EN ES
California · PSI

California Contractor Law and Business Exam

California Contractor Law and Business exam prep checklist: bulletin facts, topics and their weights, reference books, sample questions with answers, test-day steps.

210 minutes 7 topics 1:49 per question Closed book 505 questions in pool Bulletin: December 2021
Full practice exam $9.95
  • 115 questions on a 210-minute clock, like the real exam
  • Every answer explained; code questions cite the book and section so you can find it in your own copy
  • A fresh draw from 505 questions each attempt
Try 10 free questions
Study Course $59.95/month
  • Unlimited full exams, topic quizzes and study briefs
  • Cancel anytime
See the study course
Not sure which exam you need? Text us: (813) 582-5360
Texts preferred · 9am–9pm Central
On this page

California Contractor Law and Business Exam Prep Checklist

Everything for the California Contractor Law and Business exam in one place: the bulletin's key facts, the topics and each one's share of the exam, the reference books, sample questions with answers, and a prep checklist. PSI gives the exam.

California Contractor Law and Business Exam Facts

From the official bulletin:

Questions Not published by the board
Time limit 210 minutes
Passing score Not published by the board
Books in the exam room Closed book (no books in the room)
Exam fee $51.43

On exam day

  • The examination is multiple choice with four choices per question and only one BEST answer, with no penalty for guessing.
  • One valid, non-expired government-issued photo ID from the listed types is required before you may test, and the name must match your application.
  • You must arrive at the examination site at least 30 minutes before your scheduled appointment time.
  • A calculator is provided for the examination, and candidates may not bring their own.
  • Numerous personal items, including calculators, textbooks, notes, personal pens or pencils and watches, are prohibited in the testing room, while timing mechanisms are available in the room and on screen.

Scheduling, changes and retakes

  • You schedule the examination through PSI either online at https://test-takers.psiexams.com/cacon or by telephone at (877) 392-6422.
  • Board approval is required before scheduling, and examination eligibility lasts 18 months from the date the Board deems you eligible.
  • Cancelling or rescheduling at least two days before the examination date preserves your fee, but notice must be given through the PSI website or by speaking to a PSI representative.
  • Missing the appointment, arriving after the examination start time, or failing to present proper identification causes forfeiture of the examination fee.
  • You receive a printed score report at the check-in location immediately after the examination, and scores are not given over the telephone.
  • You must wait 21 calendar days after each attempt before testing again, and you may test as many times as needed within the 18-month eligibility period.
  • Passing candidates receive further instructions by mail from CSLB, because the score report is not a license.

Source: Contractors State License Board Licensing Examination Information Guide — Law and Business. Check the bulletin before test day: fees and rules can change.

California Contractor Law and Business Exam Topics

The official content outline has 7 topics:

Topic Share of the exam
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%

California Contractor Law and Business Exam Prep Checklist

  • Study the topics in the outline. This is a closed-book exam, so you work from memory.
  • Start with the biggest topics: Contract Requirements and Execution and Employment Requirements (41% of the exam).
  • Take our timed practice exams until you pass several in a row.
  • Read the explanation and reference for every question you miss.

California Contractor Law and Business Exam Reference Books

CSLB lists these study resources (none may be brought into the exam room): California Contractors License Law & Reference Book; California Employer's Guide (DE 44), EDD; California Financial Code (PACE program); California Labor Code; Get Licensed to Build (CSLB); Maintain and Change Your License (CSLB); NASCLA Contractors Guide to Business, Law and Project Management, 14th Edition; IRS Publication 15 (Circular E), Employer's Tax Guide; the Department of Industrial Relations (DIR) Public Works Manual; and the Cal/OSHA General Industry & Electrical Safety Orders and Construction & Electrical Safety Orders (California Code of Regulations, Title 8).

Test Day Checklist

  • First pass: answer every question you know. Bookmark the rest. Every exam lets you return to bookmarked questions (some lock them once you take a break).
  • Second pass: work through your bookmarks.
  • Last step: answer anything still blank. A blank can't earn a point.

