Learn About California’s Contractor License
The Contractor license in California is a mandatory license that must be obtained before a contractor can work on any project in California. It is defined, and regulated by the Contractors State License Board (CSLB), which is part of the Department of Consumer Affairs of the State of California. The CSLB issues 43 classifications of contractor licenses to contractors, suppliers, and labor organizations. After passing an exam pertaining to the license classification that the contractor plans on doing work in, and having four years in the industry experience, provided that two of the years are as an owner or employee of a company with the type of license classification that is sought , the contractor has to pass an exam which tests their knowledge of California Construction law and other business practices that contractors need to know to run a successful company in California.
The contractor license in California protects the consumers, as they can see if a contractor is licensed or not. The consumer can check on the contractors’ licenses history, which includes past complaints from consumers as well as other contractors, as well as their work. In addition, the consumers can write their complaints in a forum that is available to other consumers who have had either positive or negative experiences with that particular contractor. One of the other advantages of having a contractor license is that it allows the contractor the business in order to be able to bid on certain bonding projects, or bid on state and federal projects that require a contractor to be licensed.
California Contractor License: Do You Qualify?
In California, there are certain eligibility requirements that an individual must meet before they can apply for a contractor’s license. These requirements are in place to ensure that contractors have the necessary skills and knowledge to perform contracting work safely and effectively.
First and foremost, an individual applying for a contractor’s license must be at least 18 years old. Additionally, the applicant must have a Social Security number or an individual taxpayer identification number.
One of the key eligibility requirements for a contractor’s license is the need for sufficient work experience. The applicant must have at least four years of journey-level work experience in the trade that you are applying for. This experience should be in a supervisory or managerial role, as a foreman, project manager, estimator, or lead person. In lieu of the four years of experience, an applicant may have a combination of education and work experience.
In addition to work experience, applicants must also have the necessary educational qualifications. While formal education is not always required, having a high school diploma or GED can be beneficial. For those applying for a license in a specialized trade, such as electrical, plumbing, or HVAC, additional training may be required.
Finally, a contractor must be of good moral character. This means that the applicant does not have any felony convictions, has not taken out a contractor license bond, and has not committed any fraud, dishonesty or other misconduct that could indicate that they are unfit to be a contractor.
It is important to note that the above eligibility requirements may vary depending on the category of contractor license being sought. It is advisable to verify the requirements for each specific license prior to applying.
How to Apply for Your CA Contractor License
The application process for becoming a licensed contractor in California is handled through the CSLB and consists of a number of steps. At the beginning of the process, an applicant must locate an application form. These are available on the CSLB website or through a local CSLB office. It’s important to note that the application must be the correct size, and the applicant must indicate on the form exactly which classification of license they are seeking. Forms must be completed in black ink and submitted to the CSLB in person or via mail. The application fee is $300 per classification, or $500 for a combination license. As part of the evaluation process, it is necessary for each applicant to submit fingerprint cards and identification to check for any felony convictions. Fingerprints should be done at a live scan location. Failure to submit the proper identification can result in an automatic rejection of the application. Applicants may also be able to complete the process by fax. Once the application is submitted, a notice will be sent to indicate the status of the application within 90 days. The Internal Revenue Service must also approve it, so applicants must submit an RFT to the franchise tax board, which can take up to four weeks to process. Then, a final review of the application and supporting materials is performed. If no issues are identified, the CSLB will issue a Certificate of Experience and a notice to schedule an exam. Once the application is approved, the applicant’s licensing information data is turned over to the Department of Justice. Many applicants for the exam are surprised to learn that they don’t have to wait for a test date to file their initial registration with the state. By filing this request early, the state can allow the contractor to receive credit for work performed during the time that they were waiting for the exam.
Contractor License Fees and Insurance Requirements
Fees
In California, the process for applying for a contractor license is not free. Fees must be paid to the Contractors State License Board (CSLB) at multiple stages of the licensing application process. Fortunately, the fees are relatively modest.
The CSLB fees associated with first-time license applications are as follows:
- (1) $50 Filing Fee for the original license application;
- (2) $400 Initial Application Fee; and if you are taking a trade exam:
- (3) $100 for an Original Trade Exam; or
- (4) $60 for a Waiver of Trade Exam.
Once you are approved to take the exam and pass, there are additional costs for the fingerprinting and insurance. The fees in this area are as follows:
- (1) $64 for Live Scan fingerprinting;
- (2) $52 for a license classification certification; and
- (3) $100-multiple for the contractor’s bond.
The total cost of the fees alone can add up to over $700. However, these fees don’t cover the examination preparation courses, books, and study guides that most first-time applicants take. Of course, there are also costs associated with the hiring of legal counsel to prepare your application and manage the CSLB interview with you. Additionally, you will also have posting and advertising costs which are not a part of the application submission process, but they are a part of the process of obtaining your contractor license. And, there are costs in obtaining workers compensation insurance and developing a business plan.
Insurance
In California, a contractor cannot hold a license without being covered by a workers compensation policy or an owner-builder exemption. The CSLB requires contractors and subcontractors to provide a certificate verifying active workers compensation coverage before performing any work for the public. The CSLB also requires all individuals who perform work for a company, including owners of construction companies, to be covered by the company’s workers compensation policy or to have a valid owner-builder exemption from the CSLB.
