Reference · License law terms
Thirty-two terms from California’s contractor license law, lien law and public works rules, the ones that trip people up on paperwork and on the job. Each gets a sentence or two and the statute it comes from.
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These are plain-English summaries to help you read the law, not legal advice. Each entry names the statute it summarizes, and statutes change, so read the source before you rely on a detail. License Ladder is independent study material, not affiliated with or endorsed by CSLB or PSI.
The category of work a license covers. California divides contracting into general engineering (A), general building (B), residential remodeling (B-2) and specialty contracting (C, for trades such as C-10 electrical); CSLB can limit a licensee to the classifications it holds, though a specialty contractor may do another trade’s work when it is incidental and supplemental to its own.
Cal. Bus. & Prof. Code §7055, §7059; CSLB, Licensing Classifications
A contractor whose main business is structures built for the shelter or enclosure of people, animals or property, on projects that need at least two unrelated building trades or crafts. A B may take framing or carpentry jobs on their own, but framing and carpentry don’t count toward the two trades, so a narrower job needs the matching license or, on a prime contract, a licensed subcontractor.
Cal. Bus. & Prof. Code §7057
A contractor whose main business is improving an existing wood-frame home, where a single contract uses at least three unrelated trades or crafts, such as drywall, flooring and painting. A B-2 may not contract for structural changes to load-bearing parts of the building at all, and may not install, replace, substantially alter or extend electrical, plumbing or mechanical systems unless it holds that license or subcontracts the work to a licensed contractor. B or B-2? The exam guide compares them.
Cal. Bus. & Prof. Code §7057.5, in effect since January 1, 2021
A specialty classification for work that doesn’t fit any of the other C classifications. A C-61 contractor is confined to the field and scope CSLB accepted and endorsed on the license, which CSLB tracks as “D” subcategories such as D-28 doors, gates and activating devices.
Cal. Code Regs., tit. 16, §832.61, as published on CSLB’s C-61 Limited Specialty page
The rule that lets a small job go without a license: work on one project where labor, materials and everything else add up to less than $1,000 and no building permit is needed. It doesn’t apply if the job is part of a larger operation or split up to get under $1,000, if you advertise as a contractor, or if you hire anyone to do or help with the work.
Cal. Bus. & Prof. Code §7048, as amended effective January 1, 2026
A property owner who builds or improves a structure on their own property without a contractor’s license, which the law allows only in set situations, such as doing all the work themselves or with their own wage-paid employees when none of it is intended or offered for sale. Selling or offering the structure for sale within a year after it’s finished creates a presumption, which the owner can try to rebut, that it was built to sell.
Cal. Bus. & Prof. Code §7044
A license set aside by a contractor who isn’t doing work that needs one. While it’s inactive you can’t work as a contractor and the bond, qualifier and workers’ compensation requirements don’t apply; you can reactivate it without an exam by paying the full active renewal fee and meeting the license law’s other requirements.
Cal. Bus. & Prof. Code §7076.5
Acting as a contractor without a license, when no exemption applies, is a misdemeanor; a first conviction is punishable by a fine of up to $5,000, up to six months in county jail, or both. Separately, CSLB’s registrar issues citations for it with a civil penalty of $1,500 to $15,000; the $1,500 minimum took effect July 1, 2026. The exam guide explains the difference.
Cal. Bus. & Prof. Code §7028, §7028.7
The person whose experience and knowledge qualify a business for its license, and who must exercise supervision and control over its construction operations so they comply with the license law. Depending on how the business is set up, the qualifier is the owner, a general partner, a responsible managing officer (RMO), an LLC’s responsible managing member or manager, or a responsible managing employee (RME).
Cal. Bus. & Prof. Code §7025, §7068, §7068.1
An officer of a corporation (an LLC can also use one) who serves as the company’s qualifier. Unless the RMO owns at least 10% of the corporation’s voting stock and certifies that on CSLB’s form, a $25,000 bond of qualifying individual must also be on file.
Cal. Bus. & Prof. Code §7068(b), §7071.9
A qualifier who is a permanent, bona fide employee of the business and is actively engaged in its licensed work at least 32 hours a week, or 80% of the hours the business operates, whichever is less. Because an RME is an employee, CSLB won’t accept a no-employees workers’ compensation exemption on a license an RME qualifies.
