In California, many contractors begin their careers in that gray zone between employee and business owner. You may be doing side work, getting referrals from friends, or thinking about starting your own company. Understanding what you can legally do without a California contractor license, and where the line is crossed, is critical if you want to protect your future license and stay out of trouble with the Contractors State License Board (CSLB).
The New One Thousand Dollar Limit And What It Really Means
For many years, the rule almost everyone quoted was the five hundred dollar rule. That changed starting January 1, 2025, when Assembly Bill 2622 raised the minor work exemption from $500 to $1,000. In simple terms, if the total price of your project is under one thousand dollars, you may not need a contractor license in California.
However, that is only true if three conditions are met. First, the total value of labor and materials together must stay under one thousand dollars for the entire project, not per day, not per person, and not per invoice. Second, the work cannot require a building permit, including typical structural, electrical, plumbing, or mechanical work that local building departments expect to be permitted. Third, you cannot hire or employ anyone else to help you perform the work. Once any of those conditions is broken, the job becomes license-required work even if the dollars are still under the limit.
What You Can Legally Do Before You Are Licensed
From an exam prep school perspective, we often tell students to treat the unlicensed period as a training ground for running a business correctly. Within the one thousand dollar, no permit, no employees limits, you can perform truly minor home repairs and maintenance. Examples might include small patch and paint jobs, basic drywall repairs that do not involve fire rated assemblies, or simple flooring replacements that do not require structural changes or permits.
You can also perform work as a W-2 employee of a licensed contractor while you are unlicensed. In that case, the license, bonding, and insurance responsibility rests on your employer; you are not considered an unlicensed contractor because you are not acting independently. Many future licensees spend these years learning how jobs are bid, how contracts are written, and how inspections are handled, which pays off later when they sit for the CSLB Law and Business exam.
What Crosses The Line Into Illegal Unlicensed Contracting
Problems start when a capable worker acts like a licensed contractor without actually holding a license. In California, contracting without a license is a misdemeanor under Business and Professions Code section 7028, and CSLB takes it seriously. A first offense can lead to up to six months in county jail and fines up to five thousand dollars, plus possible administrative penalties that can reach fifteen thousand dollars. Repeat offenses can trigger mandatory jail time and fines that are calculated as a percentage of the contract price or payments received.
You cross the line when you bid or contract for work of one thousand dollars or more, when you perform work that requires a building permit, or when you hire workers to help on your job, and you do not hold a license. You also cross the line when you advertise or present yourself to the public as a contractor without making your unlicensed status clear. Even something that looks harmless, such as putting your business name and “construction” on a truck or online listing, can be treated as unlawful advertising if it suggests you are a licensed contractor when you are not.
Advertising, Names, And The License Number Trap
Once you hold a California contractor license, CSLB expects your license number to appear on virtually every form of advertising. This includes business cards, vehicle signs, websites, online ads, social media pages, and printed flyers. The business name you use in those ads must match exactly what is on file with CSLB; nicknames and creative variations are not allowed. Leaving the license number off or using the wrong business name can lead to fines from one hundred to one thousand dollars for each violation, and repeated problems can affect your license record.
For someone who is not yet licensed, the safest approach is honesty. You can describe yourself by your trade or skill, such as “tile installer” or “painting services,” but you should not use language that implies you are a licensed contractor or that you can take on larger, permit-required projects. Remember that CSLB investigators and local enforcement agencies routinely check online listings, social media, and job sites in California, often through undercover stings that focus on unlicensed activity.
Why Staying Legal Now Helps Your Future License
From the perspective of a school that prepares contractors for the CSLB exams, we see a pattern. The applicants who reach licensing smoothly are usually the ones who respected the legal boundaries during their unlicensed years. They kept their side work small, avoided permits and employees, and never promised more than the law allowed them to do.
On the other hand, a serious unlicensed contracting case can delay or complicate your application. CSLB reviews your background, and criminal convictions or administrative actions for unlicensed work can raise questions about your fitness to hold a license. The main takeaway is simple. Use the minor work exemption carefully, be honest in how you present yourself, and treat your early years as preparation for being a fully responsible, licensed contractor in California. That mindset will support you not only on exam day, but throughout your career.