The Law and Business Exam: What CSLB Puts on It, for C-10 Applicants
Every applicant for a California contractor license, electricians included, has to pass the Law and Business exam as well as the trade exam. It has 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%). It is closed book, multiple choice with four choices per question, and you get 3½ hours. None of it is wiring, which is exactly why strong electricians fail it.
Key facts
| Fact | Value | Source |
|---|---|---|
| Who takes it | All applicants, together with the trade exam | CSLB, Get Licensed to Build |
| Sections | Seven | CSLB Law and Business study guide |
| Time | 3½ hours | CSLB Examinations FAQ |
| Format | Multiple choice, four choices per question, one BEST answer | CSLB Law and Business study guide |
| Books allowed | None. Closed book | CSLB Law and Business study guide |
| Calculator | A calculator will be provided | CSLB Law and Business study guide |
| Where | PSI test centers; can be taken out of state | CSLB Examinations FAQ |
| Spanish version | Yes | CSLB Examinations FAQ |
What is on the Law and Business exam
These are the seven sections and their approximate weights from CSLB's study guide, with the topics CSLB lists under each.
| Section | Weight | Topics CSLB lists |
|---|---|---|
| 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 employees, 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 requirements, bonding requirements, insurance requirements |
| Safety | 14% | Training and reporting requirements, general safety, hazardous/unknown materials |
Contracts and employment are the two biggest sections. Public Works is the smallest. If your study time is short, that table tells you where it goes.
What the questions look like
CSLB's study guide prints three sample questions. One of them asks what determines how often an employer's payroll deposits are made to the IRS; the correct answer is the amount of payroll liability. That is the flavor of the exam: exact rules from tax, labor and contract law, asked in the "BEST answer" style. Some questions require mathematical computation, and there is no penalty for guessing.
What CSLB says to study
The study guide's reference list for this exam includes:
- the California Contractors License Law & Reference Book,
- the California Employer's Guide (DE 44) from the Employment Development Department,
- the California Labor Code,
- the California Financial Code (regarding 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 Public Works Manual from the Department of Industrial Relations, and
- the Cal/OSHA safety orders.
CSLB's Get Licensed to Build guide says free access to the Law & Reference Book is available on CSLB's website. Start there; it is the backbone of the exam.
Taking it
- Time: 3½ hours.
- Where: in person at a PSI test center. Unlike the trade exam, the Law and Business exam can be taken out of state.
- Language: a Spanish version is available.
- Results: you get a printed report before you leave. A passing report does not show your score; a failing report shows your overall score and how you did on each section.
- Retakes: after 21 calendar days, inside the 18 months your application gives you to pass. Exam results are good for five years, so if you pass Law and Business and fail the trade exam, you only retake the trade exam.
Why strong electricians fail it
Because they study the trade and walk in cold on this one. Nothing on the table above is about wiring. Payroll deposit rules, lien remedies, contract requirements and prevailing wage are learned facts, not field instincts, and the exam asks for the BEST answer among four that can all sound reasonable.
The fix is simple and boring: give it its own study time, weighted the way CSLB weights it.
Sources
- CSLB License Examination Study Guide: Law and Business
- CSLB Examinations Frequently Asked Questions
- CSLB, Get Licensed to Build
Last reviewed: 2026-10-15. Every fact above is quoted from the CSLB document it cites and checked by code against our stored copy of that document.
See where you stand on both exams
The free 10-question C-10 practice test covers the trade topics and the Law and Business topics, and shows you, section by section, where you would lose points today. No account needed.
The full course is $148.75 one time: lessons for both exams, practice questions with written explanations, and timed practice exams, in English and Spanish. See what is included.