What are the risks of hiring an unlicensed contractor?
Hiring an unlicensed contractor for work of $1,000 or more leaves you unprotected: no contractor bond to claim against, no CSLB complaint process, and potential exposure if a worker is injured on your property. California law does give you one strong remedy after the fact: you may sue to recover all money paid to an unlicensed contractor. But leverage after the fact is a poor substitute for the protections you get by hiring licensed.
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Summary — key takeaways
- No $25,000 bond and no CSLB complaint process to fall back on.
- You could be asked to pay through your homeowner's policy if an uninsured worker is hurt on your property.
- Unlicensed contracting is a misdemeanor; CSLB citations now run $1,500 to $15,000.
- B&P §7031(b) lets you sue to recover all money paid to an unlicensed contractor.
- Permits and insurance claims can be jeopardized.
You lose the bond and CSLB complaint process
You lose your safety net. Licensed contractors carry a $25,000 bond and are subject to CSLB's complaint and disciplinary process; with an unlicensed person you have neither, and recovering money for bad or unfinished work depends entirely on suing someone who may have no assets.
You can take on injury exposure
You can take on exposure for injuries. If a worker without workers' compensation coverage is hurt on your property, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy or face a lawsuit. There's no employer-side coverage to absorb it.
It's illegal for them, and costly
Work priced at $1,000 or more in labor, materials, and all other items must be done by a licensed contractor; the threshold rose from $500 on January 1, 2025 under Assembly Bill 2622. Unlicensed contracting is a misdemeanor: a first offense carries up to six months in county jail and/or a fine of up to $5,000, repeat offenses carry mandatory jail time, and CSLB can issue administrative citations of $1,500 to $15,000. Contracting without a license on repairs in a declared disaster area can even be charged as a felony. Permits and insurance claims can also be jeopardized when the work wasn't done by a licensed contractor.
The law's after-the-fact remedy
California gives you unusual leverage if you discover the person was unlicensed: under Business & Professions Code §7031(b), a person who used an unlicensed contractor may sue to recover all compensation paid, regardless of how good the work was, subject only to a narrow exception for contractors who briefly and in good faith lapsed. An unlicensed contractor also cannot sue you to collect payment, and if they're criminally convicted, you're treated as a crime victim eligible for restitution. Powerful, but collection still depends on the person having assets, which is why prevention beats litigation.
Frequently asked questions
Is it illegal to hire an unlicensed contractor in California?
Doing work of $1,000 or more without a license is illegal for the contractor. As the homeowner you're not usually penalized, but you lose the bond, the CSLB complaint process, and insurance protections, and you could face exposure if a worker is hurt on your property.
What are the penalties for contracting without a license in California?
A first offense is a misdemeanor punishable by up to six months in county jail and/or a fine of up to $5,000. A second conviction brings at least 90 days in jail and a fine of the greater of 20% of the contract price or $5,000. CSLB can also issue administrative citations of $1,500 to $15,000, and unlicensed repair work in a declared disaster area can be charged as a felony.
What happens if an unlicensed worker is injured on my property?
Without workers' compensation coverage behind the crew, you could be asked to pay for injuries and rehabilitation through your homeowner's insurance policy or face a lawsuit. This is one of the biggest financial risks of hiring unlicensed.
Can I get my money back from an unlicensed contractor?
You have a strong legal tool: Business & Professions Code §7031(b) lets a person who used an unlicensed contractor sue to recover all compensation paid, regardless of the quality of the work, with only a narrow substantial-compliance exception. Collection still depends on the person having assets, which is why avoiding the situation beats litigating it.
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