California Law and Business Exam Study Guide
What the CSLB Law and Business exam covers, how much each section is worth and how to study each one.
Quick answer
The Law and Business exam has seven sections: Contract Requirements and Execution (21%), Employment Requirements (20%), Business Finances (15%), Safety (14%), Business Organization and Licensing (13%), Insurance and Liens (12%) and Public Works (5%). It is a closed book, multiple choice exam that every qualifier takes, whatever the classification.
The Seven Sections and Their Weights
| Section | Weight | Topics |
|---|---|---|
| Business Organization and Licensing | 13% | Company organization, licensing requirements, advertising and subcontracting |
| Business Finances | 15% | Cash management, budget and planning, taxes, financial reporting |
| Employment Requirements | 20% | Hiring, supervising and training employees, evaluation and record keeping, payroll |
| Insurance and Liens | 12% | Workers’ compensation insurance, business insurance, liens and other remedies |
| Contract Requirements and Execution | 21% | Bidding, cost control, project organization, contracts, payments |
| Public Works | 5% | Prevailing wage, bonding and insurance requirements |
| Safety | 14% | Training and reporting requirements, general safety, hazardous and unknown materials |
CSLB notes that the percentages are approximate. They come from the official Law and Business study guide for exams scheduled on or after December 1, 2021.
How to Study Each Section
- Contracts (21%): home improvement contract rules, down payment limits, change orders, bidding and cost control.
- Employment (20%): hiring forms, payroll taxes, wage and hour rules and record keeping. The California Employer’s Guide and IRS Publication 15 are key.
- Finances (15%): cash flow, budgets, overhead versus job costs, depreciation and financial statements.
- Safety (14%): Cal/OSHA training and reporting rules, the Injury and Illness Prevention Program and hazardous materials.
- Licensing (13%): who needs a license, classifications, business entities, advertising and CSLB rules.
- Insurance and liens (12%): workers’ compensation, business insurance, preliminary notices and mechanics liens.
- Public works (5%): prevailing wage, payment and performance bonds and insurance on public projects.
Reference Materials CSLB Recommends
- California Contractors License Law and Reference Book (also viewable on CSLB’s website)
- California Employer’s Guide (DE 44) from the Employment Development Department
- IRS Publication 15 (Circular E), Employer’s Tax Guide
- Public Works Manual from the California Department of Industrial Relations
- Cal/OSHA Construction Safety Orders (Title 8)
- NASCLA Contractors Guide to Business, Law and Project Management
- California Labor Code
Test Strategy
- Read every question and all four choices before answering. Questions are written to have one BEST answer.
- Some questions need math, such as payroll or markup calculations. A calculator is provided.
- There is no penalty for guessing, so answer every question.
- Practice with Law and Business practice questions until you score well across every section.
Study With CSLP
CSLP has prepared California contractors for their CSLB exams since 2013. Our courses include help with your CSLB application, online law and trade books with practice questions and weekly live classes in English and Spanish, from $595. Compare course options.
Content reviewed against CSLB sources: November 2026
- CSLB: Law and Business examination study guide (PDF)
- CSLB: Examination study guides
- CSLB: Step 7, studying for the examination
- CSLB: Examinations frequently asked questions
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California Law and Business Exam Study Guide: FAQs
Is the Law and Business exam open book?
No. It is a closed book exam. No reference materials may be used during the exam.
Is the Law and Business exam the same for every license?
Yes. Every qualifying individual takes the same Law and Business exam, regardless of classification.
Can I take the Law and Business exam in Spanish?
Yes. It is one of ten CSLB exams offered in Spanish. See the CSLB exam in Spanish.
Do I need to retake Law and Business to add a classification?
Usually not, if the qualifier already passed it. The qualifier normally takes only the new trade exam.