The CSLB: Understanding California’s Contractor License Board

The California construction industry is a well-regulated machine, and the large State body is always under the watchful eye of the California State Licensing Board (CSLB). Every contractor and their business practices need to be legally licensed and meet specific guidelines in order to continue to operate within the state.

Keep reading to learn what the CSLB is and what kind of rules they enforce.

What is the CSLB?

The Contractors State Licensing Board is the governing body overseeing construction licenses in the state of California. First established in 1929 as the Contractors License Bureau, it began establishing vocational and construction standards within the state. Today, the CSLB is part of the California Department of Consumer Affairs.

The CSLB is a 15-member board with an appointed executive officer. The Governor appoints each member to the position. The board employs 400 individuals and operates on an annual budget of $73 million.  

The main goal of the CSLB is to protect consumers from shoddy or dishonest contractors. They govern with a strict set of requirements for licensing, but they also establish trade standards, ethics, and sound business practices.

Contractor license oversight is the largest function of the CSLB. The board sets the standards and requirements for license eligibility. They also hold examinations for hopeful tradespeople in pursuit of their contractor’s license. 

Ultimately, in order to protect consumers, the CSLB has the power to issue and revoke licenses for construction contractors in nearly every trade.

The CSLB’s Mission: Consumer protection

In order to protect the consumer, the CSLB requires nearly all contractors in the state of California to carry a license. By controlling the requirements to carry a license, the CSLB aims to ensure all contractors are qualified and conduct business ethically.

For instance, the CSLB requires license applicants to have a minimum of four verifiable years in their trade before they qualify to take the licensing exam. Also, the board requires them to carry insurance and bonds.

By virtue of these standards alone, consumers find some degree of protection against poor work, inexperienced contractors, and fly-by-night crews.

Not only does the CSLB work to regulate contractors, but it also educates consumers. It routinely releases consumer guides to increase awareness of the importance of prescreening and prequalifying contractors and subcontractors.

The board’s website has a Consumer Section full of important information, guides, and publications, as well as a “CSLB’s Most Wanted” page.

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The CSLB & contractor licensing

As we mentioned, the oversight of contractor licensing is the largest function of the Contractor State Licensing Board. It determines which trades need licensing, establishes eligibility requirements, reviews applications, checks into complaints, and revokes licenses.

Who needs a license?

In general, the CSLB requires all contractors to carry a license. Unless you’re working on a project with a total value under $500 (including materials), you’ll generally need a license in California. The few exceptions apply to owner-builders and some specialty contractors like security alarm and satellite installers. Also, a craftsperson supplying a finished product that does not become part of the structure is exempt. 

Just about every other contractor needs one.

CSLB License Classes

The CSLB issues four main types of licenses: Classes A, B, B-2, and C.

Class A is a General Engineering License, required for engineering projects, earth moving, excavating, and cement and concrete work.

Class B is a General Building License, meant for anyone looking to become a general contractor.

Introduced in 2021, the Class B-2 Residential Remodeling Contractor License applies to contractors whose principal contracting business is residential structure remodeling — with projects which require the use of at least three unrelated building trades or crafts for a single contract.

Class C is for Specialty Contractors like electricians, plumbers, HVAC contractors, and carpenters. There are a number of subclassifications that specialty contractors need a separate license for.

Additionally, the CSLB also issues a Home Improvement Salesperson license. 

Requirements

To qualify for any of these licenses, contractors need to meet the requirements established by the CSLB. In general, you need to:

• 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 $25,000 bond to protect consumers against defective craftsmanship and employees from non-payment.

There are some exceptions and credits that may apply as well.

License application review

The CSLB reviews all applications at its headquarters in Sacramento. This includes new license applications, renewals, and additional applications. 

For new license applicants, your application becomes subject to a random selection in order to verify your work experience. This is the one area where the CSLB is pretty flexible. You can use a variety of sources to verify your experience. As long as you have the experience, you should be able to find an appropriate way to prove it.

Tests and examinations

Once the CSLB approves your application, it will allow you to take the exam. The CSLB technically administers two tests: One to prove that you know what you’re doing when running a construction business (Law and Business), and the other to prove you understand the trade. 

The CSLB does offer Reciprocal licenses with Arizona, Louisiana, and Nevada in some cases, so it’s worth checking into their Reciprocity Page.  

Complaints

Receiving and investigating consumer complaints is also a function of the CSLB. The complaints can be against the business practices of a licensed contractor, or a complaint about an unlicensed contractor. 

Often, the investigations result in restitution and disgorgement back to the consumer.