Study Tips

Reading the material cover to cover usually isn't enough to pass. This is a multiple-choice exam, and multiple choice rewards practice — the more questions you work through under real conditions, the more the terminology and question style become second nature.

Read the explanation for every question — right or wrong. Understanding the underlying rule lets you answer reworded questions you've never seen, instead of memorizing specific answers.

Several 25–30 minute sessions across the week beat one long cram. Spaced repetition moves facts into long-term memory so they stick through exam day.

Practicing against a ticking clock is the best way to beat exam-clock anxiety. Use these timed tests to build your pacing, so you learn to move steadily and never burn too long on a single question. By test day, the format feels routine.

California Contractor Law and Business Sample Questions

From our practice question bank, with answers and references:

Sample 1 — Safety

Question: Cal/OSHA requires a dust reduction system when powered tools are used to cut, grind, core, or drill concrete or masonry. Which of these operations is outside that dust-control requirement entirely?

  • A. Cutting block with a masonry saw
  • B. Core drilling a concrete wall
  • C. Grinding a concrete floor slab
  • D. Drilling in a downward direction

Correct Answer: D

The scope exceptions list downward drilling as an operation to which the section does not apply, along with stucco and plastering material, wall cladding and siding, powder-actuated tool work, and work incidental to installing concrete and masonry materials. Core drilling, saw cutting, and grinding of concrete or masonry remain covered and require a dust reduction system.

Reference: Cal/OSHA Title 8 Construction Safety Orders, §1530.1(a)

Sample 2 — Business Organization and Licensing

Question: Your limited partnership license lists two general partners and one limited partner. The sole limited partner disassociates from the partnership, and the general partners remain unchanged. What happens to the license?

  • A. The license continues with the general partners
  • B. The license continues as a general partnership
  • C. The license must be canceled by CSLB
  • D. The license is suspended for 90 days

Correct Answer: C

A limited partnership license may add or remove limited partners without cancellation only if all general partners remain the same AND at least one limited partner remains listed. If all limited partners leave, the partnership license must be canceled; a Disassociation Request must be filed within 90 days of the disassociation date.

Reference: Maintain and Change Your License (CSLB), Change in Personnel — Partner of a Limited Partnership

Sample 3 — Insurance and Liens

Question: A corporation's contractor license is qualified by a Responsible Managing Officer. A separate Bond of Qualifying Individual is NOT required if that RMO owns at least what percentage of the corporation's voting stock?

  • A. 5 percent
  • B. 51 percent
  • C. 20 percent
  • D. 10 percent

Correct Answer: D

An RMO who owns 10 percent or more of the voting stock of the corporation is not required to file a Bond of Qualifying Individual; instead, the RMO completes and submits a Bond of Qualifying Individual Exemption Certification. An RME, or an RMO owning less than 10 percent, must file the qualifier bond.

Reference: Maintain and Change Your License (CSLB), Bond Information – Bond of Qualifying Individual (B&P Code § 7071.9)

Sample 4 — Public Works

Question: A contractor is found to have performed work in violation of the skilled and trained workforce requirements. Absent a prior violation, the civil penalty may be assessed at up to ___ per month of work performed in violation (rising to up to $10,000 per month for a second or subsequent violation within three years).

  • A. $2,000
  • B. $5,000
  • C. $1,000
  • D. $3,000

Correct Answer: B

Public Contract Code § 2603 makes contractors and subcontractors liable for penalties of up to $5,000 per month of work performed in violation of the STW requirements, and up to $10,000 per month for a second or subsequent violation within a three-year period. Violations are enforced using the Labor Code §§ 1741 and 1742 process.

Reference: California Public Works Manual (Labor Commissioner), Section 7.2 / Public Contract Code § 2603

Online Practice vs. a PDF

  • Timed: you practice answering under time pressure, not just reading the material.
  • Bookmarks: flag questions and come back, the way you will on test day.
  • New sets: each attempt draws new questions from our bank.
  • Scored by topic: your results show which outline topics need more study.