There are two types of owner-builder exemptions:
Owner Builder Exemption #1
This exemption applies to an individual who is both the property owner and the contractor of an unlicensed contractor who performed construction work for him or her. For example, the exemption would apply to the owner if a contractor built or remodeled an addition on his house without having a valid contractor’s license required by the CSLB. To qualify under Owner Builder Exemption #1, you must provide a copy of the CSLB citation and one of the following:
Owner Builder Exemption #2
This exemption would apply to a homeowner who is performing work on their own residence. To qualify under Owner Builder Exemption #2, you must provide either:
How to Prepare for the License Exam
To gain a contractor’s license in California, you need to pass exam(s) that test your knowledge of certain general business and trade laws and regulations for the type of specialty work you plan to perform. Areas covered include the following:
Although the exam does not consist of any management-type questions, applicants must be able to apply the primary concepts of planning, organizing and controlling a construction project. The tests are now administered by computer, with multiple-choice questions. However, they are closed book. You may distribute time in any way you desire among the sections in each test. You do not have to complete the entire test at one sitting. You may complete each section of each test separately . The trade exam, consisting of 80 questions, is given only in English, while the business and law exam has a Spanish language version. Each section of the test must be passed. You must complete and pass the trade exam within 18 months from passing the initial business/law test. If you fail one or more sections of the test, you will receive a notice with instructions for reapplication. There is no waiting period. All sections must be passed within five years from the first application. If you believe that taking a practice examination is advisable, free practice exams are available on the web. Other publishers also provide study guides and practice exams for a fee. Additionally, the Contractors State License Board maintains reference materials in certain branches and local offices for researchers.
Typical Mistakes and How to Avoid Them
Mistake No. 1: Entering an Agreement Without a License
One of the most common mistakes we see is individuals entering into an agreement to perform work without first obtaining a license for their trade. Unfortunately, even when the contract price is $500, any breach of the licensing law can result in some serious consequences. If you have contracted to perform work without a license, there are some potential defenses to a lawsuit that you should be aware of.
Mistake No. 2: Hiding Litigation
Disclosing ongoing litigation is a requirement of the license application process, and failure to disclose it will result in a license denial. Do not wait until the deadline to disclose your prior litigation.
Mistake No. 3: Failing to Disclose Prior Criminal Convictions
You are required to list prior convictions (other than a minor traffic violation) on your initial license application. Remember that civil judgments and liens against you must be disclosed as well. Failure to disclose prior convictions and judgments can result in a license denial.
Mistake No. 4: Mislabeling Your Experience
The experience requirement for an individual or class B general building contractor application is four years of supervisory experience within the ten-year period preceding the application date. If you are applying for another classification of contractors license, look to the CSLB’s website for information on what qualifies as supervisory experience.
Mistake No. 5: Neglecting to Review Fingerprints
Even if you properly answer every question on the application, the processing of your fingerprints through the Department of Justice can delay your application. Fingerprinting can take anywhere from a few weeks to several months – and sometimes longer depending on the status of your criminal history or the length of your background report. This mistake can be avoided by reviewing your live scan report before you submit your application to the CSLB and making sure that the identifying data on your report matches your application.
What Happens After Your Application Has Been Submitted and Approved
Once you’ve submitted your application to the CSLB, they will then process your license. This is usually where you’ll start hearing about the CSLB hiring private investigators to look into possible criminal history on the part of the applicant. You are expected to cooperate with those investigators. These private investigators will look at all sorts of files, including the applicant’s financial records. For this reason, you should be fully aware of your rights during the application process.
A CSLB investigator must always ask you for your permission to access your records and files. Otherwise, they will only have access to your public records. The investigator cannot ask you to turn over records without your permission. Should you give them permission, they cannot keep copies of the files. You have the right to view your file, make copies of your file and request any unfiled material that’s part of your application.
However, CSLB informants may show up at your home or business and ask to speak to you. They can ask to see any documents related to your application. If they have reasonable cause to believe a respondent may be involved in violating a section of the penal code, the investigator has the right to arrest the person in most situations.
In 2018, the processing of contractor applications took an average of 89 days. That means applicants were looking at about three months’ wait. However, at times when there is a large number of applicants, as there has been in recent years, the processing time can take longer.
At any time in the application process , CSLB may ask the applicant to provide them with additional information. In the event that CSLB rejects an application for licensure, the applicant will be notified of the reason given for their rejection. You may not be able to qualify for licensure if you have filed false or fraudulent documents or statements. Should it be determined you attempted to perform work outside the scope that would have been authorized by licensure or if someone other than you exercised control over the business, your licensure could be denied.
In some cases, you might even be penalized twice. For example, if you are a specific type of contractor in California with a license guaranteed by the CSLB, any work done without a license in that category may be considered a felony, as well as an administrative offense. So, if you did work as a roofing contractor under a general contractor’s license, you could be fined by the CSLB, and then fined again by the State’s Attorney General’s office.
Should your application fail a background check or be initially rejected and then revised during the legal review process, you might be eligible for a "rehabilitation meeting" with the registrar or Registrar’s Designee. You can submit evidence for your rehabilitation, including your age, since your conviction, the nature and seriousness of the offense, any connection between it and the duties and responsibilities of the license, your conduct and activities since the conviction, and anything else you think may be relevant. If you are granted the meeting, the board member will decide whether to approve your license application.