Contractor Licensing and CSLB Compliance in California

Section 7028 makes it a misdemeanor to engage in the business of, or act in the capacity of, a contractor in California unless exempted from the chapter. That much is familiar. The part that surprises licensed contractors is the second half of the provision.

Section 7028(a)(2) reaches a person who performs covered work under a license that is under suspension — suspended for failure to pay a civil penalty, for failure to comply with an order of correction under section 7090.1, or for failure to resolve outstanding final liabilities under section 7145.5. A contractor who holds a license, believes it is in good standing, and keeps working while it sits suspended for an unpaid penalty is exposed under the same misdemeanor provision as someone who never held a license at all.

That is the single most useful compliance point on this page. License status is not a background fact; it is something to confirm before work continues after any CSLB correspondence.

A first conviction under section 7028 is punishable by a fine not exceeding $5,000, imprisonment in county jail not exceeding six months, or both. For a subsequent conviction, the court is directed to impose a fine of 20 percent of the contract price — or 20 percent of aggregate payments made to or at the direction of the unlicensed person — or $5,000, whichever is greater, along with at least 90 days in county jail, except where the interests of justice would be served by a lesser sentence. A third or subsequent conviction carries a fine of not less than $5,000 and not more than the greater of $10,000 or 20 percent of the contract price, plus jail of not more than one year and not less than 90 days.

Two further features of section 7028 matter to a contractor assessing old exposure. Under subdivision (g), a charge may be brought within four years from the date of the contract proposal, the contract, completion, or abandonment of the work — whichever occurs last. And under subdivision (h), a person who used the services of the unlicensed person is a crime victim eligible for restitution for economic losses, regardless of whether they knew the person was unlicensed.

Section 7031 is the provision with the most direct financial bite. It bars an unlicensed contractor from bringing an action to recover compensation for work requiring a license — no matter how well the work was performed, and no matter that the other side received the full benefit of it. Courts apply it strictly, because the Legislature designed it as a deterrent rather than as a remedy calibrated to fault.

For a licensed contractor, section 7031 is a reason to treat lapses in license status as an emergency rather than paperwork. A gap in licensure during the performance of a project can put compensation for that project at risk. The dedicated guide on section 7031 covers how the bar operates and the narrow substantial-compliance path around it.

Two distinctions on those provisions are worth carrying into any CSLB matter, and the dedicated guide develops both. First, “willful” in this context has been read to require only a general intent to perform the act — not a specific intent to violate the law. That is a lower bar than most contractors assume when they hear the word. Second, section 7109 contains a carve-out tied to architect-approved plans that section 7110 does not, so conduct that escapes one provision may still land under the other.

Section 7044 exempts an owner who builds or improves structures on their own property from the licensing requirement, subject to conditions. The exemption is narrower than its reputation. It requires that the owner contract directly with licensed subcontractors for the trades involved, and it caps the exemption at no more than four single-family residential structures sold within a calendar year. Selling within one year of completion creates a presumption that the work was performed for sale, which strips the exemption.

This matters to licensed contractors in two directions. A contractor who builds on speculation on their own property may be relying on an exemption they no longer qualify for, and a contractor working under an owner-builder permit pulled by a homeowner should understand who is carrying the licensing exposure on that job.

Each of the topics above has a dedicated guide: