The California Contractors State License Board (CSLB) handles everything related to acquiring and maintaining a California contractors license. The general rule is that a person or entity needs a license if they construct or alter any of the following:
- parking facility
- railroad, excavation
- or other structure
…if the total cost (labor & materials) is $500 or more. That may seem excessive, but a state contractor license is an affordable and valuable investment. Plus, considering the potential penalties, it’s well worth avoiding the trouble faced by unlicensed contractors.
The California Contractors State License Board
Before getting too deep into licensure requirements, let’s look at the organization charged with enforcing them – the California Contractors State License Board (also known as the CLSB).
The board was established in 1929, initially under the Department of Professional and Vocational Standards. The CLSB now forms part of the Department of Consumer Affairs. Their mission statement, is to “protect consumers by regulating the construction industry through policies that promote the health, safety and general welfare of the public in matters relating to construction.”
What the Does the CSLB Do?
The CSLB headquarters is located in Sacramento, but has other field offices throughout the state. It is headed by a 15-member board appointed by the Governor and the State Legislature. The Board is comprised of labor representatives, building officials, and contractors. They oversee licenses and regulate the 44 different contractor classifications, along with Home Improvement Salespeople as well.
Currently, the CSLB currently has over 300,000 active licenses. The main office processes license applications and renewals, reviews and records any disciplinary actions, and maintains a licensed contractor database. While the field offices investigate consumer complaints regarding unlicensed contractors.
California Contractors License Database
Through the California Contractors State License Board website (which you can find here), you can actually access the licensed contractor database. This allows you to look up any potential contractor to search the status of the contractor’s license. The page also provides a “most wanted list” of unlicensed contractors who have had multiple complaints filed against them. So before you hire a contractor, it’s a good idea to check the California Contractors State License Board to see the status of their license.
The CLSB also has a Statewide Investigative Fraud Team (SWIFT). This team conducts construction site sweeps and sting operations to reduce unlicensed contractors or those who don’t have the proper insurance coverage. SWIFT averages at least one sting/sweep per week throughout the State of California – so the California Contractors State Licensing Board is always on the prowl.
California Contractors License: Which Type Is Needed?
It’s important to have a California contractors license, but there are 43 (!) different classifications split among 3 classes. So which one do you need?
They’re as easy as A, B, C…
- Class A licenses are for general engineering contractors.
- Class B licenses are for general building contractors, which is required in connection with any structure built, being built, requiring the use of two or more unrelated trades or crafts.
- Class C licenses apply to specialty contractors. This class has 41 different types of licenses, ranging from swimming pool contractors, roofing, painting, electrical, plumbing, HVAC services and so on.
The bare minimum requirements to apply for a license is:
- you must be at least 18 years old
- have a social security number
- have at least 4 years experience in the past 10 years
- and must have passed the state examination.
The examination consists of a legal and business section, and in the case of Class C licenses, a specific trade section as well.
Once the exam has been passed (or waived) the applicant must then submit fingerprints, any fees and proof of worker’s comp insurance, a CA contractor bond (around $15,000) and liability insurance. A contractor license in California is valid for 2 years before a renewal is required.
Minor Work Exception
As I stated at the beginning of the post, any job over $500 requires a California contractors license. So, if the contract is under $500, including labor and materials you can work without a license. But be careful, because this might not be as straightforward as it seems.
Luckily, the CSLB gives the example: If you are remodeling the kitchen for a total cost of $6,000, and then sublets the flooring work which is only $300 the flooring worker is not exempt from licensure. This is because the overall project cost was over $500.
Also, there is another exception to the licensing requirement for the “sale of installation of finished products that do not become a fixed part of the structure”. These types of jobs can be for any contract price, as long as the product is pre-manufactured and does not become permanently attached to the structure.
California takes unlicensed contract work very seriously. They hit you where it hurts – both in your wallet and with potential criminal penalties (we’ll get to those in a second). For example, if you are supposed to have a license, and do not, you have ZERO recourse for payment in any way. Zilch. Nada.
Under California law, an unlicensed contractor “may not bring or maintain” any action for compensation for performing any act or contract for which a license is required unless the contractor was duly licensed “at all times” during performance of the job. That’s harsh! Keep the phrase “at all times” in mind. Even if you were licensed when you started a project, if your license expires or is suspended for any reason, the same penalties apply.
Perhaps even more severe than that is the “disgorgement” principle. It’s an ugly sounding word, but basically, it just means “give back” ill-gotten gains. An unlicensed contractor may be required to disgorge (“give back”) any past compensation. So any money that you fronted for materials and labor are now lost. What’s even worse? You may end up paying taxes on the “money earned” as well!
Criminal Penalties? They’re on the Table, Too.
Now on to criminal penalties! A first offense of unlicensed contractor work is a misdemeanor which can include up to 6 months jail time and/or $5,000 fine. That doesn’t include administrative fines that can range anywhere from $200 to $15,000.
A second offense comes with a mandatory 90 day jail time and a fine of either 20% of the total contract price or $5,000. If that wasn’t enough, you can face felony charges as well. If you illegally use another person’s license or pretend to be licensed, it’s considered a felony. So is unlicensed contract work during a declared state of emergency or disaster (unless the rules have been relaxed by the appropriate governing bodies).
California takes unlicensed contractor work very seriously. The Statewide Investigative Fraud Team (SWIFT) works alongside the California Contractors State License Board and performs regular stings and sweeps of construction sites to find potential violations. If you are a contractor or sub in California, it’s well advised to not perform any work on a construction project without a valid California contractors license in place at all times! Without it, you could be in trouble.