Business FinancesQuestion 661 of 1632

A Responsible Managing Employee (RME) differs from a Responsible Managing Officer (RMO) in that an RME must:

a.Be related to one of the owners by blood or marriage
b.Own 10% or more of the shares of the licensed entity
c.Hold a Class A licence himself
d.Be a bona fide employee working at least 32 hours

Explanation

An RMO is an officer of the licensed entity; an RME is a bona fide employee permanently employed by it, and 16 CCR §823 requires a qualifier who is not a bona fide owner to exercise direct supervision and control for at least 32 hours a week or 80 percent of the hours the business operates, whichever is less. Ownership of 10 percent or more is what relieves a qualifier of that hours test, so it describes the exemption rather than the RME. Family ties appear nowhere in §7068.1. And the licence class follows the work the entity is qualified for, not a personal credential the RME must hold.

Law Reference: B&P §7068.1; 16 CCR §823

This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →

Practice all 1632 questions free — no signup required.

Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →

Related questions on this topic

Last reviewed: · editorial process

PrepPass team · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
Report