Licensed vs. Unlicensed Work: The $1,000 Threshold
Effective January 1, 2025, Assembly Bill 2622 raised the threshold for unlicensed construction work in California from $500 to $1,000. This is the first increase since 2005 and the most common source of questions from both contractors and homeowners.
The Rule
A person can perform construction-related work without a contractor license if the total cost of labor, materials, and all other expenses is under $1,000, and two additional conditions are met: the work does not require a building permit, and the person works alone without hiring employees or helpers.
All three conditions must be true. If the total cost is $900 but the job requires a plumbing permit, a license is required. If the total cost is $800 but you bring a helper, a license is required.
What the $1,000 Includes
The threshold is an aggregate amount. It covers the total value of the work or operation, not just the labor charge. If materials cost $600 and labor is $350, the total is $950 and you are under the threshold. If materials cost $700 and labor is $400, you are over it.
You cannot split a larger project into smaller invoices to stay under the limit. A $2,000 fence repair billed as two $1,000 jobs is not legal. The CSLB looks at the total work or operation involved, not how you structure the billing.
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What Unlicensed Workers Can Do
Under $1,000, no permit needed, working alone: minor repairs, basic maintenance, small cosmetic work. Patching drywall and repainting a room. Replacing a faucet. Fixing a fence section. Installing a ceiling fan where wiring already exists and no permit is required.
California's Contractors License Law also states that unlicensed work must be "casual, minor, and inconsequential." That phrase leaves some gray area, but it generally excludes anything structural, anything involving systems (electrical panels, plumbing lines, HVAC), and anything that a reasonable person would consider major construction.
What Still Requires a License
Regardless of cost:
- Any work requiring a building permit
- Electrical work behind walls or at the panel
- Plumbing line modifications
- HVAC installation or major repair
- Structural work (foundations, load-bearing walls, roofs)
- Any work where you employ or direct another person
- Any portion of a larger project that exceeds $1,000 total
A common misconception: if the homeowner buys the materials and you charge only for labor under $1,000, you are in the clear. Not necessarily. If the combined value of the work or operation exceeds $1,000 including the materials, the exemption does not apply.
Advertising Rules
If you advertise services under the $1,000 exemption, you must clearly state that you are not a licensed contractor. Advertising in a way that implies licensure when you are not licensed is itself a violation, separate from the work threshold.
Penalties
Unlicensed contracting above the threshold is a misdemeanor. First offense: fines up to $15,000 and up to six months in county jail. Second offense: mandatory jail time and higher fines. Starting July 1, 2026, under SB 779, the minimum civil penalty for unlicensed work increases to $1,500.
There is also a financial risk that contractors often overlook. Under Business and Professions Code Section 7031, a client can refuse to pay for completed work and demand a return of money already paid if the contractor was unlicensed at any point during the project. This applies even if the work was done well.
For Homeowners
If you are hiring someone for a small job under $1,000, you are not required to use a licensed contractor. But you lose the protections that come with licensing: the $25,000 bond, workers' comp coverage, CSLB complaint process, and disciplinary oversight. For anything above $1,000, or any work requiring a permit, always verify the license before signing.
For Contractors and Tradespeople
The $1,000 exemption is a legal starting point for small operators, not a long-term business strategy. If you are regularly bumping against the limit, the math favors getting licensed. A license opens you to every project over $1,000, lets you pull permits, carry insurance, and compete for work that unlicensed operators cannot touch.
For details on what the licensing process involves, see our license requirements guide.
Starting a Contracting Business?
Most California contractors operate as an LLC or sole proprietorship with a DBA. Form your business entity before applying for your CSLB license.