Sen Lin, PrepPass Founder · Verified against California CSLB / Business & Professions Code · How we review

Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)

Free · printable · one page

CSLB Law & Business Exam Cram Sheet (2026)

The highest-yield facts on the CSLB Law & Business exam, grouped by the exam's real topic weights. Every number and deadline below is drawn from PrepPass's fact-checked CSLB chapters, each with its official California code citation. Print it, tape it to the wall, and drill the ones you miss.

Check your readiness →Practice these topics →

115questions

3.5 hrstime limit (210 min)

~73%to pass

7topic areas

Most-tested numbers, deadlines & dollar figures

The figures that decide the most questions. Memorize these first.

Contractor license bond	$25,000B&P §7071.6
Bond of Qualifying Individual	$25,000B&P §7071.9
Disciplinary bond	$15,000B&P §7071.17
License required (minor-work exemption)	Jobs $1,000+ (labor + materials). Old $500 figure was raised.B&P §7048
Written home-improvement contract required	When labor + materials exceeds $500B&P §7159
Home-improvement down payment cap	Lesser of $1,000 or 10% of the priceB&P §7159
Right to cancel (home improvement)	3 business days · 5 for seniors 65+B&P §7159
Preliminary notice (subs/suppliers)	Within 20 days of first furnishingCivil §8204
Record a mechanics' lien	After a notice of completion: 60 days (direct contractor) / 30 days (others). No notice: 90 days from completion.Civil §8412 / §8414
Foreclose (enforce) the lien	Within 90 days of recordingCivil §8460
Lien release bond	125% of the lien amountCivil §8424
GC pays subs after being paid	Within 7 daysCivil §8814
Overtime	1.5× after 8 hrs/day or 40 hrs/week · 2× after 12 hrs/dayLabor §510
Final pay	Discharge → immediately · Quit → last day (72+ hr notice) or within 72 hrsLabor §201–202
Waiting-time penalty	Up to 30 days of wagesLabor §203
Prevailing wage applies	Public works contracts of $1,000+Labor §1771
Payment bond on public works	Required over $25,000Civil §9550
Fall protection	Required at 6 ft or more8 CCR §1670
Trench protective system	Required at 5 ft deep or more8 CCR §1541.1
Report a serious injury/illness/death	To Cal/OSHA within 8 hoursLabor §6409.1

Contracts

~21% of the exam

Written home-improvement contract: Required when labor + materials exceeds $500; must state license number, dates, scope, price, and payment schedule; given to owner before work starts.· B&P §7159
Down payment cap: Lesser of $1,000 or 10% of the price (before finance charges). $5,000 job → $500 max; $30,000 job → $1,000 max.· B&P §7159
Progress payments: Tied to work performed / materials delivered — billing can't run ahead of the work done.· B&P §7159
3-day right to cancel: By midnight of the 3rd business day, no penalty; seniors 65+ get 5 business days; waivable only for a genuine emergency repair.· B&P §7159
Change orders: Must be in writing and signed by both parties before the extra work proceeds; unsigned 'extras' are often uncollectible.· B&P §7159
New home construction: Governed by its own statute — the $1,000 / 10% down-payment cap does NOT apply; down payment negotiated but reasonable.· B&P §7164
Bid: lowest responsible & responsive: Responsive = follows all bid instructions; responsible = qualified, licensed, bonded, capable.
Bid bond: Usually 10% of the bid; guarantees the winner signs and posts a performance bond.
Withdraw a bid: Only for a genuine clerical/math error (not judgment), with prompt written notice — generally within 5 days of bid opening.
Contract cost risk: Fixed-price/lump-sum → contractor bears overruns. Cost-plus & time-and-materials → owner bears cost risk. Unit-price → total varies with quantities.
Critical path: The longest chain of dependent activities; delay a critical task and the whole job finishes late. 'Float' = slack on non-critical tasks.
Prompt-payment penalty: Wrongful late payment ≈ 2% per month on the amount withheld, plus attorney's fees (no penalty in a good-faith dispute).
Retention: Often 5–10% of each progress payment, held until completion and released after acceptance.
Liquidated damages: A set $/day for unexcused late completion; enforceable only as a reasonable estimate of harm — a penalty clause is void.· Civil §1671
Residential arbitration clause: Must be set apart, in specified type, near the signature line, with a statutory jury-trial-waiver disclosure signed separately.· B&P §7191
Abandonment: Abandoning a project without legal excuse is grounds for CSLB discipline.· B&P §7107

