California Contractor Laws: The Main Things New Contractors Need To Know

If you’re a new California contractor or you’re simply looking to become a construction contractor in the state, it may seem like a daunting task to stay compliant and within the bounds of the legal requirements put forth by the State and the various authorities in charge of maintaining safety and construction standards.

California is notorious for its regulatory eagerness, with the state legislature constantly enacting new bills that force contractors to make constant changes in order to avoid running afoul of California law – and facing the serious consequences that accompany such action.

When it comes to contracting, you simply must follow the law – and that means laws that you’re not even aware of. With that in mind, here are the main things new contractors have to look out for when they’re beginning their journey.

1. Licensing Requirements

2. Insurance and Bonding

3. Building and Safety Regulations:

4. Local Codes and Regulations

5. Contractual Laws

Permit and Payment Regulations: Compliance with state laws concerning permits and payments is crucial. Regulations stipulate that contractors should not accept deposits exceeding $1,000 or payments disproportionate to the work completed. Ensuring that all requisite permits are obtained before commencing work is also a legal obligation[5].
Written Contracts: The CSLB requires contractors to have a written contract for any job exceeding $500 in cost. Anything less than $500 doesn’t require a contract – it doesn’t even require a CSLB license!

6. Tax Compliance:

7. Recovery of Payments and Penalties:

8. 2023 Legislative Changes:

9. When In Doubt, Trust The CSLB:

Do Your Own Diligence

While these general buckets of information are a great starting point for contractors who want to stay within the law, the world of construction in California is a mind-bending and complex web of state, regional, county, and local laws and regulations that may or may not apply to your unique situation.

Outside of the main requirements like CSLB licensing, bonding and insurance, and business and professional codes, the situation changes for each and every contractor, on each and every job. It’s up to you to not only know these laws but to deeply understand them and remain compliant with the guidelines set out by these laws.

Ignorance of the law is no excuse – in your career as a construction professional, compliance with laws and regulations is a constant battle that requires you to do the work.