the shareholders' personal assets✓
• d.Nothing, because corporations cannot be sued

A corporation is a separate legal entity from its owners (shareholders). This separation creates limited liability: creditors and judgments generally reach only the assets the corporation owns, and shareholders risk losing only what they invested — not their personal homes or savings. That protection can be lost only in unusual cases such as fraud or 'piercing the corporate veil.'

In a general partnership, how are the general partners liable for the debts of the business?

• a.Only up to the amount each partner originally invested
• b.Personally and jointly liable for all partnership debts✓
• c.Not liable at all, because the partnership pays its own debts
• d.Liable only for debts they personally signed for

A general partnership does not shield its owners. Each general partner has unlimited personal liability and is jointly liable for the partnership's debts and obligations — a creditor can pursue any partner's personal assets. This unlimited exposure is a key reason many contractors instead form an LLC or corporation, which provide limited liability.

Which statement best describes a limited liability company (LLC) for a contracting business?

• a.It gives owners limited liability while normally allowing profits to pass through to owners' personal tax returns✓
• b.It requires the business to pay corporate income tax and forbids pass-through taxation
• c.It makes every member personally liable for all company debts
• d.It can be owned by only one person and never by a group

An LLC combines the liability protection of a corporation with the tax flexibility of a partnership. Members are generally shielded from personal liability for business debts, and by default the LLC's profits and losses 'pass through' to the members' individual tax returns, avoiding the double taxation of a standard C corporation. An LLC may have one member or many.

A contractor's total direct cost for a job is $18,000. The contractor adds a 15% markup to cover overhead and profit. What is the bid price?

• a.$18,150
• b.$18,270
• c.$20,700✓
• d.$21,150

Markup is a percentage added on top of cost. Multiply the cost by (1 + markup): $18,000 x 1.15 = $20,700. The markup dollars are $18,000 x 0.15 = $2,700, which is added to the $18,000 cost to reach the bid price. Markup covers both company overhead and profit.

A job costs the contractor $8,000. The contractor wants a 20% gross profit MARGIN (profit as a percentage of the selling price). What must the selling price be?

• a.$9,600
• b.$10,000✓
• c.$9,800
• d.$10,400

Margin is measured against the selling price, not the cost, so you cannot simply add 20% to cost. Price = cost / (1 - margin) = $8,000 / (1 - 0.20) = $8,000 / 0.80 = $10,000. Check: profit is $2,000, and $2,000 / $10,000 = 20% margin. Adding 20% to cost ($9,600) would only give a 16.7% margin — a common and costly estimating error.

How many cubic yards of concrete are needed for a slab 27 ft long, 30 ft wide, and 4 inches thick?

• a.3.3 cubic yards
• b.6.7 cubic yards
• c.8.5 cubic yards
• d.10 cubic yards✓

First convert thickness to feet: 4 in / 12 = 0.3333 ft. Volume in cubic feet = 27 x 30 x 0.3333 = 270 cubic feet. Convert to cubic yards by dividing by 27 (there are 27 cubic feet in a cubic yard): 270 / 27 = 10 cubic yards. Getting units consistent — feet for all three dimensions — is the key step.

On a project where the exact quantities of excavation and fill are not yet known, which bidding method best protects both owner and contractor from large quantity surprises?

• a.A unit-price contract, paying a set price per unit for the actual quantity installed✓
• b.A lump-sum contract with no measurement of quantities
• c.A verbal handshake agreement
• d.A cost-plus contract with no cost records kept

Unit pricing sets a fixed price per unit (for example, per cubic yard of excavation), and the contractor is paid for the actual measured quantity. This fairly handles uncertain quantities: the owner pays only for work performed, and the contractor is protected if quantities grow. A lump sum forces the contractor to guess and gamble on the quantity, which is risky when the amount is genuinely unknown.

Which set of elements is generally required for a contract to be legally valid and enforceable?

