Laws & Regulations

Experience Requirements

To qualify for a California contractor license, applicants must demonstrate at least four (4) years of journey-level experience in the classification being applied for. Acceptable experience includes:

• Journey-level work as a paid employee (most common path)
• Apprenticeship completion through a state-approved program
• Education substitution — up to 3 years of technical education can substitute for experience (1 year education = 1 year experience), but at least 1 year of practical experience is always required
• Foreman/supervisory experience counts if it includes hands-on work
• Self-employment does not count unless the applicant held a valid license during that period

Examination Requirements

All applicants must pass two examinations:

Both exams are administered at PSI testing centers throughout California. After passing, scores are valid for 5 years. If you fail, you must wait at least 18 days before retaking.

Application Fees & Financial Requirements

B&P 7028 — Contracting Without a License

It is a misdemeanor to engage in the business of contracting without a valid, active license. Penalties include:

• First offense: Fine up to $5,000 and/or up to 6 months in county jail
• Subsequent offenses: Fine up to $5,000 and/or up to 1 year in county jail
• If the unlicensed work exceeds $500, it is a more serious violation
• Additional penalties apply during states of emergency (disaster-related unlicensed contracting can be charged as a felony)

B&P 7031 — The Disgorgement Rule

This is one of the most consequential sections in California contractor law. It provides that:

• A person who performs work requiring a contractor license without being properly licensed at all times during performance cannot bring or maintain any action for compensation
• The property owner may demand return of all compensation paid (disgorgement)
• This applies even if the work was done perfectly and the owner is fully satisfied
• The “substantial compliance” defense (B&P 7031(e)) may apply if the contractor: (1) held a valid license at some point during the work, (2) acted reasonably and in good faith, and (3) did not know or reasonably should not have known they were unlicensed

B&P 7044 — Home Improvement Salesperson (HIS)

Any person who solicits, sells, negotiates, or executes contracts for home improvement on behalf of a contractor must hold a Home Improvement Salesperson (HIS) registration. Key points:

• Registration is required even for employees of licensed contractors
• The employing contractor is responsible for the acts of their registered salespersons
• HIS registrants must carry their registration card and present it upon request
• Registration fee: $75 (initial), $75 (renewal every 2 years)

B&P 7068 — Qualifier Requirements

Every licensed contractor entity must have a designated qualifying individual who meets the experience and exam requirements:

• Employee qualifier — must be a bona fide employee with a permanent, ongoing connection to the business
• Officer or owner qualifier — must be an officer, owner, or general partner with an ownership interest or active management role
• The qualifier must exercise direct supervision and control of the construction operations
• A qualifier may only qualify for one entity at a time (with limited exceptions under B&P 7068.2)
• If the qualifier disassociates from the company, the license becomes inactive within 90 days unless a replacement qualifier is designated

B&P 7071.6 — Contractor Bond

All licensed contractors must maintain a $25,000 contractor bond (also called a “license bond” or “contractor’s bond”):

• The bond protects consumers who are damaged by the contractor’s actions
• It is not insurance — the bonding company will seek reimbursement from the contractor for any claims paid
• If the bond is cancelled, the license is automatically suspended
• Disciplined contractors may be required to post an additional disciplinary bond of $15,000–$150,000
• Swimming pool contractors must also post an additional $20,000 bond (B&P 7071.7)

B&P 7109 — Departure from Plans and Specifications

A willful or deliberate departure from, or disregard of, plans or specifications in a material respect without consent of the owner is cause for disciplinary action. This includes:

• Substituting materials not specified in the contract
• Deviating from approved building plans without change order approval
• Failing to perform work that was included in the contract scope
• CSLB can take action even if the customer does not file a complaint

B&P 7159 — Home Improvement Contract Requirements

Every home improvement contract must include specific provisions and disclosures. A contract that does not comply is considered an incomplete contract and the contractor may face discipline. Required elements include:

