DEF Construction was cited for unlicensed activity. The project value was $750. What is the minimum civil penalty they face?
Correct Answer
C) $2,250
Under B&P Code Section 7028, unlicensed activity penalties are the greater of $500 or three times the project value. 3 × $750 = $2,250.
Why This Is the Correct Answer
Under B&P Code Section 7028, the civil penalty for unlicensed activity is the greater of $500 or three times the contract amount. Three times $750 = $2,250, which is greater than $500, so the penalty is $2,250.
Why the Other Options Are Wrong
Option A: $1,000
$1,000 is incorrect. While greater than $500, this does not reflect the correct calculation. The formula is the greater of $500 or 3× the contract amount. 3 × $750 = $2,250, which is the correct answer.
Option B: $200
$200 is incorrect. This is less than the minimum $500 floor set by B&P Code Section 7028 and does not reflect any standard penalty calculation.
Option D: $500
$500 is incorrect. While $500 is the minimum floor in the penalty formula, the 3× calculation yields $2,250, which is higher. The law requires the greater of the two amounts, so $2,250 applies.
Memory Technique
The penalty formula: MAX($500, 3 × contract value). Think 'triple or five-hundred, whichever hurts more.' For small contracts under $167, $500 wins. For contracts over $167, triple wins — $750 × 3 = $2,250.
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