• a.A notary stamp, a witness, and a deposit
• b.A blueprint, a permit, and a bond
• c.Offer, acceptance, consideration, legal capacity, and a lawful purpose✓
• d.A handshake, a logo, and an invoice

A valid contract requires an offer, acceptance of that offer (mutual assent), consideration (something of value exchanged by each side), parties with legal capacity to contract, and a lawful purpose. If any element is missing — for example, no consideration or an illegal objective — the agreement may be void or unenforceable. Notaries, permits, and bonds are sometimes useful but are not the core elements of contract formation.

A construction contract states that the contractor will pay the owner $500 for each day the project finishes late, agreed in advance as a reasonable estimate of the owner's loss. This clause is best described as:

• a.A performance bond
• b.A liquidated damages clause✓
• c.A mechanic's lien
• d.A punitive penalty that courts always strike down

Liquidated damages are a dollar amount the parties agree to IN ADVANCE as compensation for a breach (commonly late completion) when the actual loss would be hard to calculate. To be enforceable the amount must be a reasonable pre-estimate of the harm, not a punishment. A performance bond is a surety guarantee, and a mechanic's lien secures payment for labor and materials — different tools entirely.

The owner asks the contractor to add a bathroom that was not in the original signed contract. What is the correct way to authorize and price this added work?

• a.A written change order signed by both parties before the work proceeds✓
• b.A verbal 'go ahead' with no documentation
• c.An adjustment made quietly on the final invoice
• d.A new lawsuit filed against the owner

A change order is a written amendment that documents a modification to the scope, price, or schedule and is signed by both parties. Handling changes in writing before performing the work protects the contractor's right to be paid for the extra work and prevents disputes about what was authorized. Relying on verbal approvals is a leading cause of payment disputes.

Under the Statute of Frauds, which of the following is generally required to be in writing to be enforceable?

• a.A one-hour verbal agreement to sweep a job site
• b.A casual promise to lend a friend a hammer
• c.An agreement to buy lunch for the crew
• d.A contract for the sale of land or an interest in real property✓

The Statute of Frauds requires certain categories of contracts to be in writing and signed to be enforceable — most notably contracts for the sale of land or interests in real property, and agreements that cannot be performed within one year. This is why construction and real-property agreements are documented in writing. Minor, short, everyday arrangements are not covered.

In a Critical Path Method (CPM) schedule, the 'critical path' is:

• a.The path with the most expensive activities
• b.The longest sequence of dependent activities, which determines the shortest possible project duration✓
• c.The path that uses the newest equipment
• d.Any path that has the most float

The critical path is the longest chain of dependent activities through the network. Because it is the longest path, it sets the minimum time in which the whole project can finish. Activities on the critical path have zero float — delaying any one of them delays the entire project. It is about time and dependency, not cost or equipment.

'Float' (also called slack) for a scheduled activity means:

• a.The amount of time an activity can be delayed without delaying the project's completion date✓
• b.The amount of money left in the activity's budget
• c.The number of extra workers assigned to the activity
• d.The percentage of the activity that is already complete

Float (slack) is the scheduling flexibility of an activity — how long it can slip before it pushes out the project finish date. Activities on the critical path have zero float. Understanding float lets a manager shift non-critical work and reallocate crews without harming the overall completion date. It is a measure of time flexibility, not money or manpower.

During construction the contractor finds the plans and specifications conflict and needs clarification from the architect. The standard document used to formally ask this question is a:

• a.Certificate of occupancy
• b.Lien waiver
• c.Request for Information (RFI)✓
• d.Notice to proceed

A Request for Information (RFI) is the formal, written channel a contractor uses to ask the design team to clarify or resolve gaps, conflicts, or ambiguities in the drawings and specifications. Documenting questions and answers through RFIs creates a paper trail, avoids guesswork, and supports later claims if the answer changes the cost or schedule.

What is the primary purpose of a Gantt (bar) chart on a construction project?

• a.To calculate payroll taxes for each employee
• b.To show project activities as bars along a timeline so start dates, durations, and overlaps are easy to see✓
• c.To record the exact chemical composition of the concrete
• d.To replace the need for any building permits

A Gantt chart displays each task as a horizontal bar positioned and sized along a time axis, making it easy to communicate when activities start and finish, how long they take, and where they overlap. It is a scheduling and communication tool. It does not perform payroll, material testing, or permitting functions.

