If you’re looking to do construction work in California, getting licensed is a good place to start. Without the proper license, contractors can lose any and all rights to payment. It’s hard enough to get paid in construction as it is! In order to get a California contractors license, there are qualifications, applications, and exams along the way.
In this guide, you’ll get a better understanding of California’s licensing requirements and the process involved in getting one. You’ll also learn what can happen if you don’t have the appropriate license for your trade, and how it puts your payments at risk.
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Contractor Licensing in California
Contractor licensing in California is a function of the Contractor State Licensing Board (CSLB). Established in 1929, this governing body’s primary goal is to protect consumers from predatory contractors and fly-by-night crews. The CSLB works to establish trade standards, ethics, and sound business practices in the state.
In California, the CSLB works to ensure that contractors aren’t taking advantage of consumers. The board sets the requirements, standards, and testing for licensing. Generally speaking, the CSLB requires almost all contractors to carry a license, with a few exceptions.
But that’s not all. The Statewide Investigative Fraud Team (SWIFT) works alongside the CSLB and performs regular stings and sweeps of construction sites to find potential violations. The penalties can be steep — we’ll cover those further down.
Why Contractor License Matters
A license is not just some easy-to-come-by piece of paper. It’s important, both to the consumer and the contractor.
The CSLB’s entire purpose is to protect consumers from defective work and inexperienced contractors. If you’re considering hiring a contractor, be sure to check their license. Any project valued in excess of $500 requires a contractor to have, so don’t accept any excuse as to why they don’t have a license.
While it’s true that unlicensed contractors can often undercut a licensed outfit’s bid substantially, it’s for a reason. They probably don’t have the overhead like insurance or bonding to pay for. By CSLB regulations, licensed contractors have to carry insurance and bonds, which should be of significant importance to you. Without the appropriate insurance, you could be liable for issues that occur on your property.
Without the required bond, the unlicensed contractor can skip town without paying their subs. If these subs have licenses, they could potentially file a mechanics lien on your house for money you already paid to an unlicensed contractor.
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As a contractor, it’s critical to carry the appropriate license for your work. If an unlicensed contractor performs work where a license is required, they lose all legal rights to collect payment.
They cannot file a California mechanics lien, bond claim, or any other claim in California for that matter. And missing out on payment isn’t the end of it: You could wind up in jail.
According to the CSLB, getting caught contracting without the appropriate license is a misdemeanor. A first offense is punishable by up to six months in jail, a $5,000 fine, as well as administrative fines between $200 and $15,000. A second offense is a mandatory 90-day jail sentence and a fine for up to 20 percent of the contract up to $5,000.
California is also very clear on payment disputes involving contractors without licenses. Unlicensed contractors have no remedy for non-payment. As an unlicensed contractor, if you perform $20,000 on a project, and the owner chooses not to pay, you have no ground to stand on to recover your money. You can’t file a mechanics lien, and you won’t be able to take it to court.
Performing work as an unlicensed subcontractor when a license is a requirement in California puts your payments at risk. Savvy GC’s know this and can take advantage of you if they choose to, so be sure to go through the right channels to get your license.
Who needs a contractor license in California?
If you’re wondering if you require a license in the State of California, the answer is probably yes.
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 (including labor & materials) is $500 or more.
This guideline goes on to state that contractors, subs, and specialty contractors engaged in home improvement must have a contractors license before submitting bids.
Essentially, these guidelines include all contractors. So, if you’re a General Contractor, you must have a license. If you’re a painter, you need a license. If your company installs windows and siding, get a license. In general, the CSLB is very strict on this point. However, there are a few exceptions.
A handyman service that completes projects less than $500 in value (including the cost of materials) do not need a license. But they cannot break a large job down into smaller $500 projects to skirt this law.
The CSLB gives this example: Suppose you are remodeling the kitchen for a total cost of $6,000. You sublet the flooring work, which is only $300. The flooring worker is not exempt from licensure, because the overall project cost was over $500.
Also, owner-builders — those building a structure on their own property — do not need a license. The same exception applies to security alarm company operators, satellite installers, or any craftsperson selling or installing finished products that do not become part of the structure.
As you can see, it’s actually easier to name the trades and businesses that do not need a license in California than the other way around. The CSLB is extremely clear on this topic. If you’re working on projects valued in excess of $500 in California, the chances are that you need to go through the contractor licensing process.
California Licensing Classifications
Before you apply for your license, you need to make sure you’re applying for the right one. There are three general types of contractor licenses in California. The type of work you do determines which license you need.
Class A General Engineering Contractor License
The CSLB requires a Class A General Engineering License for any contractor “whose principal contracting business is in connection with fixed works requiring specialized engineering knowledge and skill.” This includes land leveling, earth moving, excavating, trenching, paving, as well as cement and concrete work.
Projects typically requiring Class A licenses could include overpasses, underpasses, bridges, airports, power plants, pipelines, railroads, and highways.