Revocation

Contractors that don’t follow the guidelines set forth by the CSLB can have their licenses revoked. If you fail to pay a small claims judgment or CSLB citation, for example, the CSLB can suspend or revoke your license.

Also, failing to carry the required bonds and insurance are grounds for revocation. You also need to report some personnel changes to the CSLB, else it can suspend your license until you clear it up. 

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Contractor Advertising

In order to protect consumers, the CSLB has very strict rules for contractors about advertising. It aims to keep unwitting customers from entering into a contract with unlicensed contractors or licensed contractors not certified for that particular trade.

For instance, any form of advertisement, contract, subcontract, or calls for bids must include your license number. Also, the CSLB requires certain trades to display their business name, address, and license number on the side of all commercial vehicles.

It should go without saying, but you cannot advertise services for a trade you don’t hold a license in. A licensed electrical contractor cannot advertise for plumbing work, for example.

Mentioning the required bonds in your advertisement is also a no-go. The CSLB feels that mentioning that you carry a bond could lead the consumer to believe they have a higher level of protection when, in reality, everyone has it. 

False advertisement

It is a misdemeanor to use false, misleading, or deceptive advertising to induce clients to enter into improvement contracts if they might be misled or injured. It also is illegal to include in an ad for home or other improvements any false, deceptive, or misleading claims.

While false advertising is universally unacceptable, the CSLB’s stance implies it can take legal action, which could result in fines, license revocation, and possible jail time.

The CSLB complaint process

Homeowners, contractors, subcontractors, and employees can file complaints about both licensed and unlicensed contractors. These complaints can be for anything from failure to complete a project, to payment disputes, and false advertising. Complaints can also include contracting on a project valued in excess of $500 without a license.

• File a CSLB complaint
• Report unlicensed activity

The window for filing a complaint is up to four years from the act in most cases. Complaints involving public health, elder abuse, or significant financial injury receive priority.

The CSLB has a couple of avenues to try to resolve issues between complainants and contractors. It may offer CSLB-led mediation or one of two arbitration programs (based on the damage amount).

For complaints that require further investigation, the CSLB will assign an investigator. It’s the investigator’s job to determine if the contractor violated the CSLB guidelines or state law. A licensed contractor guilty of violating the law can have their license suspended or revoked, and pay up to $5,000 in civil penalties (for a first offense).

The CSLB also works with the Statewide Investigative Fraud Team (SWIFT). SWIFT’s job is to investigate complaints, including unlicensed contracting on active job sites. The team will conduct stings and sweeps, citing violations for unlicensed or uninsured contracting. 

Penalties

Violating the rules and guidelines set forth by the CSLB can have some severe and expensive consequences. They’ll come after you both financially and criminally.

Civil penalties

The CSLB has the ability to cite you for violations against its guidelines and rules, and those citations often come with civil penalties.

For example, abandoning a construction project without a legal excuse is a violation of Section Building and Professions Code 7107. You’ll receive a minimum fine of $200, but it could be as much as $5,000, depending on the circumstances. Disregarding accepted trade standards, section 7109, carries similar penalties.

Criminal penalties

Contracting without a license in the state of California is illegal. This includes working with a suspended license.

The CSLB has the ability to file misdemeanor charges against you for working without a valid license. A first offense could land you in jail for up to six months and saddle you with a $5,000 fine. 

A second offense is a mandatory 90 days in jail and a fine of up to 20% of the contract price (up to $5,000). 

Also, be aware that using someone else’s license — or just pretending to have a license — is a felony. This brings steeper fines and longer jail sentences.

Payment issues

Here’s the thing: If you don’t have a license in the state of California, but you’re taking contracts on projects valued over $500, you’re rolling some very expensive dice.

California is very clear about unlicensed contractors’ rights during a payment dispute: They don’t have the right to collect a dime.

If you’re working without a license on a project, and a payment dispute occurs between you and the owner or the GC, you have no recourse for payment. Unlicensed contractors cannot file a mechanics lien in California — not even a breach of contract claim.

Under state law, an unlicensed contractor cannot take any action to recover compensation unless they held a license at all times through the project. So, if you have a license but it expires or the CSLB suspends it for issues on a separate project — even if it’s only for a day — you’ll lose your payment rights on your current project.  

Also, if you’re unlicensed and someone files a complaint against you, you may be subject to disgorgement — meaning, you might have to pay the entire amount back to the consumer.

Play by the CSLB rules

Avoiding trouble with the CSLB is really about playing by the rules. Yes, you need a license, but you also need to follow the board’s guidelines to ensure you’re adhering to trade standards and conducting business ethically. Most of the rules are expectations most honest contractors would want to meet anyway. Any deviation from those rules could land you in hot water.

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