A contracting company has current assets of $240,000 and current liabilities of $120,000. What is its current ratio?

• a.0.5 to 1
• b.1.2 to 1
• c.2.0 to 1✓
• d.12 to 1

Current ratio = current assets / current liabilities = $240,000 / $120,000 = 2.0. A ratio of 2.0 means the company has $2 of short-term assets for every $1 of short-term debt, which generally indicates healthy short-term liquidity. Sureties and lenders watch this ratio closely; a ratio below 1.0 signals the company may struggle to pay near-term obligations.

Working capital is calculated as:

• a.Current assets minus current liabilities✓
• b.Total revenue minus total expenses for the year
• c.The value of all equipment the company owns
• d.The owner's original cash investment

Working capital = current assets - current liabilities. It measures the short-term funds available to run daily operations, buy materials, meet payroll, and absorb delays before receivables come in. Positive working capital is essential in construction because contractors often pay costs long before the owner pays them. It is different from annual net profit and from equipment value.

On a project, the owner withholds 10% from each progress payment until the work is satisfactorily completed. This withheld amount is called:

• a.A liquidated damage
• b.Retainage (retention)✓
• c.A change order
• d.Overhead

Retainage (retention) is a portion of each progress payment the owner holds back — commonly 5% to 10% — and releases after the contractor satisfactorily completes the work and addresses punch-list items. It gives the owner leverage to ensure completion, but it also strains the contractor's cash flow, so contractors must plan for it and pass appropriate retainage terms down to subcontractors.

Why do contractors use job costing (tracking costs to each specific project)?

• a.Because the law forbids one combined company bank account
• b.To avoid ever having to file a tax return
• c.Only to make the paperwork look more professional
• d.To compare actual costs against the estimate for each job and see which jobs are profitable✓

Job costing assigns labor, materials, equipment, and subcontractor costs to each individual project. This lets the contractor compare actual costs to the original estimate in real time, catch overruns early, price future work more accurately, and identify which types of jobs actually make money. Without job costing, a company can be busy and still lose money without knowing which project caused the loss.

Under OSHA construction standards, at what height above a lower level does fall protection generally become required for workers on a construction site?

• a.2 feet
• b.4 feet
• c.6 feet✓
• d.20 feet

OSHA's construction fall-protection rule (29 CFR 1926.501) generally requires protection — such as guardrails, safety nets, or personal fall-arrest systems — when a worker is exposed to a fall of 6 feet or more to a lower level. (Note the general-industry trigger is 4 feet, but on construction sites the 6-foot rule applies.) Falls are consistently a leading cause of construction fatalities, which is why this threshold is heavily tested and enforced.

According to the hierarchy of controls, which method of protecting workers from a hazard is MOST effective and should be considered first?

• a.Eliminating the hazard entirely✓
• b.Providing personal protective equipment (PPE)
• c.Posting a warning sign
• d.Writing the hazard into a safety manual

The hierarchy of controls ranks protections from most to least effective: elimination, substitution, engineering controls, administrative controls, and finally PPE. Removing the hazard entirely is best because it does not depend on worker behavior or equipment holding up. PPE is the last line of defense — it only reduces exposure and relies on correct, consistent use, so it is the least reliable control on its own.

OSHA requires that a trench or excavation be protected by sloping, shoring, or a protective (trench) box once it reaches what depth?

• a.3 feet
• b.5 feet✓
• c.10 feet
• d.15 feet

Under OSHA's excavation standard (29 CFR 1926.652), a protective system — sloping/benching, shoring, or a trench box (shield) — is generally required for trenches 5 feet deep or greater (unless the excavation is entirely in stable rock). A registered professional engineer must design protection for trenches deeper than 20 feet. Cave-ins are frequently fatal, so a competent person must inspect excavations daily.

Who is responsible for providing a safe workplace and requiring the use of appropriate personal protective equipment on a job site?

