In California, the law takes construction and contracting work very seriously, both to protect consumers and to ensure that the work meets safety standards.
As a result, the state requires individuals and companies performing this type of work to hold a valid contractor's license. This license can be obtained by meeting specific educational and experience requirements, passing a state exam, and maintaining a bond and insurance policy.
Performing contracting work without a license in California is not only a violation but also a serious offense. Under California Business and Professions Code 7028 BPC, you could face criminal charges.
If convicted, the consequences are significant, including substantial fines and even imprisonment. This is not a risk to be taken lightly.
In simple terms, BPC prohibits contracting without a current and valid contractor's license. A first-time offense is classified as a misdemeanor, with penalties including up to six months in jail and fines of up to $ 5,000.00.
Overview of BPC 7028
As noted above, California BPC 7028 makes it a crime to act as a contractor without a license. The statute specifically states that it is a misdemeanor for any person to engage in the business of or act in the capacity of a contractor in California without having a license issued by the Contractors' State License Board (CSLB).
Generally, this includes any project where the total cost of labor and materials exceeds $1,000. This threshold is quite low and covers most construction and contracting work.
This also applies to individuals who perform work. At the same time, their license is under suspension for specific reasons, such as failure to pay a civil penalty or to comply with an order of correction. The following actions are considered a violation:
- Operating without a license: Conducting contracting work on projects exceeding $1,000 without the appropriate CSLB license.
- Contracting with an unlicensed contractor: Hiring someone or an entity for contracting work who does not hold a valid CSLB license.
- Operating with a suspended license: Performing work as a contractor when your license is suspended or revoked.
What Does BPC 7028 Say?
California Business and Professions Code 7028 BPC says,
(a) Unless exempted from this chapter, it is a misdemeanor for a person to engage in the business of, or act in the capacity of, a contractor within this state under either of the following conditions:
(1) The person is not licensed in accordance with this chapter.
(2) The person performs acts covered by this chapter under a license that is under suspension for failure to pay a civil penalty or to comply with an order of correction, pursuant to Section 7090.1, or for failure to resolve all outstanding final liabilities, pursuant to Section 7145.5.
(b) A first conviction for the offense described in this section is punishable by a fine not exceeding five thousand dollars ($5,000) or by imprisonment in a county jail not exceeding six months, or by both that fine and imprisonment.
(c) If a person has been previously convicted of the offense described in this section, unless the provisions of subdivision (d) are applicable, the court shall impose a fine of 20 percent of the contract price, or 20 percent of the aggregate payments made to, or at the direction of, the unlicensed person, or five thousand dollars ($5,000), whichever is greater, and, unless the sentence prescribed in subdivision (d) is imposed, the person shall be confined in a county jail for not less than 90 days, except in an unusual case where the interests of justice would be served by imposition of a lesser sentence or a fine. If the court imposes only a fine or a jail sentence of less than 90 days for second or subsequent convictions under this section, the court shall state the reasons for its sentencing choice on the record.
(d) A third or subsequent conviction for the offense described in this section is punishable by a fine of not less than five thousand dollars ($5,000) nor more than the greater amount of ten thousand dollars ($10,000) or 20 percent of the contract price, or 20 percent of the aggregate payments made to, or at the direction of, the unlicensed person, and by imprisonment in a county jail for not more than one year or less than 90 days. The penalty provided by this subdivision is cumulative to the penalties available under all other laws of this state.
(e) A person who violates this section is subject to the penalties prescribed in subdivision (d) if the person was named on a license that was previously revoked and, either in fact or under law, was held responsible for any act or omission resulting in the revocation.
(f) If the unlicensed person engaging in the business of or acting in the capacity of a contractor has agreed to furnish materials and labor on an hourly basis, "the contract price" for the purposes of this section means the aggregate sum of the cost of materials and labor furnished and the cost of completing the work to be performed.
(g) Notwithstanding any other law, an indictment for any violation of this section by an unlicensed person shall be found, or information or a complaint shall be filed, within four years from the date of the contract proposal, contract, completion, or abandonment of the work, whichever occurs last.
(h) For any conviction under this section, a person who utilized the services of the unlicensed person is a victim of crime and is eligible, pursuant to subdivision (f) of Section 1202.4 of the Penal Code, for restitution for economic losses, regardless of whether he or she knew that the person was unlicensed.