These are large-scale, public works-type projects. Projects like these will take off under one or more engineers’ licenses, usually employed by a large construction company or engineering firm.
Class B General Building Contractor License
The CSLB requires a Class B General Building License for any contractor “whose principal contracting business is in connection with any structure built, being built, or to be built, for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring in its construction the use of at least two unrelated building trades or crafts, or to do or superintendent the whole or any part thereof.”
All that boils down to this: Class B is a California license for general contractors. If you are bidding on and taking prime contracts, you’ll need a Class B license. With a Class B license, General Contractors can take the framing contract on a project, but the project must also include two unrelated trades as well.
Class C Speciality Contractor License
The CSLB requires contractors specializing in a particular trade to carry a Class C Specialty Contractor License. This license applies to electrical, plumbing, and HVAC subcontractors, to name a few.
CSLB designates over 40 different categories of Class C licenses. They include:
- C-5 Framing and Rough Carpentry
- C-9 Drywall
- C-10 Electrical
- C-27 Landscaping
- C-29 Masonry
- C-33 Painting and Decorating
- C-36 Plumbing
If you’re taking a prime contract on a project that does NOT require two or more unrelated trades, you’ll be fine with a Class C license, provided you hold the license for that specific work.
Basic Licensing Requirements
The general licensing requirements in California are pretty straightforward. To qualify for a license in California, you must:
- Be 18 years or older
- Have the experience and skills necessary to manage the daily activities of a construction business, including field supervision (or have representation with the necessary skills and experience to serve as your qualifying individual)
- Have four years of verifiable experience at the journey level, or as foreman, supervisor, or contractor in the classification you’re applying for
- Secure a $15,000 bond to protect consumers against defective craftsmanship and employees from non-payment. If you’re using a qualifying individual, their bond’s value is set at $12,500.
There are no additional financial requirements. This is to protect consumers from contractors flying under the radar by claiming they don’t earn enough revenue to qualify for a license.
Educational Requirements and Credits
There are no educational requirements outside of those required to meet the journey level in your trade.
However, the CSLB may provide credit in the form of work experience for up to three years for vocational training or an applicable apprenticeship. You can also receive a credit for up to 1 ½ years for an Associates of Arts in building or construction management, or three years for a bachelors degree meeting certain requirements.
Criminal Background Exclusions
If you have a conviction for a criminal offense on your record, you may still qualify for a license. The CSLB has the right to deny a license for any conviction substantially related to the duties, functions, or qualifications of a contractor.
That said, the board may issue a license if you’ve shown sufficient rehabilitation.
The first step in becoming licensed in California is to determine that you’re eligible. There’s a non-refundable $330 application fee, so be sure you meet the requirements before applying, else you could be out some cash.
Once you’re sure you qualify, you need to fill out the application on the CSLB website and submit it with the $330 application fee.
Once the CSLB accepts your application, you’ll have to submit fingerprints as part of the criminal background check. The CSLB will contact you with how to get these taken care of, where you can go, and ultimately, how much it will cost.
After fingerprinting, a random selection process could require you to verify your work experience. You can use an employer, a General Contractor, a foreman or supervisor, as well as another journeyman for this step in the process. That person will need to verify that you have the experience required to run a construction business.
If you’re qualified, fingerprinted, and verified, you can schedule your CSLB examination. Regardless of license, you’ll have to pass a Law and Business section to confirm that you’re familiar with the laws and regulations that govern construction. The other half of the test will cover actual knowledge of the trade (or trades, in the Class B case).
If you pass, you’ll have more paperwork to do. You have to submit proof of your bond, worker’s compensation, and liability insurance. You’ll also have to pay an initial licensing fee.
Once you have your license, you’ll have to maintain it with the CSLB. Active licenses expire every two years, while inactive licenses expire every four. The CSLB will send a renewal application roughly 60 days before your license is due to expire. You need to fill it out and send it back with the renewal fee.
Timing is everything with your renewal. If you send your renewal application in on time, an active renewal will cost $450, while timely inactive renewals cost $225. If you’re late with your application, the fees jump to $675 for active and $337 for inactive.
The CSLB recommends ordering a renewal online if you don’t receive a renewal application within 45 days of your license’s expiration date.
If you already hold a license in another state, California may make it easier for you. The three states that California offers a reciprocal license with are Arizona, Nevada, and Louisiana.
In order to qualify for reciprocity, you must be applying for a license that appears on California’s State Reciprocal Classification List. You must have held that license in good standing for the previous five years.
If the CSLB accepts your request, you’ll have to show proof of bonding, the necessary insurances, and pay your licensing fees.
Ultimately, it’s difficult to provide even a rough timeline to suggest how long it will take you to get your license from start to finish, even if you pass your test on the first go. To get an idea of where each CSLB testing location is in the application process, you can check the CSLB Processing Times.
Penalties for Unlicensed Contractors
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).
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.
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 it basically just means to “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!
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. 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.