Licensed vs. Unlicensed Contractor in California: What Work Needs a License

Any project where labor, materials, and all other items total $1,000 or more must be performed by a CSLB-licensed contractor. The threshold rose from $500 to $1,000 on January 1, 2025 under Assembly Bill 2622 (Business & Professions Code §7048).

The exemption applies only when the total is under $1,000: a job priced at exactly $1,000 is not exempt. Assembly Bill 2622 (Carrillo, Chapter 240 of 2024) made the change effective January 1, 2025, and it did more than raise the dollar figure: it also spelled out the conditions an unlicensed person must meet to use the exemption at all.

Because the change is recent and specific, a large share of contractor-licensing pages, across every trade, still cite the old $500 figure, and most of those also omit the permit, employee, and advertising conditions AB 2622 added. When you see $500, treat the page as out of date.

The figure does not adjust automatically. An early draft of AB 2622 would have had CSLB raise the amount each year with inflation, but that provision was removed before the bill became law. The threshold stays $1,000 until the Legislature changes it again.

The threshold is the total project price: labor, materials, and all other items for one undertaking or project. It is not labor alone, not materials alone, and not a per-visit figure.

The total is also aggregated across contracts. Under Business & Professions Code §7048(b), the exemption does not apply when the work is part of a larger project, or when a project is divided into smaller contracts to stay under $1,000. If the work is really one project, its combined total is what counts.

Most real home-improvement jobs (a re-roof, a panel upgrade, a driveway, a repipe, a pool) are far above $1,000, so they squarely require a licensed contractor.

Below $1,000, a narrow minor-work exemption can apply only if the job is casual, minor, and standalone (not part of a larger project), requires no building permit of any kind, no one is employed on the job, and any advertising discloses that the person is not licensed.

Every condition must hold at the same time. The permit condition is read broadly: a permit requirement of any kind puts the job outside the exemption, even under $1,000. The employee condition is per job, not general: the person may not employ or use anyone on that work, regardless of whether they 'have employees' in the ordinary sense. And under Business & Professions Code §7027.2 (which AB 2622 also raised to $1,000), an unlicensed person may advertise for exempt work only if the ad states that they are not licensed; advertising as a contractor without that disclosure ends the exemption.

The exemption also does not override other law. Work that a statute reserves to a licensed trade still needs the proper license regardless of price. It is a narrow allowance for genuinely minor, standalone work by someone who is open about being unlicensed.

Hiring an unlicensed person for work that needs a license costs you the protections licensing provides: there is no $25,000 contractor bond to claim against, no CSLB disciplinary leverage, and if an uninsured worker is hurt on your property you could be asked to pay through your homeowner's insurance policy or face lawsuits. Recovering money for bad or unfinished work is much harder.

California law also tilts against the unlicensed contractor: one who performs work requiring a license generally cannot sue to collect payment (Business & Professions Code §7031(a)), and the hirer may sue to recover what was paid (see the penalties section below). The homeowner is not the one prosecuted, but loses the safety net, so the cleaner path is to verify the license up front and hire an Active, correctly classified contractor.

A quick rule of thumb: if labor, materials, and all other items reach $1,000, hire licensed. Roofing, HVAC, concrete driveways and patios, electrical panel work, plumbing repipes, masonry walls, fencing runs, whole-room painting, and pool construction all routinely exceed the threshold and require a licensed contractor.

A few services genuinely sit below it: routine pool cleaning and chemical service, a single-fixture touch-up, or a small cosmetic repair can fall under $1,000. But the moment a 'small' job is part of a bigger project, the whole project's total decides, and a job that requires a permit of any kind needs a license at any price. When in doubt, verify the license; it is free and rules out most problems.

A first offense of contracting without a license is a misdemeanor punishable by up to six months in county jail, a fine of up to $5,000, or both (Business & Professions Code §7028). A second conviction carries a mandatory minimum of 90 days in jail plus a fine equal to the greater of 20 percent of the contract price or $5,000. A third or later conviction carries 90 days to one year in jail and a fine from $5,000 up to the greater of $10,000 or 20 percent of the contract price. All of these remain misdemeanors.

Felony exposure comes only from separate statutes: unlicensed repair contracting in a declared disaster or emergency area (Business & Professions Code §7028.16) or fraudulent use of a contractor's license, not from repeat §7028 convictions alone.

CSLB can also act without a criminal case. Under §7028.7, as amended by SB 779, an administrative citation against an unlicensed operator carries a civil penalty of $1,500 to $15,000 for citations issued on or after July 1, 2026; some pages still show the outdated $200 minimum, but the statute controls. Licensed contractors who aid or contract with unlicensed persons face their own citations of $1,500 to $30,000 for those violations (§7099.2).

The strongest consumer remedy is civil: under §7031(b), a person who hired an unlicensed contractor may sue to recover all compensation paid, regardless of how good the work was, subject to a narrow substantial-compliance exception for contractors whose license briefly lapsed. The hirer is also treated as a crime victim under §7028, eligible for restitution in a criminal case whether or not they knew the contractor was unlicensed.