Employment & Labor

~20% of the exam

Form I-9: Complete within 3 business days of the start date for every worker.· 8 USC §1324a
New-hire report to EDD: Within 20 days of the first day of work (form DE 34).· UI Code §1088.5
ABC test: All three prongs must be true for independent-contractor status: (A) free from control, (B) work outside your usual business, (C) worker has an independent trade. One fails → employee.· Labor §2750.3
Willful misclassification: Civil penalties of $5,000–$25,000 per violation, plus back taxes and unpaid overtime.· Labor §226.8
Overtime: 1.5× after 8 hrs/day or 40 hrs/week; 2× after 12 hrs/day; 7th consecutive day = 1.5× first 8 hrs then 2×.· Labor §510
Meal periods: 30-min unpaid meal after 5 hrs; a second after 10 hrs.· Labor §512
Rest breaks: Paid 10 minutes per 4 hours worked (or major fraction).· 8 CCR §11160
Missed break premium: One extra hour at the regular rate for a missed meal, plus one more for a missed rest period.· Labor §226.7
Minimum wage: Pay the highest applicable rate (state vs. city/county); it cannot be waived.· Labor §1182.12
Pay frequency: At least twice a month; construction employers may pay at least biweekly.· Labor §204
Final pay: Discharge → all wages immediately. Quit → last day if 72+ hr notice, else within 72 hrs.· Labor §201–202
Waiting-time penalty: One day's wages per day late, capped at 30 days.· Labor §203
Wage statement: Must show all 9 required items; penalties $50 (first) then $100 per employee per period, up to $4,000.· Labor §226
Payroll records: Keep hours-worked and wage records at least 3 years.· Labor §1174
Unlawful deductions: No deductions for shortages, breakage, tools, or ordinary negligence.· Labor §221
Accrued vacation: Treated as wages — 'use it or lose it' is illegal; paid out at the final rate at separation.· Labor §227.3
FEHA: Discrimination rules apply at 5+ employees; harassment rules apply to every employer; harassment-prevention training at 5+.· Gov. §12940 / §12950.1

Financial Management

~15% of the exam

Cash flow ≠ profit: Cash flow is timing; you can be profitable and still unable to pay this week's bills.
Direct vs. overhead: Direct costs belong to one job (labor, materials, subs, permits); overhead runs the whole company (rent, insurance, admin, license fees).
Markup vs. margin: Markup is a % of cost; margin is a % of price. A 25% markup = a 20% margin. Convert: margin = markup / (1 + markup).
Break-even: Fixed costs / (1 − variable-cost ratio). $8,000 fixed at a 0.60 ratio → $20,000/month. The denominator is the contribution margin.
Accounting equation: Assets = Liabilities + Owner's Equity. The balance sheet is a snapshot on one date.
Income vs. cash-flow statement: Income statement = profit over a period; cash-flow statement = cash movement. Profit on paper ≠ cash in the bank.
Cash vs. accrual: Cash basis records money when it moves; accrual records when earned/incurred. Long jobs use percentage-of-completion.
1099-NEC threshold: Issue a 1099-NEC to an independent contractor paid $600+ in a year; employees get a W-2.
Estimated taxes: Due April 15, June 15, Sept 15, Jan 15 (federal to IRS, California to the Franchise Tax Board).
Payroll taxes: FICA split 50/50; FUTA, CA SUI, and ETT paid by the employer; CA SDI withheld from the employee.
EIN & EDD: EIN (IRS) runs federal payroll/taxes; an EDD Employer Account Number runs California payroll taxes.
Simple interest: Principal × rate × time. $20,000 at 8% for 2 years = $3,200.
Working capital: Current assets − current liabilities; a current ratio above 1.0 is healthy.

Safety (Cal/OSHA)

~14% of the exam

IIPP: Every employer needs a written Injury and Illness Prevention Program (8 required elements) — no minimum headcount.· 8 CCR §3203
Cal/OSHA is stricter: Enforces Title 8 statewide; where state and federal rules conflict, the stricter California rule governs.· 8 CCR Title 8
Report serious injury/death: To the nearest Cal/OSHA office within 8 hours (hospitalization, amputation, loss of eye, serious disfigurement).· Labor §6409.1
Fall protection: Required at 6 ft or more — guardrails, personal fall arrest, or safety nets.· 8 CCR §1670
Excavation/trenching: Protective system (sloping, shoring, or trench box) at 5 ft or deeper; competent-person inspection daily and after rain.· 8 CCR §1541.1
Scaffolds: Must support 4× the intended load; erected/dismantled under a qualified person.· 8 CCR §1637
Ladders: Extend about 3 ft above the landing; inspect before use; firm, level footing.· 8 CCR §1675
Confined space: Test the atmosphere before entry, ventilate, issue a permit, station an attendant outside; never make an untrained rescue.· 8 CCR §5157
Hazard communication: Keep a Safety Data Sheet (16-section GHS format) for every hazardous chemical, accessible each shift; label and train.· 8 CCR §5194
Heat illness: ~1 quart of water per worker per hour; shade at 80°F; a 5-minute cool-down rest; high-heat procedures at 95°F.· 8 CCR §3395
PPE: Employer-required PPE must be provided at no cost to employees.· 8 CCR §3380
Injury log: Record on the Form 300 log (keep 5 years); post the Form 300A summary February 1 – April 30.· 8 CCR §14300
Lead & asbestos & silica: Assume lead paint before 1978; asbestos work requires Cal/OSHA registration; control respirable silica dust.· 8 CCR §1532.1 / §1529 / §1532.3

