California has some of the most specific contractor rules in the country, and several changed recently. Here is a plain-language overview of what tends to apply, with the official sources to confirm it.
Who needs a license in California
California requires a Contractors State License Board (CSLB) license for any construction work where the combined cost of labor and materials is $1,000 or more. That threshold was raised from $500 to $1,000 effective January 1, 2025. The small-job exemption only applies when no employees are used, no building permit is needed, and you do not advertise as licensed.
License bonds in California
The statewide contractor license bond is $25,000 (raised from $15,000 in 2023). A separate Bond of Qualifying Individual may also be required when the license is qualified by a responsible managing employee, or by an officer who owns less than 10 percent of the voting stock. Confirm what applies to your license with the CSLB.
Workers compensation in California
California requires workers compensation for any employer with even one employee, with no minimum threshold. California is an open market. Importantly, certain trades, including C-8 concrete, C-20 HVAC, C-22 asbestos, C-39 roofing, and C-61/D-49 tree service, must carry workers comp whether or not they have employees.
Owner and officer exemptions
A contractor with no employees may file a signed exemption from workers comp. That exemption is barred if the license is qualified by a responsible managing employee, or if the contractor holds one of the trades that must carry coverage regardless (such as C-39 roofing). Once you hire anyone, proof of coverage must reach the CSLB within 90 days.
Independent contractors and subcontractors
California uses the ABC test (AB 5) for most worker classification. In construction, a bona fide subcontract between licensed contractors is generally judged under Labor Code 2750.5 and the older Borello multi-factor test when certain conditions are met, including that the sub is CSLB-licensed and working within its license scope. This is complex; confirm with your advisors and the state.
Public works and prevailing wage
Contractors and subcontractors who bid or work on California public works generally must register with the Department of Industrial Relations (DIR), maintain workers comp, use DIR-registered subcontractors, and pay prevailing wage. The annual registration fee changes periodically, so confirm the current amount with DIR.
Verify before you rely on this
California raised its licensing threshold to $1,000 in 2025 and its bond to $25,000 in 2023. This page is general information for California contractors, not legal advice, and rules change and vary by project and locality. Confirm current requirements with the official sources below before you bid, hire, or buy coverage.
Last verified June 2026 by Vantage Point Risk.