• a.Only the individual workers themselves
• b.Only the equipment manufacturer
• c.Only OSHA inspectors
• d.The employer✓

Under the OSH Act's General Duty Clause and OSHA standards, the employer has the primary legal duty to furnish a workplace free from recognized hazards, to assess the job for hazards, and to provide and require appropriate PPE (often at no cost to the employee). Workers must follow safety rules and use provided equipment, but the core obligation to create a safe workplace rests with the employer.

An employee is injured while framing a house during work hours. Which system is designed to cover the employee's medical bills and lost wages regardless of who was at fault?

• a.The employee's personal auto insurance
• b.Workers' compensation insurance✓
• c.A performance bond
• d.The building permit fee

Workers' compensation is a no-fault system: an employee injured on the job receives medical care and partial wage replacement without having to prove the employer was negligent, and in exchange the employer is generally protected from most injury lawsuits. Carrying required workers' compensation coverage is a fundamental legal obligation for contractors with employees. A bond and a permit serve entirely different purposes.

Under the federal Fair Labor Standards Act (FLSA), a covered nonexempt employee must generally be paid overtime for hours worked beyond:

• a.8 hours in a single day, in every state
• b.35 hours in a week
• c.40 hours in a workweek, at one-and-one-half times the regular rate✓
• d.60 hours in a week, at the regular rate

The FLSA sets the federal overtime rule: covered nonexempt employees must receive at least 1.5 times their regular rate for hours worked over 40 in a workweek. The federal standard is weekly, not daily (some states add their own daily-overtime rules, but the nationwide FLSA baseline is the 40-hour workweek). Misclassifying workers to dodge overtime is a common and costly violation.

Which factor most strongly suggests a worker should be classified as an EMPLOYEE rather than an independent contractor?

• a.The business controls how, when, and where the work is done and provides the tools✓
• b.The worker runs an independent business serving many clients and sets their own methods
• c.The worker supplies their own tools and can profit or lose based on their own decisions
• d.The worker is free to accept or reject jobs from many different companies

The central test for classification is the degree of control and independence. When the business directs how, when, and where the work is performed and supplies the tools, the worker looks like an employee. Independent contractors typically control their own methods, invest in their own tools, serve multiple clients, and bear the risk of profit or loss. Misclassifying employees as contractors to avoid taxes, overtime, and workers' comp is a serious and heavily penalized violation.

What is the purpose of Form I-9 that a contractor completes for each new hire?

• a.To calculate the employee's overtime rate
• b.To register the employee with the local building department
• c.To order the employee's personal protective equipment
• d.To verify the employee's identity and legal authorization to work in the United States✓

The federal Form I-9 is used to verify each new employee's identity and their authorization to work in the United States, as required by immigration law. Employers must complete and retain an I-9 for every employee and review acceptable documents. It is separate from tax forms (like the W-4) and from any safety, permitting, or payroll-rate functions.

What is the primary purpose of a building permit and the inspections that go with it?

• a.To generate extra tax revenue with no benefit to the public
• b.To confirm that the proposed work meets the applicable building codes for safety and to allow official inspection of the work✓
• c.To guarantee the contractor will make a profit on the job
• d.To replace the need for a written contract with the owner

A building permit is the jurisdiction's authorization to perform construction that meets the adopted building codes, and the required inspections verify that the work actually complies at key stages. The core purpose is protecting public health and safety — sound structures, safe electrical and plumbing systems, and proper egress. Permits are not a revenue trick, a profit guarantee, or a substitute for the owner-contractor contract.

Before a newly constructed building may be legally occupied, the building department typically must issue a:

• a.Certificate of occupancy✓
• b.Lien waiver
• c.Bid bond
• d.Change order

A certificate of occupancy (CO) is the document the building official issues after final inspections confirm the building complies with the code and is safe to occupy for its intended use. Occupying a building without a required CO can lead to fines and forced vacancy. A lien waiver relates to payment, a bid bond to the bidding process, and a change order to scope changes — none of them authorize occupancy.

A contractor must set a new house a minimum distance from the property line. Which type of rule most directly governs this required setback?

