What You Need to Know About Obtaining a Contractor’s License in California

more+
less-
more+
less-

To perform work on most construction projects in California you need to be a licensed by the California Crooked contractorContractors State License Board (“CSLB”).

The CSLB publishes a helpful guide on becoming a licensed contractor – Blueprint for Becoming a California Licensed Contractor – as well as a reference book which discusses contractor licensing – California Contractors License Law & Reference Book. The guide is a bit outdated through having been published in 2006 although the reference book is updated annually.

Since they say imitation is the greatest form of flattery, I’ve borrow liberally from both the Guide and Reference Book for this post, although I’ve added a few additional comments from my experience with licensing issues.

Who must be licensed as a contractor?

All businesses and individuals who construct or alter, or offer to construct or alter, any building, highway, road, parking facility, railroad, excavation, or other structure in California (other than federal projects located in California) must be licensed by the CSLB if the total cost of labor and materials under one or more contracts on the project is $500 or more.

Note: Contractors who work with asbestos or other hazardous substances are regulated by the U.S. Occupational Safety and Health Administration and the California Division of Occupational Safety and Health, and must be licensed by these agencies, as well as by the CSLB.

Are there any exemptions to the license requirement?

Yes. The most common exemptions are:

  • Minor Work Exemption: If the total cost of labor and materials under one or more contracts on a project is less than $500, a contractor’s license is not required. Work which is part of a larger project, whether undertaken by the same or different contractors, may not be divided into contracts of less than $500 in an attempt to meet this exemption.
  • Employee Exemption: Employees who are paid wages, who do not work in an independently established business, and who do not have direction or control over the performance of the work or who do not determine the final results of the work or project are not required to have a contractor’s license.
  • Public Employee Exemption: Public employees working on public projects are not required to have a contractor’s license.
  • Owner-Builder Exemption: Owner-builders who build or improve structures on their own property are not required to have a contractor’s license if they either do the work themselves or use their own employees. This exception only applies if the structure is not intended to be offered for sale within one year of completion.
  • Owner-Builder Contracting Exemption: Owner-builders who build or improve structures on their own property are not required to have a contractor’s license if they contract with a licensed contractor to perform the work. This exemption is only applicable to the construction of single-family residences if no more than four such structures are offered for sale in any one calendar year.
  • Owner-Builder Primary Residence Exemption: Owner-builders who improve their main place of residence, who have actually resided there for one year prior to completion of the work, and who complete the work prior to sale are not required to have a contractor’s license. This exemption is limited to two structures within a three-year period.
  • Manufacturer Exemption: Manufacturers who sell or install finished products that do not become a fixed part of a structure are not required to have a contractor’s license.

Who can become a licensed contractor?

To qualify for a contractor’s license, an individual must:

  • Be 18 years of age or older;
  • Have a valid social security number; and
  • Show that they have the experience and skills necessary to manage the daily activities of a construction business, including field supervision, or be represented by another individual with the necessary experience and skills who serves as the qualifying individual.

Can business entities be licensed?

Yes, the CSLB issues contractor’s licenses to corporations, partnerships, joint venturers and limited liability companies (“LLCs”). However, in order for a business entity to be issued a contractor’s license they must associate a qualifying individual who holds an contractor’s license. Whether licensed as an individual or as a business entity, a licensed contractor may only contract in the classification(s) in which it is licensed.

What experience is required for a contractor’s license?

A qualifying individual must have at least four years of journey-level experience in the past 10 years immediately preceding application for a contractor’s license. Credit for experience is only given for experience as a journeyman, foreman, supervising employee, contractor, or owner-builder. All experience must be verified by a qualified and responsible person who has firsthand knowledge of the individual’s experience during the time period covered.

A qualifying individual may also receive credit of up to three years of the required four years of journey-level experience:

  • A maximum of 1 ½ years of credit: Upon submission of transcripts for an Associate of Arts degree from an accredited school or college in building or construction management.
  • A maximum of 2 years of credit: Upon submission of transcripts for: (1) a four-year degree from an accredited college or university in the fields of accounting, business, economics, mathematics, physics, or areas related to the specific trade or craft for which an application is being made; (2) a professional degree in law; or (3) substantial college or university course work in accounting, architecture, business, construction technology, drafting, economics, engineering, mathematics or physics.
  • A maximum of 3 years credit: Upon submission of: (1) a Certificate of Completion of Apprenticeship from an accredited apprenticeship program or a certified statement of completion of apprenticeship training from a union in the classification being applied for; (2) transcripts for a four-year degree from an accredited college or university in architecture, construction technology, or any field of engineering that is directly related to the classification being applied for; or (3) transcripts for a four-year degree from an accredited college or university in the field of horticulture or landscape horticulture if applying for a C-27 Landscaping classification.

What classifications may a contractor be licensed in?

