CSLB Law and Business Exam Guide
What the California Law and Business exam covers and the numbers worth knowing cold, based on the CSLB study guide and the 2026 CSLB Law Book.
Most California contractor licence applicants take two exams: a trade exam for their classification and the Law and Business exam. The official sources are the CSLB Law and Business Study Guide and the 2026 CSLB Law Book.
Exam Format
The study guide describes a multiple-choice exam with four choices per question and one best answer. Some questions need arithmetic, and a calculator is provided. There is no penalty for guessing, so answer every question. The guide does not publish the item count or the pass mark.
What the Exam Covers
| Area | Weight |
|---|---|
| Business Organization and Licensing | 13% |
| Business Finances | 15% |
| Employment Requirements | 20% |
| Insurance and Liens | 12% |
| Contract Requirements and Execution | 21% |
| Public Works | 5% |
| Safety | 14% |
Experience Requirement
Under 16 CCR 825, you need at least four years of experience within the last 10 years as a journeyman, foreman, supervising employee or contractor in the classification you're applying for.
Numbers Worth Knowing
- Contractor bond: $25,000 (B&P 7071.6). LLCs also need a $100,000 bond for employee wages and benefits, plus liability insurance of at least $1 million.
- Down payment on home improvement: no more than $1,000 or 10% of the price, whichever is less.
- Service and repair contracts: $750 or less.
- Right to cancel: until midnight of the third business day after the buyer receives a signed copy.
- Paying subcontractors: within seven days of receiving a progress payment (B&P 7108.5).
- Preliminary notice: within 20 days of first furnishing labour or materials.
- Recording a lien: 60 days for a prime contractor or 30 days for a subcontractor after a Notice of Completion or Cessation is recorded, or 90 days if neither is recorded. You then have 90 days to file to foreclose.
- Unlicensed contracting: first conviction up to $5,000 and/or six months in county jail. CSLB citations carry a civil penalty of up to $15,000.
- Digging: call 811 at least two working days, and no more than 14 calendar days, before you dig. Tickets are valid for 28 days.
- Cal/OSHA: fall protection over 7½ feet, toolbox meetings at least every 10 working days, and shade when it's over 80°F.
How to Prepare
- Read the Law Book narrative chapters on licensing, home improvement, liens and workers' compensation.
- Learn the formulas: current ratio, quick ratio and working capital.
- Practise with timed mixed tests and review every explanation.
Common Questions
Can I be exempt from the Law and Business exam? CSLB sets the waiver rules. Check its application instructions for your situation.
Does the exam cover public works? Yes, at 5%. It covers prevailing wages, bonding and insurance. Our bank covers this area only lightly, so read the Law Book's public works material too.
Sources: CSLB Law and Business Study Guide, 2026 CSLB Law Book and Cal/OSHA Title 8 Construction Safety Orders.