LBExamThe Contractors State License Board (CSLB) does not publish how many questions are on the Law and Business exam, or what score passes. It does publish the shape of the paper, in the free study guide for the exam, and that is the document to plan from. The guide splits the paper into seven sections and gives each one a share of it, with a note that the percentages are approximate.
| Section | Share |
|---|---|
| Contract Requirements and Execution | 21% |
| Employment Requirements | 20% |
| Business Finances | 15% |
| Safety | 14% |
| Business Organization and Licensing | 13% |
| Insurance and Liens | 12% |
| Public Works | 5% |
Two sections make up two fifths of the paper between them. Public Works is one twentieth. Act on that first, because the study guide prints the sections in a different order from their weights. Read it top to bottom and the heaviest section comes fifth.
Contract Requirements and Execution, 21 percent
The guide lists bidding, cost control, project organization, contracts and payments under this heading. In practice it is the most detailed part of the license law. The home improvement contract rules in Bus. & Prof. Code s. 7159 run to pages of required content, down to the type size a notice is printed in, and s. 7030 requires a specified notice about CSLB in at least 10-point type on the written contracts of a prime contractor.
The consequence rules belong here too. Section 7031 is the one every contractor has heard of and few can quote: an unlicensed person cannot bring or maintain an action in any California court to collect compensation for work where a license was required, whatever the merits of the claim.
Employment Requirements, 20 percent
Hiring, supervising and training employees, evaluation and record-keeping, and payroll. Almost none of this is in the contractors law. The sources are the Labor Code and the two employer guides the study guide names, the Employment Development Department (EDD) California Employer’s Guide and Internal Revenue Service (IRS) Circular E. The questions ask which deposit is due when, what has to be recorded, and how long you keep it.
One piece does reach back into the license law. Under s. 7125, a current and valid Certificate of Workers’ Compensation Insurance, or a Certification of Self-Insurance, is a condition of issuing, reinstating, reactivating, renewing or continuing a license, except under subdivision (b) for a licensee with no employees who files the certifying statement and holds none of the C-8, C-20, C-22, C-39 or D-49 classifications.
Business Finances, 15 percent
Cash management, budget and planning, taxes, financial reporting. This is the most hands-on section of the paper, and the least of it is statute. The study guide’s own sample questions show it: one asks what determines how often payroll deposits are made to the IRS, and another asks which account the depreciation on a car bought for the sales staff is charged to. The depreciation one has no source section behind it. The payroll one does, and the source is federal: IRS Publication 15 (2026), the Circular E named above, sets the deposit schedule from the total tax liability reported over a lookback period, monthly at $50,000 or less and semiweekly above it.
Safety, 14 percent
Training and reporting requirements, general safety, and hazardous or unknown materials. The source is Title 8 of the California Code of Regulations, the California Division of Occupational Safety and Health (Cal/OSHA) safety orders, which the study guide names in both its general industry and construction forms.
The license law comes in at s. 7110, which makes willful or deliberate disregard and violation of the building laws of the state or of any political subdivision, and of the specific provisions it lists, a cause for disciplinary action against a licensee.
Business Organization and Licensing, 13 percent
Company organization, licensing requirements, advertising and subcontracting. The exemptions are worth as much study as the rule. Section 7048 puts work outside the chapter where the aggregate contract price is less than $1,000 and no building permit is required. The statute calls that work casual, minor or inconsequential.
Who can qualify a license is in s. 7065. That is where the responsible managing officer, manager, member and employee all come from, and it sets out how each form of business qualifies by examination.
Insurance and Liens, 12 percent
Workers’ compensation insurance, business insurance, and liens and other remedies. Two bodies of law meet here. The contractor’s bond is s. 7071.6: a $25,000 bond, required as a condition precedent to issuing, reinstating, reactivating, renewing or continuing a license. The lien and stop-payment remedies are Civil Code territory, and they run on deadlines, which closed-book exams love.
Public Works, 5 percent
The smallest section, and the most self-contained: prevailing wage requirements, bonding requirements, insurance requirements. It covers what changes when the customer is a public agency. The source is the Labor Code, with the Department of Industrial Relations Public Works Manual beside it.
At a twentieth of the paper, this is not where to spend a week. You are also the least likely to have worked in it, so give it a read at least.
What the guide does not tell you
The percentages are approximate, by the guide’s own note, so a five percent section could be a question or two either side. And the guide’s three sample questions show the form, not the syllabus. CSLB says its questions are written and reviewed by licensed contractors actively working in the trade, which goes some way to explaining why the finance section reads like a bookkeeping exam.
Sources
- Law and Business study guide, form 13E-LAW rev. 03-2026, CSLB
- Contractors State License Law, Business and Professions Code, Division 3, Chapter 9
- Get Licensed to Build, CSLB
- IRS Publication 15 (Circular E), for use in 2026, Internal Revenue Service