Whether you’re a homeowner looking to refresh the tile in your bathroom or you’re the CEO of a Fortune 500 company looking to expand your company’s data center assets, you need contractors to do the job.
But finding a good contractor to do the job is a tough thing to do. First, you have to identify the job you need done, then you need to actually find the person to do the job – which comes with its own set of responsibilities and problems for you.
The biggest issues when hiring a contractor are legality and expertise: there are millions of dudes out there with a hammer and some nails who could do a decent job on your project.
But how do you know that the project won’t fall apart immediately after they leave the job site? And how do you know you won’t be in big trouble after the fact, both financially and legally?
The easiest and most direct way to know if you’ve got a contractor worth their salt is if they’re licensed and bonded. This single characteristic immediately makes your search for the right contractor that much easier.
Let’s find out why.
Why Hiring Licensed and Bonded Contractors Matters
In California, the law stipulates that all contractors working on a project valued at $500 or more must be licensed by the Contractors State License Board (CSLB). This mandate ensures that contractors meet certain standards of professionalism and expertise.
So we’ve covered the licensing side of things – contractors are licensed by the CSLB – but what about being “bonded”?
Being “bonded” simply means the contractor has secured a surety bond – a type of insurance that protects the client if the contractor fails to complete the job, doesn’t pay for permits, or fails to meet other financial obligations.
This amount is a dollar amount that any homeowner is entitled to, should the contractor not fulfill their contract. The idea is that you at least get something for your troubles.
As of 2023, the CSLB requires licensed contractors to hold a contractor’s bond worth $25,000 – that means, in the event of a contract breach, customers are entitled to receive an amount of up to $25,000 to cover their losses. Note that you will not always receive this amount, but this is the amount that is available in this situation.
Probably the most important bit of anything bond-related is that every contractor in California is required to hold a surety bond. That’s right – anyone who has a valid CSLB license also has a surety bond, as per the CSLB’s laws.
That’s it for a quick-and-dirty overview of bonds and licenses. If you’re interested in the nitty-gritty of bonds, the CSLB has all the information available on their website.
How To Verify a Contractor’s License and Bond in California
So, how can you confirm if your contractor is licensed and bonded in California? Here’s how to check a license in three easy steps.
- Ask for the contractor’s license number: Any contractor worth talking to will have their CSLB license number easily available – either on their business card or company website. If they’re reluctant to provide it, that’s a red flag.
- Verify the license number: Use the CSLB’s online License Check tool to check the validity of the license. This tool will not only immediately tell you if a contractor is licensed (and bonded), but it also shows if there are any disciplinary actions against the contractor.
- Check their bond: while no contractor can obtain a CSLB license without proof of a $25,000 surety bond, it is still possible for a contractor to cancel their bond after getting their license. You can check on the validity of their bond by asking the contractor directly for their bond information and cross-referencing it with their bond company.
What Happens If I Hire An Unlicensed Contractor?
If you’re tempted to skip the whole “is my contractor licensed and bonded?” question, pump the brakes first. The consequences of hiring an unlicensed contractor can be severe in many ways.
From the start, there’s a reason someone is operating as a contractor without a license – they probably lack the skill to get a license. An unlicensed contractor may lack the necessary skills and standards to do the job of a professional.
While you may be stoked about the cost savings of an unlicensed contractor (funny how they can always offer to do a job for cheaper, huh?), the ultimate cost of hiring an unlicensed contractor outweighs the nominal cost savings.
Many unlicensed contractors simply lack the skill and expertise of a licensed contractor who has been through the grueling CSLB process. The effects on your expensive construction project can be catastrophic and can cause your project’s cost to double, triple, quadruple, and so on.
And that’s even if they finish the project! In many cases, unlicensed contractors simply take your money and run – and since they’re unlicensed, you have no recourse. You are stuck with the bill, the unfinished project, and the need to hire a licensed contractor to fix their problem. Sounds like you should have just hired a licensed contractor in the beginning (that’s the whole idea here!).
And even if you get your job done right, you could still be in massive trouble for getting an unlicensed contractor to do the work. California’s Business and Professions Code 7118 states that the punishments for employing an unlicensed contractor for work costing $500 or more can include a fine of up to $5,000 and/or six months in jail.
Imagine that – jail, just to save a few pennies for a subpar job.
All of the consequences of hiring an unlicensed contractor is why we cannot stress this enough: hire a licensed contractor for Pete’s (and your) sake!