• a.The electrical code
• b.OSHA fall-protection standards
• c.Local zoning ordinances✓
• d.The workers' compensation statute

Setbacks — the minimum required distances between a structure and the property lines — are established by local zoning ordinances, which regulate how land may be used and where buildings may be placed. Building codes govern how a structure is built (its safety and construction), while zoning governs where and what may be built. Distinguishing zoning (land use) from building codes (construction standards) is a fundamental concept for contractors.

In Tennessee, a contractor must hold a license from the Board for Licensing Contractors before bidding or contracting when the total cost of a general building project reaches at least what amount?

• a.$3,000
• b.$10,000
• c.$25,000✓
• d.$50,000

Tennessee requires a contractor's license when the total cost of the work is $25,000 or more for general building projects. The license (with the proper classification and monetary limit) must be in place before the contractor even bids, not just before it starts work.T.C.A. §62-6-103 (license required)

How does the Tennessee Board for Licensing Contractors set a contractor's monetary limit (the largest project the license allows)?

• a.It equals five times gross annual revenue
• b.It is unlimited for every licensee
• c.It always equals the contractor's bond amount
• d.It equals the lesser of ten times the contractor's net worth or ten times its working capital✓

Tennessee sets the monetary limit at the lesser of 10 times net worth or 10 times working capital, as shown on the required financial statement. The rule keeps a contractor's project size tied to its demonstrated financial capacity.T.C.A. §62-6-111; Board financial rules (monetary limit)

Which Tennessee contractor licensing rule is stated correctly?

• a.A contractor may submit a bid first and obtain the license afterward
• b.A contractor must hold the license before bidding, and general building work triggers licensing at $25,000 or more✓
• c.Electrical, plumbing, and mechanical work never require a state license in Tennessee
• d.General building work requires a license only above $100,000

In Tennessee the contractor's license must be obtained BEFORE bidding, and general building work triggers licensing at $25,000 or more (T.C.A. §62-6-103). Lower-dollar trade work is handled through separate limited-license tiers rather than being exempt.T.C.A. §62-6-103

A Tennessee contractor applies for a monetary limit above $1,500,000. What kind of financial statement must accompany the application?

• a.A reviewed or audited financial statement prepared by a licensed CPA✓
• b.A verbal statement of the contractor's assets
• c.No financial statement is required above that amount
• d.A one-page printout of the business bank balance

When the requested monetary limit exceeds $1,500,000, Tennessee requires a reviewed or audited financial statement prepared by a CPA. Lower limits can be supported by a compiled statement, but the larger the limit, the higher the assurance the Board demands.Board financial-statement rule (reviewed/audited statement above $1,500,000 limit)

A Tennessee contractor's balance sheet shows total assets of $900,000 and total liabilities of $520,000. What is the owner's equity (net worth)?

• a.$1,420,000
• b.$380,000✓
• c.$520,000
• d.$900,000

Owner's equity = assets - liabilities = $900,000 - $520,000 = $380,000. Because the monetary limit is based on net worth, an accurate balance sheet directly affects how large a project the contractor may take.Accounting equation: Assets = Liabilities + Owner's Equity

Tennessee bases part of the monetary limit on working capital. Working capital is defined as:

• a.Total assets minus total liabilities
• b.Gross revenue minus all expenses
• c.The cash on hand at year end only
• d.Current assets minus current liabilities✓

Working capital = current assets - current liabilities. It measures the short-term liquidity a contractor can put toward a job. Net worth (total assets minus total liabilities) is a different, broader measure; Tennessee uses the lesser of ten times each.Working capital = current assets - current liabilities

A Tennessee contractor's job costs $60,000, and she wants a 25% margin on the selling price. What is the correct bid price?

• a.$75,000
• b.$80,000✓
• c.$72,000
• d.$48,000

For a target margin, divide cost by (1 - margin): $60,000 / (1 - 0.25) = $60,000 / 0.75 = $80,000. Multiplying cost by 1.25 gives $75,000, which is only a 20% margin - the recurring markup-vs-margin trap.Margin: price = cost / (1 - margin)

Tennessee's bidding statute requires that a bid on a project requiring a license disclose what about the bidder (for many bids, on the outside of the bid envelope)?