Cal. Bus. & Prof. Code §7068(b)–(c); CSLB, Workers’ Compensation Requirements
A license issued to a combination of licensees (individuals, partnerships, corporations, LLCs or other joint ventures), each holding a current, active license in good standing; it can be issued in any classification at least one member holds. Two or more licensees generally can’t be awarded a contract jointly without one, and it is automatically suspended whenever any member’s license isn’t current, active and in good standing.
Cal. Bus. & Prof. Code §7029, §7029.1
A person who solicits, sells, negotiates or signs home improvement contracts on behalf of a licensed contractor; they must be registered with CSLB and must give the homeowner the contractor’s business name and license number before doing so. Officers, general partners and the qualifier listed on the license are among the people who don’t have to register.
Cal. Bus. & Prof. Code §7152, §7153
The $25,000 bond, from an admitted surety or as a deposit of cash or a cashier’s check with the registrar, that a license needs to be issued, renewed or kept active. It protects the people the statute names, such as a homeowner harmed by a license-law violation on a home improvement job or an employee the contractor didn’t pay; an LLC license also needs a separate $100,000 bond covering its workers’ wages and benefits.
Cal. Bus. & Prof. Code §7071.4, §7071.5, §7071.6, §7071.6.5
A second $25,000 bond, in addition to and never combined with the contractor’s bond, required when the qualifier isn’t the owner, a general partner or a joint licensee. An RMO who owns at least 10% of the corporation’s voting stock, or an LLC qualifier with at least a 10% membership interest, doesn’t need one after certifying that ownership to CSLB.
Cal. Bus. & Prof. Code §7071.9
Insurance for employees who get hurt or sick because of their work; every California employer must carry it or be approved to self-insure, and an active license needs a certificate on file with CSLB. As the law reads in September 2026, a licensee with no employees may file an exemption instead unless it holds one of five named classifications (C-8, C-20, C-22, C-39 and D-49), and a version of the law already on the books ends that exemption on January 1, 2028 for everyone but joint ventures with no employees.
Cal. Bus. & Prof. Code §7125 (current version and the version operative January 1, 2028); Cal. Lab. Code §3700; CSLB, Workers’ Compensation Requirements
An agreement, spoken or written, between a contractor and a homeowner (or a tenant, for work on their own unit) to repair, remodel, alter or add to residential property. Once the price is over $500, a lower figure than the $1,000 license threshold, it must be in writing, signed before work starts and carry the terms and notices the statute lists; qualifying service-and-repair jobs of $750 or less follow their own rules.
Cal. Bus. & Prof. Code §7151, §7151.2, §7159, §7159.10
The money a homeowner pays up front on a home improvement contract. It can be no more than 10 percent of the contract price or $1,000, whichever amount is smaller. After that, the contractor can only ask for or take payment for work already done or materials already delivered. Both limits are lifted for a contractor who furnishes a performance and payment bond, a lien and completion bond, or a registrar-approved bond equivalent or joint control covering full performance and payment.
Cal. Bus. & Prof. Code §7159.5(a)(3), (a)(5), (a)(8)
A change to the work or the price after a contract is signed. On a home improvement job it becomes part of the contract only if it is written and signed by both sides before the changed work starts, and it isn’t enforceable against the homeowner unless it states the scope of work, the amount added or subtracted, and the effect on progress payments or the completion date.
Cal. Bus. & Prof. Code §7159(c)(5), §7159.6
A buyer’s right to cancel a home improvement contract by written notice until midnight of the third business day after receiving a signed, dated copy with the cancellation notice, or the fifth business day for a buyer 65 or older. It doesn’t apply when the contract is negotiated at the contractor’s place of business, and contracts to repair disaster damage get a seven-day version.
Cal. Bus. & Prof. Code §7159(e)(6)–(7); Cal. Civ. Code §1689.5, §1689.6
A contractor that has a contract directly with the property owner. It’s the lien law’s term for what many people call the prime contractor, and when other statutes say “prime contractor” in lien matters, they mean the direct contractor.
Cal. Civ. Code §8018
A claim against the property itself, recorded with the county recorder, by someone who did authorized work or supplied materials for the project and hasn’t been paid. Lien rights belong to the direct contractor, subs, material suppliers, companies that rent out equipment, laborers and design professionals. It must be recorded within deadlines tied to the project’s completion, and it generally expires unless a lawsuit to enforce it is filed within 90 days after recording.