Who Is Considered a Contractor in California?
Under BPC 7026, the term "contractor" is effectively synonymous with "builder." A contractor is defined as any person who undertakes, offers to undertake, or purports to have the capacity to undertake a project. This definition is broad and includes a wide range of activities, such as:
- Constructing, altering, repairing, or improving buildings, highways, roads, or other structures.
- Adding to, subtracting from, moving, wrecking, or demolishing projects.
- Erecting scaffolding or cleaning grounds and structures.
- Preparing roadway construction zones or managing lane closures.
- Installing, repairing, or maintaining monitoring equipment for underground storage tanks.
This definition applies to general contractors, subcontractors, and specialty contractors alike. If your work falls into these categories, the state likely views you as a contractor, and you are required to be licensed to perform these actions.
Elements of the Crime
For a prosecutor to secure a conviction for contracting without a license, they must prove the following elements of the crime beyond a reasonable doubt:
- You acted as a contractor: You engaged in activities defined as contracting, such as building, altering, repairing, or demolition.
- You were not licensed: You did not hold a valid California contractor's license at the time the work was performed; and
- You were not exempt: The law includes certain exemptions, and the prosecution must demonstrate that none of these apply to your situation.
It is important to note that intent is not a primary element of the crime. Simply performing the work without a license is sufficient for a violation, regardless of whether you knew you were required to have one.
Penalties for Contracting Without a License
The consequences for violating BPC 7028 can be severe and become progressively harsher with each conviction:
- First Offense: A first-time conviction is a misdemeanor, punishable by up to six months in county jail, a fine of up to $5,000, or both.
- Second Offense: For a second conviction, the court must impose a fine of $5,000 or 20 percent of the contract price, whichever is greater. Additionally, a second offense carries a mandatory jail sentence of at least 90 days, unless a judge finds that a lesser sentence would better serve the interests of justice.
- Third or Subsequent Offense: A third conviction increases the fine to a minimum of $5,000 and can be as high as $10,000 or 20 percent of the contract price, whichever is greater. There is also a mandatory jail sentence of 90 days to one year.
Fraudulent Use of a Contractor's License Number - BPC 7027.3
Any effort to undermine the integrity of this system could lead to unsafe construction. California also criminalizes the fraudulent use of another person's contractor license number.
This related offense is the fraudulent use of a contractor's license number, as defined under California Business and Professions Code Section 7027.3.
A conviction may result in substantial fines and potentially up to 3 years of imprisonment, depending on the specific circumstances of the case.
In simple terms, the California legislature has enacted penalties for anyone falsely claiming to be a licensed contractor and fraudulently using a contractor's license number.
According to BPC 7027.3, misusing a contractor's license number is considered a serious offense that can be prosecuted as a felony, potentially resulting in imprisonment.
What are the Related Crimes?
- False advertising, as outlined in Business and Professions Code 17500 BPC, involves making false or misleading claims regarding your credentials or the products and services you provide.
- Forging, counterfeiting, or possessing a fraudulent public seal as outlined in Penal Code 472 PC. This law criminalizes the forging of a public seal or the creation of a counterfeit design or emblem.
- Diversion of construction loans, as defined under Penal Code 484b PC, refers to the crime of redirecting funds meant for construction expenses.
Common Defenses Against the Charges
An accusation of contracting without a license does not automatically mean a conviction. A skilled California criminal defense attorney may employ several defenses to combat the charges. Common defenses include:
- You Were Not Acting as a Contractor: You may be able to argue that the work you performed does not fall under the legal definition of contracting. For example, you may have been a simple employee or a supplier of materials, not the person responsible for the overall project.
- Exemption from Licensing Requirements: The law provides exemptions for certain types of work. The most common is the "handyman exemption," which applies to projects where the total cost for labor and materials is less than $500. Other exemptions may apply to government work or certain agricultural projects. If your work falls under an exemption, you have not violated the law.
- You Have a Valid License: Mistakes can happen. It is possible that there was a clerical error or misunderstanding regarding the status of your license. Presenting evidence of a valid, active license at the time the work was performed is a complete defense to the charge.
For additional information, contact our criminal defense law firm, Eisner Gorin LLP, located in Los Angeles, CA.
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