The Penalties for Operating Without the Proper Contractor License
Mar 07, 2022
Operating without a license is no small issue. In fact, it can result in serious consequences. The Contractors State License Board (CSLB) was formed in 1929 in large part to ensure all contractors were properly licensed before performing work. This was, and still is, to raise the standard and provide customers with safe, honest, quality results. Operating without the license does a disservice to the industry and to customers. And it’s not just a matter of integrity—without the right license for the job, you could be found to be operating outside the law and face hefty penalties.
The CSLB’s Statewide Investigative Fraud Team regularly conducts undercover investigations to determine if work is being properly performed and if any contracting laws are being broken. If you’re caught operating without the proper license for the work you’re performing, you’ll first be required to appear before a Superior Court judge. You’ll likely receive a misdemeanor charge that can carry a jail sentence of up to six months, as well as a potential fine of $5,000. In addition, you’ll also be required to pay an administrative fee that can be as high as $15,000.
If you are found to continue operating illegally after your first offense, you’ll then be mandated to fulfill a 90-day jail sentence and a fine of 20% of the contracted price or $5,000.
Misleading customers into believing you are properly licensed or using someone else’s license will result in felony charges. Anyone who contracts for work in a state or federal natural disaster area without an active state contractor license could also face felony charges. If convicted of a felony, you may have to serve time in a state prison.
The public is not legally required to pay a person who is not state-licensed for the work they’re performing.
Can I Have Two Contractor License Classifications at Once?
You can hold licensure in multiple classifications. However, you must get each license one at a time. You cannot have two applications in the system simultaneously. You’ll need to get your license number before you can apply for additional classifications. Once you have a license in one classification, you can apply for and work through the process of obtaining a second classification. Once you receive your second classification, you can then perform projects pertaining to both trade areas.
How to Get a Contractor License
Before setting out to become a contractor, you first need to determine if you are eligible. Here are the basic requirements:
- You must be at least 18 years of age
- You must have the experience and skills necessary to manage a construction business’s day-to-day operations, including field supervision
- You must have worked four full years at the journeyman level or as a foreman, supervisor, or contractor for the license classification you’re seeking (this experience must be within 10 years of the license application and be verifiable). Additionally, owner-builders may be able to qualify some of their experience by submitting a Construction Project Experience form for each project they have completed.
Upon meeting these requirements, you can then follow these four steps to becoming a contractor.
1. Submit an Application
The CSLB provides license applications by classification. The application for your business type will require certain information and documents. All applications require a social security number or individual taxpayer identification number. After completing a license application, you’ll need to pay two fees: an application filing fee and an initial license fee. These typically total $530.
2. Pass a Background Check
Once your application is submitted, you’ll need to take and pass a background check. This involves submitting fingerprints, which the CSLB will provide details for. There is a charge for this, which varies depending on the Live Scan location. Once your application is posted, the CSLB will mail you the necessary documents for collecting your fingerprints. In terms of a criminal background investigation, it is still possible to qualify for a contractor license if you have a criminal offense, pending you have shown sufficient rehabilitation. The CSLB may deny a license for convictions related to the duties, functions, or qualifications of a contractor, however.
3. Take Your Exams
To get licensed for the first time, you’ll be required to take two examinations. One will focus on the trade you’re seeking licensure in, and the other is your state’s Law & Business exam that all applicants must take. The CSLB will schedule the test date, time, and location after processing your application and will reach out to you about next steps. Each exam is multiple-choice, and you’ll have three hours to complete each one. The trade exam will focus on general knowledge related to that trade and the required skills. The Law & Business exam will test your knowledge of your state’s contracting laws and appropriate business standards.
4. Get Bonded
The last step is to get bonded and satisfy workers' compensation insurance requirements. You’ll need to purchase a license bond (and a Bond of Qualifying Individual if applicable) prior to being issued your license number. LLC entities will need to secure a 100k LLC employee/worker bond, as well as liability insurance. You can get bonded quickly and reliably through Exam Cram Pro’s family-owned sister company Surety First.
View our guide on how to get a contractor's license in California for more information.
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