This step gives you important information you should know before applying for a contractor license.
Who must be licensed as a contractor?
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?
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.
Requirements for Asbestos or other Hazardous Substances.
Contractors who work with asbestos or other hazardous substances are regulated by the United States Department of Labor, Federal Occupational Safety and Health Administration, and the California Department of Industrial Relations, Division of Occupational Safety and Health (DOSH), as well as by the CSLB. These contractors are subject to a number of certification, registration, reporting, and safety requirements.
The following are some of the CSLB’s basic requirements:
- All new applicants for a license must complete the asbestos open-book examination if it has not been done previously. The examination and verification form must be completed and submitted to the CSLB prior to licensure. If the form is not submitted, the CSLB cannot issue a license, pursuant to Business and Professions Code Section 7058.5.
The Open Book Examination does not certify a contractor to engage in asbestos-related work. The purpose of the guide and the examination is to make contractors aware of the risks of dealing with asbestos and to provide the knowledge base necessary to respond appropriately to construction situations where asbestos is or may be present. The booklet contains general information about asbestos abatement standards.
- Asbestos abatement contractors must be certified by the CSLB. To become certified, a contractor must take and pass an EPA-accredited asbestos abatement course; complete the Application for Asbestos Certification and pass a comprehensive asbestos abatement exam; and register with the Asbestos Contractor Registration Unit of DOSH.
- Contractors who do hazardous substance removal work must be certified by the CSLB–they must complete an Application for Hazardous Substance Removal Certification and they must pass a CSLB certification examination. Any contractor who has a Class “A” General Engineering, “B” General Building, “C-36” Plumbing, “C-61 (D-40)” Service Station Equipment and Maintenance (only those licensees who currently hold this classification), “C-12” Earthwork and Paving, or “C-57” Well Drilling (Water) license is eligible to be certified.
In addition, contractors who install or remove underground storage tanks must hold this certification. CSLB policy currently limits certified contractors doing underground storage tank work as follows:
- General Engineering “A” contractors may install and/or remove underground storage tanks for any purpose at any location.
- Plumbing “C-36” contractors may install and/or remove any underground storage tank that provides service to a building—including storage tanks for service stations.
- Service Station Equipment and Maintenance “C-61/D-40” contractors may install and/or remove fuel underground storage tanks at service stations or any other site up to a capacity of 20,000 gallons. (No new C-61/D-40 licenses are issued for these purposes.)
- General Building “B” contractors may, in the course of work performed under a contract that meets the requirements for the “B” classification, install and/or remove an underground storage tank if they have been properly certified for Hazardous Substance Removal and Remedial Actions.
What are the penalties for contracting without a license?
- A contractor’s license is not necessary as long as 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.
LAWS AND REGULATIONS – Felony charges can be filed against those who contract without a license in areas designated as a state of emergency or disaster by the Governor of California or the President of the United States. Felony convictions can result in a state prison term.
To whom is a license issued?
A license may be issued to an individual, a partnership, a corporation, a limited liability company, or a joint venture. The license belongs to the owner of an individual license, to the partnership, to the corporation or limited liability company as it is registered with the California Secretary of State, or to the combination of licensees who are party to the joint venture.
If the ownership of a business changes, is the contractor’s license considered to be part of the purchase?
No, with the possible exception of a corporation, the license is not considered part of the business. If the corporation’s registration number assigned by the California Secretary of State remains the same, the same license can be used if the license is current and active. The officers and the qualifying individual do not necessarily have to remain the same, although a qualifying individual must be in place in order for the license to be valid.
To whom does the term “qualifying individual” refer?
A qualifying individual, or simply “qualifier”, is the person listed on the CSLB records who meets the experience and examination requirements for the license. A qualifying individual is required for every classification on each license issued by the CSLB.
What is the qualifying individual required to do?
The qualifying individual for a license is responsible for the employer’s (or principal’s) construction operations.
Can the same person serve as the qualifier for more than one license?
A person may act as a qualifying individual for more than one active license only if one of the following conditions exists:
- There is a common ownership of at least 20 percent of the equity of each firm for which the person acts as a qualifier;
- The additional firm is a subsidiary of or a joint venture with the first; or
- The majority of the partners or officers are the same.
Even if he or she meets the above conditions, A PERSON MAY SERVE AS THE QUALIFYING INDIVIDUAL FOR NO MORE THAN THREE FIRMS IN ANY ONE-YEAR PERIOD. If a qualifier disassociates from the third firm, he or she must wait one year before associating with a new third firm.