Business Organization & Licensing

~13% of the exam

Class A: General Engineering — fixed works needing engineering: roads, bridges, dams, pipelines.· B&P §7056
Class B: General Building — projects with 2+ unrelated trades, or framing/carpentry on a habitable structure.· B&P §7057
Class C: Specialty — 43 classifications, one trade each, examined and qualified separately.· B&P §7058
Experience: 4 years of journey-level (or higher) experience in the trade within the last 10 years; at least 1 year hands-on.· B&P §7068
RMO vs. RME: RMO = owner holding 20%+, may qualify more than one license; RME = employee with no ownership, may qualify only ONE active license.· B&P §7068
Eligible entities: Sole owner, partnership, corporation, LLC. A trust cannot hold a license. The license is non-transferable.· B&P §7065 / §7075.1
Entity change: A new legal entity (incorporating, converting, changing partners) needs a brand-new license application.· B&P §7075
License bond: $25,000 — protects consumers/claimants, not the contractor. A lapsed bond suspends the license.· B&P §7071.6
Qualifier & disciplinary bonds: Bond of Qualifying Individual $25,000 (RME, or RMO under 10%); disciplinary bond $15,000 when ordered by the CSLB.· B&P §7071.9 / §7071.17
Display the number: On all contracts, bids, business cards, advertising (incl. websites), and each commercial vehicle.· B&P §7030.5 / §7030
Unlicensed bar: An unlicensed contractor can't sue to collect for licensed work; a customer can even recover money already paid.· B&P §7031
License required: A license is required once labor + materials reach $1,000 (the old $500 minor-work threshold was raised).· B&P §7048
Discipline & renewal: Advisory → citation → suspension → revocation; citations public for 5 years. Renew every 2 years; expired 5 years = reapply.· B&P §7124.6 / §7141

Insurance, Bonds & Liens

~12% of the exam

Workers' comp trigger: One employee triggers mandatory coverage — no minimum headcount, in place before the first day of work.· Labor §3700
No coverage penalty: Automatic license suspension + stop-work order; penalties up to $10,000 per employee, capped at $100,000.· Labor §3722
No-fault / exclusive remedy: Benefits paid regardless of fault; workers' comp is generally the worker's only remedy against the employer.· Labor §3600 / §3602
DWC-1 claim form: Give the worker a DWC-1 within one working day of notice of injury.· Labor §5401
Treatment while claim reviewed: Up to $10,000 in medical care authorized before the claim is accepted or denied.· Labor §5402
Temporary disability: Pays about two-thirds of average weekly wages while recovering.· Labor §4653
Uninsured sub: Hiring an uninsured sub makes you the employer of its workers; an unlicensed worker is automatically your employee.· Labor §2750.5
CGL insurance: Covers third-party bodily injury and property damage — NOT your own employees (that's workers' comp).
Insurance vs. surety bond: A bond has three parties (principal, obligee, surety); the surety recovers from the contractor what it pays — a bond isn't insurance.
Mechanics' lien: Secures payment for work/materials on private property (can force a sale).· Civil §8200
Preliminary notice: Subs/suppliers serve it within 20 days of first furnishing; the prime contractor need not notice the owner.· Civil §8204
Record the lien: After a notice of completion: 60 days (direct contractor) / 30 days (others). No notice: 90 days from completion.· Civil §8412 / §8414
Enforce & clear: Foreclose within 90 days of recording; a lien release bond of 125% clears the lien from title.· Civil §8460 / §8424
Stop payment notice: Forces the owner or lender to withhold project funds on a private job.· Civil §8500

Public Works

~5% of the exam

What makes it public works: Public funds pay for the work (in whole or part) — regardless of who owns the property.· Labor §1720
Prevailing wage applies: On public works contracts of $1,000 or more; only contracts under $1,000 are exempt.· Labor §1771
Prevailing wage = base + fringe: Set by the DIR per craft and county; post the wage determination at the job site.· Labor §1773 / §1773.2
DIR registration: Register annually with the DIR before bidding and before award; agencies can't accept an unregistered contractor's bid.· Labor §1725.5
Certified payroll & apprentices: Submit certified payroll to the Labor Commissioner; employ apprentices from a DIR-approved program in the required ratio.· Labor §1776 / §1777.5
Payment bond: Required on public works over $25,000 — protects workers, subs, and suppliers.· Civil §9550
No lien on public property: The stop payment notice + payment bond replace the mechanics' lien on government land.· Civil §9350
Overtime & penalties: Overtime after 8 hrs/day or 40 hrs/week at the prevailing overtime rate; per-worker/per-day penalties for underpaying prevailing wage.· Labor §1815 / §1775

Now prove you know them

Reading numbers is not the same as recalling them under exam pressure. Take the free 10-question readiness check to find your weak topics, then drill them with adaptive practice — no signup, no paywall.

Check your readiness →Practice these topics →

Want the full picture? The complete 7-chapter CSLB Law & Business study guide is free online, and the PDF + EPUB eBook is $9.99. Read the study guide →

Every figure above is drawn from PrepPass's fact-checked CSLB Law & Business chapters and 2025-26 law-changes reference, each carrying its California Business & Professions Code, Labor Code, Civil Code, or Title 8 (Cal/OSHA) citation.

Study aid, not legal advice — always confirm the current rule with the official source (CSLB / California Legislature). Last verified: August 13, 2026.