• a.The bidder's Social Security number
• b.The bidder's license number, the classification, and the expiration date of the license✓
• c.Nothing; Tennessee bids are anonymous
• d.The owner's most recent tax return

Under Tennessee's bid law, a bid must include the contractor's license number, the classification allowing the work, and (for many public bids) that information on the bid envelope. A bid that omits it can be thrown out, because the contractor must be licensed to bid at all.T.C.A. §62-6-119 (bid law: license information required)

How many cubic yards of concrete are needed for a slab 20 ft by 30 ft, poured 6 inches thick (before any waste factor)?

• a.100 cy
• b.33.3 cy
• c.22.2 cy
• d.11.1 cy✓

Convert thickness to feet (6 / 12 = 0.5 ft), then cubic yards = (length x width x thickness) / 27 = (20 x 30 x 0.5) / 27 = 300 / 27 = about 11.1 cy. There are 27 cubic feet in a cubic yard.Quantity takeoff: cubic yards = (L x W x thickness in ft) / 27

Under Tennessee's mechanics' and materialmen's lien law, a prime (general) contractor who contracts directly with the owner generally must enforce the lien by filing suit within what period after the work is completed?

• a.Within one year after completion of the work✓
• b.Within 30 days after completion
• c.Within five years after completion
• d.There is no time limit once work stops

A prime contractor's lien in Tennessee continues for one year after the work is completed or abandoned, and suit to enforce it must be filed within that year. Missing the one-year deadline extinguishes the lien, leaving only ordinary contract remedies.T.C.A. §66-11-106, §66-11-115 (prime contractor's lien)

Two chains of work must both finish before final inspection. Chain A totals 4 + 6 + 5 = 15 days; Chain B totals 4 + 3 + 3 = 10 days. How much float does Chain B carry?

• a.0 days
• b.10 days
• c.5 days✓
• d.15 days

Chain A is the longer (critical) path at 15 days; Chain B totals 10 days. Float on the non-critical chain equals the difference: 15 - 10 = 5 days. Chain B can slip up to five days before it would delay completion.CPM scheduling (float = critical path duration - path duration)

On Tennessee construction contracts, the amount of retainage that may be withheld from progress payments is capped by statute at what percentage, and the retained funds must be deposited where?

• a.10%, held by the owner
• b.5%, deposited into a separate, interest-bearing escrow account✓
• c.15%, held by the general contractor
• d.There is no cap; the contract controls

Tennessee caps retainage at 5% of the amount of each progress payment and requires the retained funds to be deposited into a separate, interest-bearing escrow account. The cap protects the contractor's cash flow, and improper withholding carries penalties.T.C.A. §66-34-104 (retainage cap and escrow)

Extra work outside the original Tennessee contract scope should be authorized by:

• a.A verbal 'go ahead' from the owner only
• b.A signed written change order stating the added scope, price, and time✓
• c.Recording a mechanic's lien
• d.Pulling a new building permit

Added or changed scope should be authorized by a written change order signed by both parties that sets out the added work, its price, and any schedule impact. Relying on verbal approvals is a leading cause of unpaid extras and disputes.Construction contract administration (change orders)

Which contract document is the 'rulebook' that defines notice, claims, changes, payment, and dispute-resolution provisions and is referenced by the owner-contractor agreement?

• a.G703 - Continuation Sheet
• b.A701 - Instructions to Bidders
• c.A W-9 tax form
• d.A201 - General Conditions of the Contract for Construction✓

A201 (current edition A201-2017) is the general conditions - the rulebook for owner, contractor, and architect covering notice, claims, changes, payments, and disputes. A701 governs bidding, and G703 is payment-application backup.AIA A201-2017 General Conditions

Which statement about Tennessee state income tax is correct as it affects a contractor's payroll?