California has three different license classifications:

  • Class “A” – General Engineering Contractor: A Class “A” – General Engineering Contractor’s principal business is in connection with fixed works requiring specialized engineering knowledge and skill.
  • Class “B” – General Building Contractor: A Class “B” – General Building Contractor’s principal business is in connection with any structure built, being built, or to be built, requiring in its construction the use of at least two unrelated building trades or crafts. However, framing and carpentry projects may be performed without limitation. A Class “B” licensed contractor may enter into a direct contract for projects involving only one trade, if the contractor holds the appropriate speciality license or subcontracts with an appropriately licensed specialty contractor to perform the work.
  • Class “C” – Specialty Contractor: There are 41 separate Class “C” licenses for contractors whose principal business involves the use of specialized building trades or crafts. Manufacturers are considered to be contractors requiring a license if engaged in on-site construction, alteration, or repair. In addition, there is a C-61 Limited Specialty classification which is subcategorized into 30 separate “D” subclassifications.

How do I apply for a contractor’s license?

To apply for a contractor’s license you must complete and submit:

If you are required to take an examination, you must complete and submit the Application for Original Contractor’s License or Application for LLC Original Contractor License together with a processing fee (currently $300) to the CSLB. If you are not required to take the examination, you must complete and submit the Application for Original Contractor’s License (Exam Waived) or Application for LLC Original Contractor License (Exam Waived) together with a processing fee (currently $300), initial licensing fee (currently $180), and an additional classification fee (currently $75) for any additional classifications being applied for.

Note: Applications may be submitted in person or by mail to the CSLB. Although the CSLB has a few different offices, only the CSLB’s Sacramento office accepts application. The address of the CSLB’s Sacramento office is Contractors State License Board, P.O. Box 26000, Sacramento, CA 95826.

What if I am required to take an examination?

If you are required to take an examination you must pass a written law and business examination and a specific trade examination. Each examination is 3 1/2 hours and is multiple choice. Examination center are located in Fresno, Norwalk, Oakland, Oxnard, Sacramento, San Bernardino, San Diego and San Jose. Your examination center and a study guide will be included in a Notice to Appear for Examination sent by the CSLB.

The CSLB may waive the examination requirement if the qualifying individual either:

  • Is currently licensed and in good standing in the same classification in which a license is being applied for;
  • Has been licensed and in good standing within the past five years in the same classification in which a license is being applied for;
  • Has passed both the law and business examination and trade examination within the last five years in the same classification in which a license is being applied for; or
  • Is a member of the immediate family of a licensee whose individual license was active and in good standing for five of the past seven years preceding the application, the qualifying individual was actively engaged in the licensee’s business for five of the past seven years and is applying for the same classification, and the license is necessary to continue the operation of an existing family business due to the absence or death of the licensee.

Note: Even if you think you are eligible for an examination waiver you must complete the “Experience” section of the application, unless you are currently a qualifier on a license in good standing in the same classification as the license being applied for, or you have served as a qualifier on a license in good standing within the past five years in the same classification in which a license is being applied for.

Can a qualifying individual serve as the qualifier for more than one license?

Yes, but only if one of the following conditions exist:

  • Twenty Percent Common Ownership: There is a common ownership of at least 20% of the equity of each firm for which the qualifying individual serves as qualifier;
  • Subsidiary or Joint Venture: The additional firm is a subsidiary or joint venture with the first firm; or
  • Majority of Partners or Officers the Same: The majority of partners or officers of the two firms are the same.

Note: Even if a qualifying individual meets these conditions, he or she may not serve as the qualifying individual for more than three firms in any one-year period. Moreover, if a qualifying individual disassociates from the third firm, he or she must wait one year before associating with a new third firm. Responsible Managing Employees (“RMEs”) may not be the qualifier on more than one active license.

What other information or other documentation do I need to submit?

Either together with your application, or later when notified by the CSLB, you must also submit:

  • Contractor Bond or Alternative: A contractor bond (currently $12,500), or alternative in lieu of a bond, in the business name of the applicant;
  • Qualifying Individual Bond or Alternative: A qualifying individual bond (currently $12,500), or alternative in lieu of a bond, or exemption statement for each Responsible Managing Officer (“RMO”) or RME. The bond of the qualifying individual must be in the name of the qualifying individual and the business name of the applicant.
  • Proof of Workers Compensation Insurance or Exemption Certificate: Proof of workers’ compensation insurance or exemption certificate certifying that no workers are employed.

Note: A RMO of a corporation or RMO, responsible managing manager or responsible managing member of a LLC do not need to provide a qualifying individual bond if they own 10% or more of the voting stock or equity of the corporation or LLC and submit a Qualifier Statement of Ownership. A RME may not be exempted from having a qualifying individual bond. RMEs must be bona fide employees involved in the business at least 32 hours a week or 80% of the total business operating hours per week, whichever is less.

How will I know if my application has been approved?

When the CSLB receives your application it will send a Letter of Acknowledgement including a nine-digit Application Fee Number and a four-digit Personal Identification Number which you can use to check the status of your application on the CSLB website. Application status information is updated weekly. You should expect the CSLB to take several months (currently 3 to 4 months) to process your application.

Topics:  Contractors, Licenses, Licensing Rules

Published In: General Business Updates, Construction Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wendel, Rosen, Black & Dean LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »