Consequences of Contracting Without a LicenseThe Contractors State License Board (CSLB) was established in 1929 at the request of the building industry. Since work done by contractors can endanger both them and consumers, the industry realized being regulated would help raise standards, thereby protecting consumers.
Those who operate without a license harm consumers each and every day. They tarnish the respectability of the construction industry and harm the state's financial situation by operating in the underground economy.
The CSLB makes a concerted effort to target unlicensed operators. The CSLB's Statewide Investigative Fraud Team (SWIFT) conducts undercover sting and sweep operations on a weekly basis around the state. You could be targeted by one of these operations. If you're caught contracting without a license, you will likely have to go in front of a judge to answer to misdemeanor charges, which carry a potential sentence of up to six months in jail and/or a $500 fine, and a potential administrative fine of $200 to $15,000.
If you get caught again, the penalties get stiffer. You could face a mandatory 90 day jail sentence as well as a fine of 20 percent of the contract price of the work performed, or a $4,500 fine.
Felony charges may be filed against those who illegally use someone else's license or who try to mislead consumers into believing that you are a licensed contractor. In addition, you could face felony charges if you contract for any project that is covered by a state of emergency or disaster proclaimed by the Governor of California or the President of the United States. If you're convicted of felony charges, you could end up in state prison.
Plus, if you contract without a license consumers don't have to pay you for your work. You don't have a right to sue them in court for work you weren't legally able to perform.
In addition, if you've got your contractor's license and have a dispute with a consumer, the CSLB has a variety of tools to help resolve it. These range from on-site negotiation to mediation and arbitration. These services are free of charge to consumers and licensed contractors.
Plus, when you consider the cost of your contractor's license, about $20 a month, you can't afford not to be licensed.