California’s Contractors State License Board (CSLB) was established in 1929 to protect California residents through licensing and regulating contractors working in the state. Today, the CSLB licenses approximately 290,000 contractors, utilizing forty-four different classifications. Each licensing classification specifies the type of contracting work permitted by that classification.
The CSLB website (www.cslb.ca.gov) contains a wealth of information for contractors and non-contractor consumers alike. Consumers can use the website’s features to check the history and business information of contractors, searching via license number, business name, or individual name. License applicants can use the website for instructions and forms for the application process. Contractors can use the website for renewals, regulations, and various resources.
One the CSLB’s most important roles is assisting contractors with keeping track of the multitude of state regulations, and periodic changes thereto, that apply to those in the construction trades. The CSLB posts periodic Industry Bulletins which provide helpful guidance and reminders of important construction topics. At year end, the CSLB issues a bulletin to update licensees of the changes to California Law that will become effective on the first of January in the coming year. Below are four of the more interesting and impactful statutory changes.
SENATE BILL 216
Prior to January 1, 2023, California law (Business & Professions Code Sec. 7125) required every licensed contractor to file with the CSLB 1) a certificate demonstrating Workers’ Compensation Insurance, 2) a certificate demonstrating Self-Insurance, or 3) a certificate claiming exemption because the contractor has no employees and is not required to obtain or maintain workers’ compensation insurance. The one express exception was for roofing contractors, holding a C-39 license, who were specifically required to obtain workers’ compensation insurance, even if the contractor had no employees. It appears from the record that such contractors more often than not did have employees, even though they claimed they did not in certificates of exemption and failed to purchase workers compensation insurance. Thus, the statute treated C-39 contractors differently.
Senate Bill 216 went into effect as of January 1, 2023, and expanded the applicable contractor classifications that must now purchase workers compensation insurance even if they have no employees. The new law requires concrete contractors (with a C-8 license), heating, ventilation and air-conditioning contractors (with a C-20 license), asbestos abatement contractors (with a C-22 license), or tree service contractors (with a D-49 license) to purchase workers’ compensation insurance even if that contractor has no employees. After January 1, 2023, no license in these classifications will be issued, or renewed without evidence of Workers’ Compensation Insurance in place. Impacted contractors with an active license and no employees, who are not due to renew until after June 30, 2023, will not have to have proof of workers’ compensation insurance on file with the CSLB until the first of July. However, after June 30, 2023, any impacted contractor that does not have workers compensation insurance, and a certificate of such insurance on file with CSLB, will have its classification removed.
While the impacted group of contractors may be relatively small, this will soon change. On January 1, 2026, the law will change to require all licensed contractors regardless of their classification obtain and maintain workers’ compensation insurance to work lawfully in the state, The only exception will be for contractors who are organized as a joint venture and file a certificate of exemption. For further information, check with your insurance provider. Additionally, The CSLB website has information on workers’ compensation insurance and the tools to assist with filing the required Certificate of Workers’ Compensation Insurance.
ASSEMBLY BILL 1747
Building permits are required to protect the safety of California residents and ensure that construction work is performed pursuant to state, county, and local ordinances and building requirements. The failure to obtain a building permit can result in a danger to workers and consumers alike and can increase risk for building owners in terms of liability and costs. Additionally, those contractors who ignore the permitting process may do so in an effort to undercut the bid of a contractor who must factor in the time and costs of permitting. To encourage compliance with the permitting process, and to dissuade the tendency on the part of some contractors to ignore the process, California is increasing the penalties for disregarding permit requirements.
Assembly Bill 1747 increases the potential civil penalty, available under Business & Professions Code Section 7099.2, to $30,000 for every violation of Business and Professions Code Section 7110 (among others). This bill further provides (in amending Business and Professions Code Section 7110) that the list of violations which constitute cause for a disciplinary action by the board includes a willful or deliberate disregard of any state or local law relating to the issuance of building permits. Thus, there is now a more significant “bite” in the law and beware to the contractor who willfully or deliberately ignores the requirements of the permitting process.
ASSEMBLY BILL 2916
When a contractor during the course of his or her work does something which results in a minor violation of a rule or ordinance, the CSLB is empowered to issue a letter of admonishment to that contractor as an intermediate form of corrective action. A letter of admonishment will not be used with more serious violations involving working without a license, financial harm, an elder victim, repairs of damage from a natural disaster, or if the contractor has a history of similar violations.
Contractors must comply with the requirements of, or contest in writing, the letter of admonishment. The CSLB will handle contests without a formal hearing process. While a letter of admonishment is not considered formal disciplinary action, it may be used to support future formal discipline. Pursuant to Business & Professions Code Section 7124.6, the CSLB shall publicly disclose a contractor’s letter of admonishment for one year.
As of January 1, 2023, Assembly Bill 2916 amends Business & Professions Code Section 7124.6, so that the CSLB may choose to increase the length of time the letter of admonishment is made public from one to two years. In making the decision to publicly disclose the letter for two years, the CSLB shall consider various factors including the gravity of the violation, the good faith of the contractor, and the history of previous violations. For more serious infractions, the two-year disclosure will be deemed more appropriate in an effort to provide the public with more information about contactors and their work. While there were arguments that two years disadvantages the contractor in question, the public policy of consumer protection was more persuasive.
ASSEMBLY BILL 2105
The purpose of this statutory change is to provide an advantage to veterans looking to start a contracting business in this state. California’s Department of Consumer Affairs is composed of various boards that license and regulate various professions and vocations. California’s laws allow those boards to set rules and regulations, to include the setting of fees according to a prescribed schedule. The CSLB is one of the boards within California’s Department of Consumer Affairs.
Assembly bill 2105 will amend Business & Professions Code Section 7137 to allow the CSLB to grant a 50% reduction in the fees for an initial license or registration fee to any contractor license applicant who demonstrates that he or she is a veteran who has served as an active-duty member of the United States Armed Forces and was not dishonorably discharged. While this amendment is a thoughtful and welcome change, it remains to be seen how many individuals will be alerted to this and actually take advantage of the benefit.
California’s laws change each year and are constantly evolving. Being in business in California, or even simply being a resident hereof, requires attention to these statutory changes. We will watch with interest how the changes outlined above result in changes in construction practices in the coming year and in the years to come.