Cal. Civ. Code §8400, §8412, §8414, §8416, §8460
On private work, the written notice a subcontractor, supplier or other claimant gives the owner, the direct contractor and any construction lender no later than 20 days after first furnishing work, to keep the right to record a lien, give a stop payment notice or claim on a payment bond. A late notice still counts, but only for work performed in the 20 days before it was served and after; laborers don’t have to give one, and a contractor hired directly by the owner gives it only to the construction lender, if there is one.
Cal. Civ. Code §8200, §8204
A signed, verified notice from an unpaid claimant that generally requires the owner to hold back enough of the money due the direct contractor to cover the claim; it can also go to a construction lender, and on a public job it goes to the public entity, which must withhold funds from the direct contractor. Where another statute says “stop notice,” it means this notice.
Cal. Civ. Code §8044, §8502, §8520, §8522, §8530, §9354, §9358
A notice the owner may record with the county recorder on or within 15 days after a project is completed. It can cut the time to record a lien to 60 days after it’s recorded for the direct contractor and 30 days for everyone else, instead of 90 days after completion; a notice of cessation, allowed once work has stopped for at least 30 days, has the same effect.
Cal. Civ. Code §8182, §8188, §8412, §8414
A form in which a claimant gives up lien, stop payment notice and payment bond rights in exchange for payment; to release the owner, lender or surety, it must be signed and substantially follow one of four statutory forms: conditional or unconditional, on a progress payment or on final payment. A conditional release takes effect only when payment is actually received, while the unconditional form warns that it “is enforceable against you if you sign it, even if you have not been paid.”
Cal. Civ. Code §8124, §8126, §§8132–8138
A bond from an admitted surety that guarantees payment in full of the claims of the people who furnish work for a project. A direct contractor awarded a public works contract over $25,000 generally must give one, for at least the full contract amount, before work starts; on a private job, an owner who files the contract and records the direct contractor’s payment bond for at least half the price before work begins can have lien enforcement limited, where equitable, to what the owner still owes the direct contractor.
Cal. Civ. Code §8600, §8606, §9550, §9554
Someone paid for labor or services who is in business for themselves rather than your employee; California treats a worker as an employee unless you can show all three parts of the “ABC” test: free from your control, doing work outside your usual business, and customarily engaged in an independent business of that kind. For construction subcontracts that meet a list of conditions, including a written subcontract and a sub licensed by CSLB for the work, an older multi-factor test applies instead, and anyone doing work that needs a contractor’s license must hold one to be treated as an independent contractor.
Cal. Lab. Code §2775, §2750.5, §2781
Construction, alteration, demolition, installation or repair work done under contract and paid for in whole or in part with public funds, along with other categories the Labor Code lists. It is where the prevailing wage, certified payroll and DIR registration rules below apply, each with its own dollar threshold.
Cal. Lab. Code §1720
The minimum wage rates, including holiday and overtime rates, that must be paid to every worker on a public works project for that type of work in that locality; the rule covers projects over $1,000 and binds the contractor and every subcontractor. The Director of Industrial Relations determines the rates.
Cal. Lab. Code §1771, §1773, §1774
The payroll records each contractor and subcontractor on a public works project must keep for every worker (name, work classification, hours and pay, among other details), certified under penalty of perjury. On projects covered by the rule they also go straight to the Labor Commissioner, electronically, at least once a month while work is underway.
Cal. Lab. Code §1776, §1771.4
Registration with the Department of Industrial Relations that every contractor and subcontractor needs to bid on, be listed in a bid for, or work on a public works contract covered by the prevailing wage law, renewed each year with a fee. As the statute reads in September 2026, it isn’t required on construction, alteration, demolition, installation or repair projects of $25,000 or less, or maintenance projects of $15,000 or less.
Cal. Lab. Code §1725.5, version operative July 1, 2026
A definition tells you what a word means. The exam guide shows where it fits: the licensing process step by step, the seven topics on the Law & Business exam, and who qualifies to sit it.
Studying for that exam? The Law & Business package is $99 and the bundle with General Building (B) is $149; those are launch prices, and they go to $189 and $249 when the launch ends. See what’s in each package.
Sources: California Business and Professions Code, Civil Code and Labor Code, section text read on leginfo.legislature.ca.gov; Cal. Code Regs., tit. 16, §832.61 and CSLB’s workers’ compensation guidance, read on cslb.ca.gov. Checked 22 September 2026.