Next Step

Frequently Asked Questions

How much does the California Contractor Law and Business Exam cost?
The exam fee is $51.43 per attempt, whether it is your first time or a repeat. This fee is not refundable or transferable.
How many questions are on the Law and Business exam, and what score do I need to pass?
CSLB does not publish the number of questions or the passing score for this exam. Your printed score report shows your overall score, and a failing report includes the number of items you answered correctly. Our practice exam uses 115 questions and a 72% target as its own practice setting, not as the official figures.
How do I schedule the California Contractor Law and Business Exam?
Once CSLB approves your application, you schedule and pay PSI directly. You can register online 24 hours a day at test-takers.psiexams.com/cacon, or call PSI at (877) 392-6422 Monday–Friday 4:30 a.m.–7:00 p.m. or Saturday–Sunday 8:00 a.m.–2:00 p.m. Pacific time.
How long is the Law and Business Exam appointment?
PSI schedules a 210-minute (3.5-hour) appointment. An on-screen tutorial of up to 15 minutes is provided before the exam begins and does not count against your exam time.
What topics are covered on the California Contractor Law and Business Exam?
The exam is divided into seven sections: Business Organization and Licensing (13%), Business Finances (15%), Employment Requirements (20%), Insurance and Liens (12%), Contract Requirements and Execution (21%), Public Works (5%), and Safety (14%). All percentages are approximate.
What should I study for the California Law and Business exam?
CSLB's listed study resources are the California Contractors License Law & Reference Book; the California Employer's Guide (DE 44) from EDD; the California Labor Code; the California Financial Code sections on the PACE program; CSLB's Get Licensed to Build and Maintain and Change Your License; the NASCLA Contractors Guide to Business, Law and Project Management, 14th Edition; IRS Publication 15 (Circular E), Employer's Tax Guide; the California Department of Industrial Relations Public Works Manual; and the Cal/OSHA General Industry, Construction and Electrical Safety Orders (California Code of Regulations Title 8). Many of these are free to view online at cslb.ca.gov, edd.ca.gov, irs.gov and dir.ca.gov.
Can I bring books or a calculator into the Law and Business Exam?
No. The exam is closed book—no books, notes, reading materials, personal calculators, phones, watches, or personal pens are allowed in the testing room. A calculator is provided by PSI for questions that require math.
What ID do I need to bring to the California Contractor Law and Business Exam?
You must present one valid, non-expired government-issued photo ID. Accepted forms include a U.S. driver's license or state ID card (any state), passport book or card, green card, U.S. military ID, or U.S. Employment Authorization Card. The name on the ID must match your application.
How early do I need to arrive at the exam center?
You must arrive at least 30 minutes before your scheduled appointment time. If you arrive after the exam start time you may be turned away and will forfeit your exam fee.
How many times can I retake the Law and Business Exam, and how long do I have?
You may retake the exam as many times as needed within your 18-month eligibility period, but you must wait 21 calendar days after each attempt. If your eligibility expires before you pass, you must reapply to CSLB.
How do I cancel or reschedule my exam without losing my fee?
Your cancellation notice must be received by PSI at least two days before the scheduled exam date. You must cancel through the PSI website or by speaking directly to a PSI customer service representative—voicemail and email are not accepted. Missing the deadline, not showing up, arriving late, or lacking proper ID all result in forfeiture of the fee.
What do I receive when I finish the Law and Business Exam, and does passing mean I have my license?
At the end of the exam you receive a printed score report. If you fail, the report shows your overall score including the number of items answered correctly. If you pass, the score report is not a license—CSLB will mail you further instructions.
Can I take the Law and Business exam with a translator?
Yes. CSLB allows you to test with a translator you arrange yourself, such as a friend, family member or someone you hire. The translator must be approved by CSLB before the exam is scheduled and cannot be employed in construction, real estate, finance, architecture, engineering or law. Call CSLB at (916) 255-3498 for the translator form.
Took this practice exam? Tell other candidates how it went.
10 free questions30 min · no account
Start Free Exam