What if my contractor is working without a license?
Answered by Netanel Presman, General Contractor (CSLB #1105249) · Updated
Short answer
Stop work, do not pay further, and report to the state licensing board. In California, unlicensed contracting over $500 is a misdemeanor (and can be a felony on repeat offenses). Unlicensed contractors cannot legally collect payment, cannot pull permits, and you as the homeowner may be treated as the employer for any injuries on site. You can recover all amounts already paid via civil action in California.
In detail
Hiring an unlicensed contractor is one of the riskiest decisions a homeowner can make. Beyond workmanship risk, there are legal exposures that often surprise homeowners.
California-specific consequences:
- Criminal liability for contractor — unlicensed contracting over $500 is a misdemeanor under B&P Code §7028. Repeat offenses or post-disaster unlicensed work can be charged as a felony.
- Unlicensed contractor cannot sue for payment — B&P Code §7031 bars any unlicensed person from collecting any compensation for work requiring a license, regardless of performance.
- Homeowner can recover everything paid — §7031(b) allows the homeowner to sue and recover ALL compensation already paid, not just the unearned portion. One of the strongest consumer protections in construction law.
- Homeowner treated as employer — if an unlicensed contractor is injured on your property, you may be treated as their employer for workers' comp and personal injury purposes. Your homeowners insurance may not cover this.
- Permits cannot be pulled — unlicensed contractors cannot pull building permits. If work is done unpermitted and discovered, homeowner is liable for remediation.
What "unlicensed" means:
- No CSLB license at all.
- License is expired, suspended, or revoked.
- License is in a class that doesn't cover the work.
- License is for a different entity than the one you contracted with.
- License is inactive.
How to report:
- File a CSLB complaint online.
- Unlicensed contracting investigations are priority.
- Local District Attorney may prosecute.
Practical steps if you discover mid-project your contractor is unlicensed:
- Document everything — contract, payments, photos, communications.
- Stop further payment — unlicensed contractors have no right to payment.
- File CSLB complaint — triggers investigation.
- Consult attorney — §7031(b) recovery requires civil action.
- Plan completion with licensed contractor — budget for likely remediation of unlicensed work.
Other states:
- Oregon (CCB): unlicensed contracting is a misdemeanor.
- Washington (L&I): up to $5,000 fine per violation.
- Florida: unlicensed contracting is a misdemeanor or felony (felony if during declared disaster).
- Texas: no state license for residential GC; local jurisdictions may license trades.
Prevention: always verify license BEFORE signing any contract. Takes 2 minutes on any state board website and is free.
AskBaily verifies every contractor's license daily and only matches homeowners with currently-licensed, properly-classified contractors.
Sources
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