A Responsible Managing Employee (RME) can only act as a qualifying individual for one active license at a time.
Who can be a qualifying individual?
If you have an individual license, you may be the qualifier or you may designate a Responsible Managing Employee (RME).
If you have a partnership license, your qualifier may either be one of the general partners (who shall be designated as the qualifying partner) or the RME.
If you have a corporate license, your qualifier may be either one of the officers listed on the CSLB’s records for your license (who shall be designated as the Responsible Managing Officer, or RMO), or an RME.
If you have a limited liability company license, your qualifier may be one of the officers, members, or managers listed on the CSLB’s records for your license (who shall be designated as the Responsible Managing Officer or RMO, the Responsible Managing Member, or the Responsible Managing Manager, respectively), or an RME.
If your qualifying individual is a Responsible Managing Employee, he or she must be a bona fide employee of the firm and may not be the qualifier on any other active license. This means that the RME must be regularly employed by the firm and actively involved in the operation of the business at least 32 hours per week or 80 percent of the total business operating hours per week, whichever is less.
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.
Are there any financial requirements to meet in order to qualify for a contractors license?
Yes. All applicants for a new contractors license, other than those applying for a joint venture license, must have more than $2,500 worth of operating capital. Operating capital is defined as your current assets minus your current liabilities.
Will a conviction for a criminal offense prevent a person from being licensed as a contractor or from serving as a qualifying individual?
The CSLB’s applications and other forms include questions regarding criminal convictions. The CSLB may deny a license if the crime is substantially related to the duties, functions and qualifications of a contractor. Failure to disclose the requested information may, in and of itself, be grounds for denial of a license.
Even if a crime is found to be substantially related to the duties, functions and qualifications of a contractor, an individual may be licensed if he or she has demonstrated sufficient rehabilitation. See Rule 869 in Chapter 13 of the California Contractors License Law & Reference Book.
In 2005, the Legislature mandated that all applicants for licenses and home improvement salesperson registrations would be required to submit fingerprints with each application. All new applicants for licensure, including each officer, partner, owner and responsible managing employee; and all home improvement salespersons will have to submit fingerprints.
Fingerprints are not required for:
- Individuals who are currently licensed by the CSLB, as long as they do not apply for any changes to their licenses; and
- Applicants for joint venture licenses.
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.
Business & Professions Code Section 7055. For the purpose of classification, the contracting business includes any or all of the following branches:
Class “C” Specialty Contractor’s License Classifications. You may obtain a license in any of the classifications listed below. For a detailed description of these classifications, click on the corresponding link.
- C-2 – Insulation and Acoustical Contractor
- C-4 – Boiler, Hot Water Heating and Steam Fitting Contractor
- C-5 – Framing and Rough Carpentry Contractor
- C-6 – Cabinet, Millwork and Finish Carpentry Contractor
- C-7 – Low Voltage Systems Contractor
- C-8 – Concrete Contractor
- C-9 – Drywall Contractor
- C10 – Electrical Contractor
- C11 – Elevator Contractor
- C12 – Earthwork and Paving Contractors
- C13 – Fencing Contractor
- C15 – Flooring and Floor Covering Contractors
- C16 – Fire Protection Contractor
- C17 – Glazing Contractor
- C20 – Warm-Air Heating, Ventilating and Air-Conditioning Contractor
- C21 – Building Moving/Demolition Contractor
- C23 – Ornamental Metal Contractor
- C27 – Landscaping Contractor
- C28 – Lock and Security Equipment Contractor
- C29 – Masonry Contractor
- C31 – Construction Zone Traffic Control Contractor
- C32 – Parking and Highway Improvement Contractor
- C33 – Painting and Decorating Contractor
- C34 – Pipeline Contractor
- C35 – Lathing and Plastering Contractor
- C36 – Plumbing Contractor
- C38 – Refrigeration Contractor
- C39 – Roofing Contractor
- C42 – Sanitation System Contractor
- C43 – Sheet Metal Contractor
- C45 – Electrical Sign Contractor
- C46 – Solar Contractor
- C47 -General Manufactured Housing Contractor
- C50 – Reinforcing Steel Contractor
- C51 – Structural Steel Contractor
- C53 – Swimming Pool Contractor
- C54 – Ceramic and Mosaic Tile Contractor
- C55 – Water Conditioning Contractor
- C57 – Water Well Drilling Contractor
- C60 – Welding Contractor
- C61 – Limited Specialty
- ASB – Asbestos Certification
- HAZ – Hazardous Substance Removal Certification