California Law and Business Practice Test
Ten free practice questions covering the main sections of the CSLB Law and Business exam, with answers and explanations.
Quick answer
Below are ten original practice questions that cover licensing, contracts, employment, safety, insurance and business finances, the main sections of the CSLB Law and Business exam. Answer each one before reading the explanation, then focus your study on the sections you miss.
Practice Questions
Question 1
Above what total contract amount (labor and materials) does construction work generally require a California contractor license?
- a. $500
- b. $750
- c. $1,000
- d. $5,000
Answer: c. Work of $1,000 or more in combined labor and materials requires a license, as does any job that needs a building permit or uses employees.
Question 2
On a home improvement contract, the down payment may not exceed:
- a. 10% of the contract price or $1,000, whichever is less
- b. 10% of the contract price or $1,000, whichever is more
- c. 25% of the contract price
- d. $500
Answer: a. California limits home improvement down payments to 10% of the contract price or $1,000, whichever is less.
Question 3
A homeowner under 65 who signs a home improvement contract at home generally has how long to cancel it?
- a. 24 hours
- b. Three business days
- c. Seven calendar days
- d. Ten calendar days
Answer: b. The standard right to cancel is three business days. Homeowners 65 or older have five business days.
Question 4
How soon must an employer report a serious workplace injury to Cal/OSHA?
- a. Within 8 hours
- b. Within 24 hours
- c. Within 3 days
- d. Within 30 days
Answer: a. Serious injuries, illnesses and deaths must be reported to Cal/OSHA immediately, and no later than 8 hours after the employer knows.
Question 5
Which written safety program must every California employer have?
- a. A hazard communication poster only
- b. An Injury and Illness Prevention Program
- c. A fleet safety program
- d. A respiratory protection program
Answer: b. Title 8 requires every employer to establish and maintain an Injury and Illness Prevention Program (IIPP).
Question 6
How often must an active contractor license be renewed?
- a. Every year
- b. Every two years
- c. Every three years
- d. Every four years
Answer: b. Active licenses expire every two years. Inactive licenses are renewed every four years.
Question 7
A license qualified by a Responsible Managing Employee must file a Bond of Qualifying Individual of:
- a. $7,500
- b. $12,500
- c. $25,000
- d. $100,000
Answer: c. The Bond of Qualifying Individual is $25,000.
Question 8
A limited liability company must file an LLC Employee/Worker Bond of:
- a. $25,000
- b. $50,000
- c. $100,000
- d. $250,000
Answer: c. LLCs need a $100,000 Employee/Worker Bond in addition to the contractor bond and liability insurance.
Question 9
Rent for the company’s main office is best classified as:
- a. A direct job cost
- b. Overhead
- c. A capital asset
- d. Profit
Answer: b. Office rent is not tied to one project, so it is an overhead (indirect) cost spread across all jobs.
Question 10
Within how many days must CSLB be notified of a change in the business’s officers?
- a. 15 days
- b. 30 days
- c. 60 days
- d. 90 days
Answer: d. Changes of personnel of record must be reported to CSLB within 90 days.
How Did You Do?
- 9 or 10 correct: keep practicing with full timed tests to stay sharp.
- 6 to 8 correct: review the sections you missed, then try a new set of questions.
- 5 or fewer: start with the study guide and a structured plan before more practice tests.
See the Law and Business study guide for every section and its weight.
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Content reviewed against CSLB sources: November 2026
- CSLB: Law and Business examination study guide (PDF)
- CSLB: Before applying for the examination
- CSLB: Change in personnel
- CSLB: General renewal information
- CSLB: Bond information
- California Business and Professions Code section 7071.19
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California Law and Business Practice Test: FAQs
Are these questions from the real exam?
No. CSLB exam questions are confidential. These are original practice questions based on the topics in CSLB’s Law and Business study guide.
What sections are on the Law and Business exam?
Contracts, employment, business finances, safety, licensing, insurance and liens, and public works.
How many times can I take the Law and Business exam?
As many times as you need within 18 months of your application being accepted, waiting 21 days between attempts and paying a re-examination fee to PSI each time.