California CSLB Law & Business Practice Test 2025
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Free Practice Test (20 Questions)
1. What is the maximum legally allowed down payment for a home improvement contract in California?
Correct Answer: 10% of the contract price or $1,000, whichever is less. This is a critical consumer protection law that all contractors must follow for residential projects.
2. An employer must report a new hire to the Employment Development Department (EDD) within how many days?
Correct Answer: 20 days. This reporting is mandatory for all new employees and is used for purposes such as child support enforcement.
3. A "Preliminary Notice" must be served to the property owner within how many days of first furnishing labor or materials to preserve lien rights?
Correct Answer: 20 days. Failure to serve this notice in a timely manner can result in the complete loss of mechanic's lien rights.
4. If a contractor has employees, they are required by law to have which type of insurance?
Correct Answer: Workers' Compensation Insurance. It is mandatory in California for any business with even one employee. Operating without it can lead to severe penalties.
5. What is the minimum amount for a Contractor's License Bond in California?
Correct Answer: $25,000. This bond is a mandatory requirement for all active licensed contractors to provide a source of funds for consumers or employees harmed by the contractor.
6. If an employee quits without giving notice, the employer must provide their final paycheck within how many hours?
Correct Answer: 72 hours. If an employee is fired, their final wages are due immediately at the time of termination.
7. A change order to a home improvement contract is only legally enforceable if it is:
Correct Answer: In writing and signed by both the contractor and homeowner BEFORE the work is performed. Verbal agreements are not sufficient to alter the written contract.
8. An employer must report a serious work-related injury or death to the nearest Cal/OSHA office within:
Correct Answer: 8 hours. This is a strict and immediate reporting requirement for any serious injury or fatality.
9. After recording a mechanic's lien, a contractor must file a lawsuit to foreclose on the lien within:
Correct Answer: 90 days. If a lawsuit is not filed within this strict timeframe, the lien becomes legally unenforceable.
10. What is the primary factor in determining if a worker is an employee or an independent contractor?
Correct Answer: Who has the right to control the manner and means of the work being performed. If the hiring entity controls *how* the work is done, the worker is an employee.
11. A Home Improvement Salesperson (HIS) registration is required for individuals who:
Correct Answer: Solicit or sell home improvement contracts outside the contractor's normal place of business. This is a key consumer protection requirement.
12. An I-9 "Employment Eligibility Verification" form must be completed for:
Correct Answer: Every new employee. This form is used to verify an employee's identity and legal authorization to work in the United States.
13. Overtime pay in California is generally required for any hours worked over:
Correct Answer: Both 8 hours in a day AND 40 hours in a week. California has stricter daily overtime laws than federal law.
14. Before beginning any excavation, a contractor must contact Underground Service Alert (USA/811) at least:
Correct Answer: 2 business days before digging. This allows utility companies time to mark the location of their underground lines.
15. A contractor's license number must appear in:
Correct Answer: All forms of advertising. This includes contracts, business cards, websites, and vehicle signage.
16. The "Notice to Owner" in a home improvement contract explains the risks of what?
Correct Answer: Mechanic's Liens. It informs the owner that if subcontractors and suppliers are not paid, they could file a lien against the property.
17. A non-exempt employee is entitled to a 30-minute unpaid meal break if they work more than:
Correct Answer: 5 hours in a day. The meal break must be provided before the end of the fifth hour of work.
18. A "Stop Payment Notice" is a legal remedy used on which type of project?
Correct Answer: Public works projects. Since liens cannot be placed on public property, this notice is used to intercept funds owed to the prime contractor.
19. General Liability insurance primarily protects the contractor against:
Correct Answer: Claims of property damage or bodily injury to third parties. Injuries to employees are covered by Workers' Compensation insurance.
20. An "inactive" contractor's license must be renewed every:
Correct Answer: 4 years. An active license must be renewed every 2 years.
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How is this different from the free CSLB study guide?
The free CSLB guide tells you WHAT to study. Our practice exam teaches you HOW you'll be tested. We turn the dense legal text into exam-realistic multiple-choice questions with detailed explanations, so you can build the confidence and speed needed to pass.
Are these questions updated for the 2025 exam?
Yes. Our team reviews the CSLB curriculum and updates our question bank regularly to ensure you are studying the most current and relevant material for your exam.
Does this cover my specific trade exam (e.g., Plumbing, Electrical)?
No. This question bank is specifically and exclusively for the **California Law & Business exam**, which is a requirement for ALL contractor classifications. It does not cover individual trade exams.
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