• a.Tennessee has no state income tax on wages; the Hall income tax on certain investment income was fully repealed effective 2021✓
• b.Tennessee imposes a flat 6% tax on all wages
• c.Tennessee imposes a graduated income tax up to 9%
• d.Tennessee taxes only overtime wages

Tennessee does not tax wage income, and the Hall tax (which had applied to some interest and dividend income) was fully repealed effective January 1, 2021. So there is no Tennessee income-tax withholding on payroll, though federal withholding still applies.Tennessee has no state income tax on wages (Hall income tax repealed 2021)

When a Tennessee contractor buys materials that will be permanently installed into real property under a lump-sum contract, who generally owes sales or use tax on those materials?

• a.The owner pays sales tax on the full contract price
• b.Materials for real property are always exempt from tax
• c.The contractor, as the consumer of the materials✓
• d.The material supplier absorbs the tax and no one pays it

A lump-sum real-property contractor is treated as the consumer of the materials and owes sales or use tax on the cost of those materials, rather than collecting tax from the owner like a retailer. The tax is a cost the contractor builds into the bid.Tennessee sales and use tax (contractor as consumer of materials)

In Tennessee's construction industry, at how many employees does workers' compensation coverage generally become mandatory (stricter than the five-employee threshold for most other industries)?

• a.Only at 25 or more employees
• b.At ten or more employees
• c.At five or more employees
• d.At one or more employees✓

Tennessee's construction industry is the strict case: employers providing construction services must carry workers' compensation coverage even with a single employee. Most non-construction Tennessee employers are not required to carry coverage until they have five or more.T.C.A. §50-6-902 (construction services providers)

What do the federal Form I-9 and Form W-4 each accomplish for a new hire?

• a.The I-9 sets federal income-tax withholding; the W-4 verifies work eligibility
• b.The I-9 verifies the worker's identity and authorization to work; the W-4 tells the employer how much federal income tax to withhold✓
• c.Both forms are filed with the IRS at the time of hire
• d.The I-9 reports year-end wages; the W-4 reports nonemployee compensation

Form I-9 verifies a new hire's identity and work authorization (and is retained, not filed). Form W-4 tells the employer how much federal income tax to withhold. Tennessee has no state income tax, so there is no state withholding form.USCIS Form I-9 / M-274; IRS Form W-4

Construction workplace safety in Tennessee is enforced by which agency?

• a.TOSHA (Tennessee OSHA), an OSHA-approved state plan within the Department of Labor and Workforce Development✓
• b.The Board for Licensing Contractors
• c.The Internal Revenue Service
• d.There is no workplace-safety enforcement in Tennessee

Tennessee operates its own OSHA-approved state plan, TOSHA, within the Department of Labor and Workforce Development. It enforces safety standards at least as effective as federal OSHA, so Tennessee contractors answer to TOSHA on the jobsite.T.C.A. Title 50, Ch. 3 (TOSHA state plan)

A work-related fatality on a Tennessee jobsite must be reported to the OSHA authority within how many hours?

• a.24 hours
• b.48 hours
• c.8 hours✓
• d.72 hours

A work-related fatality must be reported within 8 hours of the employer learning of it. An in-patient hospitalization, amputation, or loss of an eye carries a 24-hour clock. The 8-hour fatality deadline is the one the exam most often tests.29 CFR 1904.39 (severe-injury reporting), applied through TOSHA

On a project with the three standard construction bonds, which bond protects subcontractors and suppliers if the general contractor fails to pay them?

• a.The bid bond
• b.The performance bond
• c.The license bond
• d.The payment bond✓

The payment bond guarantees that the contractor pays its subcontractors and suppliers, so it protects them. A bid bond protects the owner against a low bidder that backs out; a performance bond protects the owner by assuring completion.Surety bonds (payment bond protects subs and suppliers)

Which insurance covers a building under construction against losses such as fire, wind, and theft of materials during the project?

• a.Workers' compensation insurance
• b.Builder's risk insurance✓
• c.Commercial auto liability insurance
• d.Group health insurance

Builder's risk (course-of-construction) insurance covers the structure and materials while the project is being built, against perils such as fire, wind, and theft. Workers' compensation covers employee injuries, and auto liability covers vehicles - different risks entirely.Property/casualty insurance (builder's risk)