CSLB Contractor's Law & Business Practice Exam

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What must contractors provide employees if they choose to pay in cash?

Monthly bonuses
An annual salary statement
An employment handbook
A wage deduction statement

The correct answer is: A wage deduction statement

When contractors choose to pay their employees in cash, they are required to provide a wage deduction statement. This requirement ensures that employees have a clear and accurate record of their earnings and any deductions that may be taken from their wages. The wage deduction statement typically includes details about the gross amount earned, any withheld taxes, and other deductions such as health insurance, retirement contributions, or other benefits. Providing a wage deduction statement is essential for transparency and compliance with labor laws. It protects both the employee and the contractor by establishing a formal record of payments made, which is crucial for tax and legal purposes. This practice aligns with the requirements set by labor regulations, which mandate that employees receive documentation regarding their pay, regardless of the payment method used. The other options, while potentially beneficial in different contexts, do not meet the specific regulatory requirement tied to cash payments. Monthly bonuses, an annual salary statement, and an employment handbook serve different purposes and are not mandated in relation to cash payments.