Business FinancesQuestion 665 of 690
When is a Bond of Qualifying Individual (BQI) required, separate from the standard $25,000 Contractor License Bond?
a.When the licensee employs more than 10 workers
b.When the licensee elects to self-insure workers' compensation
c.When the licensee operates in more than one CSLB classification
d.When the qualifying individual is an RMO or RME who is NOT a bona fide owner of 10% or more of the licensed entity — to provide additional security in case of the qualifier's failure to supervise
Explanation
Bus. & Prof. Code §7071.9 requires a separate $25,000 Bond of Qualifying Individual whenever the RMO or RME is not a bona fide owner of at least 10% of the licensed entity. The rationale: when a non-owner qualifier 'rents' their experience to the business, the BQI provides extra recourse for the public if supervision fails. The 10-employee, self-insurance, and multi-classification options are unrelated to §7071.9. A bona fide owner-qualifier (10%+) is exempt from the BQI requirement because their ownership stake is presumed to align supervision incentives.
Law Reference: Bus. & Prof. Code §7071.9Practice all 690 questions free — no signup required.
Related questions on this topic
- Under Bus. & Prof. Code §7071.11, when claims against a contractor's $25,000 license bond exceed the bond's penal sum, the bond proceeds are distributed in which order of priority?
- Instead of filing a contractor's license bond, a licensee may deposit cash or equivalent securities with the State Treasurer under Bus. & Prof. Code §7071.12. To replace the $25,000 license bond entirely with cash, the licensee must deposit:
- A Responsible Managing Employee (RME) differs from a Responsible Managing Officer (RMO) in that an RME must:
- A general contractor classifies its on-site framer as an independent contractor and issues a 1099-NEC instead of a W-2. If the framer is later determined to be a W-2 employee under AB-5 and federal common-law tests, the general contractor will likely be liable for:
- On a private construction project, the owner is generally entitled to withhold from each progress payment a 'retention' (retainage) of up to:
- Effective January 1, 2023, the California Contractor License Bond was increased to:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California CSLB Contractor License Law & Business Exam · How we review