• Contractor’s name, address, license number, and classification
• Date the contract was signed and approximate start/completion dates
• A detailed description of the work to be performed and materials to be used
• The total contract price and payment schedule
• Notice of the 3-day right to cancel (see Contract Requirements below)
• Information about the mechanics lien process
• Contract must be legible and a signed copy given to the buyer at signing

Mandatory Coverage — Labor Code 3700

California law requires every employer to provide workers’ compensation insurance coverage for all employees. For contractors:

• Coverage must be obtained before any employees begin work
• Proof of coverage must be filed with the CSLB and kept current
• Failure to carry workers’ comp is a criminal offense (Labor Code 3700.5) — punishable by up to 1 year in jail and/or a fine of up to $100,000
• The contractor’s license may be automatically suspended for failure to maintain coverage
• Subcontractors must carry their own workers’ comp — the general contractor may be held liable for uninsured subcontractor employees

Written Contract Threshold

A written contract is required for any home improvement project exceeding $500 (combined labor and materials). Even for projects under $500, a written contract is strongly recommended. The contract must meet all B&P 7159 requirements listed above.

3-Day Right to Cancel

Under both California law (Civil Code 1689.5–1689.14) and federal FTC rules, homeowners have a 3-business-day right to cancel most home improvement contracts signed at their residence or away from the contractor’s principal place of business:

• The contractor must provide two copies of a “Notice of Right to Cancel” form
• The notice must be in the same language the contract was negotiated in
• The cancellation period does not begin until the buyer receives the notice
• No work may begin during the cancellation period (unless the buyer provides a separate, dated, handwritten statement waiving the right due to an emergency)
• If the buyer cancels, the contractor must return all payments within 10 days

Required Contract Provisions

In addition to B&P 7159 requirements, California contracts must address:

• Change orders — must be in writing and signed by both parties before additional work begins
• Warranty information — minimum 1-year implied warranty on residential work
• Arbitration clauses — if included, must be initialed separately by the buyer
• Finance terms — must comply with Truth in Lending Act (Regulation Z) if contractor arranges financing
• Permit responsibilities — contract must state who is responsible for obtaining required permits

Preliminary Notice Requirements

Under California Civil Code 8200–8216, anyone who furnishes labor, services, equipment, or materials for a construction project (and is not in direct contract with the property owner) must serve a Preliminary Notice within 20 days of first furnishing work or materials:

• Must be served on the property owner, direct contractor, and construction lender (if any)
• Protects only work/materials furnished within 20 days before the notice and all work after
• Can be served by certified mail, registered mail, or personal delivery
• Failure to serve a timely preliminary notice limits your lien and payment bond rights

Filing Deadlines

Stop Payment Notices

A stop payment notice (Civil Code 8500–8560) is a tool for subcontractors and suppliers to secure payment from construction funds held by the owner or lender:

• The notice directs the party holding funds to withhold enough money to satisfy the claim
• A bonded stop payment notice (backed by a bond of 125% of the claim amount) is required for funds held by a construction lender
• Must be served before the owner makes final payment or within the preliminary notice protection period
• The holder of funds must withhold the claimed amount or face personal liability

California contractor law is updated regularly through new legislation, CSLB rule changes, and court decisions. We monitor all changes and update this page accordingly. Below are the most recent updates:

2026 Updates

• Contractor Bond Amount — The $25,000 contractor bond requirement remains in effect. There are ongoing legislative discussions about potential increases — we will update this page if any changes are enacted.
• Exam Scheduling — CSLB continues to use PSI Testing for all exam administration. Online proctoring is not currently available; all exams must be taken in person at an approved testing center.
• Workers’ Comp Enforcement — CSLB has increased enforcement actions against contractors operating without workers’ compensation coverage, including sting operations and increased penalties.
• Digital Contracts — Electronic signatures on home improvement contracts continue to be accepted under UETA and E-SIGN, provided all B&P 7159 requirements are met and the consumer receives a complete copy.
• License Fee Schedule — Application and renewal fees remain at current levels for the 2025–2026 fiscal year.