In the state of California, and many other states, large home construction, repairs, and remodeling projects must be completed by a licensed contractor. California contractor licensure is regulated by the Contractors State License Board, also known as the CSLB. The CSLB is a state government entity that helps to protect consumers and regulate construction activity. While the CSLB administers license exams, they also investigate complaints and provide administrative services to contractors and their customers. They are also responsible for seeking criminal and civil actions against unlicensed contractors. The CSLB issues licenses to contract in particular trades or fields of the construction profession. Each separate trade is recognized as a “classification.” You may add as many classifications to your license as you can qualify for.

Who Must be a Licensed Contractor?

According to the CSLB:

“All businesses or individuals who construct or alter any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the California Contractors State License Board (CSLB) if the total cost (labor and materials) of one or more contracts on the project is $500 or more. Contractors, including subcontractors, specialty contractors, and persons engaged in the business of home improvement (with the exception of joint ventures and projects involving federal funding) must be licensed before submitting bids. Licenses may be issued to individuals, partnerships, corporations, limited liability companies, or joint ventures.”

Who is Exempt from Licensing?

According to the CSLB, the following projects or individuals may be exempt from licensing:

  • “A project for which the combined value of labor, materials, and all other costs on one or more contracts is less than $500. Work on a larger project, may not be broken down to smaller amounts of less than $500 in an attempt to meet the $500 exemption;
  • An employee who is paid wages, who does not usually work in an independently established business, and who does not have direction or control over the performance of work or who does not determine the final results of the work or project;
  • Public personnel working on public projects;
  • Officers of a court acting within the scope of their office;
  • Public utilities working under specified conditions;
  • Oil and gas operations performed by an owner or lessee;
  • Owner-builders who build or improve existing structures on their own property if they either do the work themselves or use their own employees (paid in wages) to do the work;
  • Sale or installation of finished products that do not become a fixed part of the structure;
  • A seller of installed carpets who holds a retail furniture dealer’s license but who contracts for installation of the carpet with a licensed carpet installer;
  • Security alarm company operators (licensed by the Bureau of Security and Investigative Services) who install, maintain, monitor, sell, alter, or service alarm systems (fire alarm company operators must be licensed by the CSLB); and
  • Persons whose activities consist only of installing satellite antenna systems on residential structures or property. These persons must be registered with the Bureau of Electronic and Appliance Repair.”

Basic Qualifications to Secure a Contractor’s License:

To qualify to become a licensed contractor an individual must be 18 years of age or older and have the experience and skills necessary to manage the daily activities of a construction business, including field supervision.

Or, you must be represented by someone else with the necessary experience and skills, who serves as your qualifying individual.

The contractor or other person who will act as the qualifying individual must have had, within the ten years immediately before the filing of the application, at least four full years of experience at a journey level, or as a foreman, supervisor, or contractor in the classification for which he or she is applying. The experience claimed on the application must be verifiable and individuals who have knowledge of the experience must certify the accuracy of the experience information provided by the applicant.

Out of state individuals can apply for a California License if they meet the qualifications. Several states have reciprocity agreements with California which makes it easier to get a license.

General Information on Reciprocity:

Out of state individuals can apply for a California License if they meet the qualifications. California has formal reciprocity agreements with the contractor licensing agencies of Arizona, Louisiana, and Nevada.

Because CSLB believes that reciprocity among respective licensing programs is a valuable benefit, it offers reciprocity in specified classifications where the scopes of practice and licensing requirements are either identical or fundamentally indistinguishable in each state with California which makes it easier to get a license.

Penalties for Contracting Without a License:

  • A contractor’s license is not necessary if you don’t advertise yourself as a licensed contractor and never contract for jobs costing $500 or more, including labor and materials.
  • There are serious penalties for unlicensed contracting and the Contractors State License Board (CSLB) seriously pursues violators. The CSLB has Statewide Investigative Fraud Team(s) that conduct stings and sweeps on a regular basis focusing on the underground economy.
  • First time offenses for contracting without a license are usually a misdemeanor, carrying a potential sentence of up to six months in jail and/or a $500 fine, along with a potential administrative fine of $200 to $15,000.
  • The penalties go up with subsequent violations. A second conviction can mean a fine of 20 percent of the contract price of the work performed, or a $4,500 fine. Also, the unlicensed contractor shall be confined to jail for no less than 90 days.

Are There Any Financial Requirements to Meet in Order to Qualify for a Contractor’s License?

There are not. You do not have to meet any financial requirements to qualify for a contractor’s license, however, you will need to have a $15,000 Contractor’s Bond in place before you’re able to become license. The Contractor’s Bond is filed to benefit consumers who may be damaged because of defective construction or other license law violations. It can also benefit employees who have not been paid wages that are due to them.

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