5 Critical Things to Know About Unlicensed Contractors

Hiring a contractor for your home or business is a major investment, and choosing the wrong one can have serious consequences. If you’ve hired an unlicensed contractor—whether unknowingly or by taking a gamble—you could be facing financial, legal, and safety risks.

View this post on Instagram

A post shared by Etehad Law (@etehadlaw)

Before you make any decisions, here are five crucial things you need to know about unlicensed contractors in California.

1. It’s Illegal for Unlicensed Contractors to Charge Over $1,000

In California, any contractor performing construction work for more than $1,000 in labor and materials must be licensed by the Contractors State License Board (CSLB). If they aren’t, they are breaking the law—and you could be left with no legal protection if something goes wrong.

2. Unlicensed Contractors Don’t Have Insurance—You’re Liable

Licensed contractors are required to carry liability insurance and worker’s compensation to protect you and their employees. Unlicensed contractors do not.

If a worker gets injured on your property, you could be responsible for:

• Medical expenses
• Lost wages
• Potential lawsuits

This risk alone makes hiring an unlicensed contractor a dangerous decision.

3. Unlicensed Contractors Cut Corners

Because unlicensed contractors operate outside the law, they often cut corners to save money and time. This includes:

• Skipping permits, leading to potential fines or unsafe work
• Ignoring building codes, which can cause structural issues
• Using low-quality materials, resulting in work that doesn’t last

More often than not, you’ll end up paying twice—once for the bad job and again to fix it.

4. Lack of Licensing Means Lack of Training

Licensed contractors must go through testing, training, and background checks to ensure they meet industry standards. Unlicensed contractors don’t, which often means:

• Less experience and oversight
• Improper techniques and knowledge gaps
• Inferior quality work that may cost more in the long run

When it comes to your home or business, you deserve a contractor who knows what they’re doing.

5. You Might Be Entitled to a Full Refund

California protects consumers from unlicensed contractors. If an unlicensed contractor has performed work for you, you may be entitled to disgorgement—meaning you could recover all the money you paid for the job, no matter the quality of the work.

It doesn’t matter whether you knew they were unlicensed or not—the law is designed to protect you.

Hired an Unlicensed Contractor? We Can Help.

At Etehad Law, we have firsthand experience holding unlicensed contractors accountable, including our work in the landmark case, Ahdout v. Hekmatjah (2013). The court ruled that an unlicensed contractor was not entitled to recover any compensation for work performed, regardless of the quality or completion of the project. Even if work is completed, unlicensed contractors cannot legally collect compensation, and homeowners may have the right to recover their money.

If you’ve been misled or taken advantage of by an unlicensed contractor, you have legal options. Etehad Law is here to help you recover your money, hold them accountable, and protect your rights.

Contact us today for a consultation and let us fight for you.

Key Takeaways

• California homeowners can sue an unlicensed contractor for defective work, breach, or property damage.
• Under B&P Code § 7031, you may recover money paid to an unlicensed contractor even if the work was acceptable (disgorgement).
• A CSLB license is required for jobs of $1,000 or more in combined labor and materials; working unlicensed is a misdemeanor under B&P Code § 7028.
• Hiring unlicensed can make you the injured worker’s de facto employer, shifting workers’ comp and injury risk onto you.

Frequently Asked Questions

Can I sue an unlicensed contractor in California?

Yes. A homeowner can sue an unlicensed contractor for defective work, property damage, or breach of contract like any other party. The contractor’s lack of a license does not shield them; it usually works against them. Etehad Law helps Los Angeles and Beverly Hills homeowners hold unlicensed contractors answerable for bad work.

Can I get my money back from an unlicensed contractor even if the work was fine?

Often, yes. Under Business and Professions Code section 7031, a person who was required to be licensed but was not generally cannot collect payment for the work, and a homeowner can sue to recover the money already paid, even when the job was done well. This disgorgement rule is one of the strongest tools California hands consumers. Etehad Law can review your contract and payments to see whether it applies.

When does a contractor in California need a license?

A contractor must hold a California Contractors State License Board (CSLB) license for any job where the combined labor and materials total $1,000 or more. Working unlicensed at or above that amount is a misdemeanor under Business and Professions Code section 7028. Etehad Law can help Los Angeles homeowners confirm whether the person they hired was legally required to be licensed.

Am I liable if a worker for an unlicensed contractor gets hurt on my property?

Possibly. When you hire an unlicensed contractor, California law can treat you as the worker’s employer, which may expose you to workers’ compensation and injury liability that a licensed, insured contractor would normally carry. That is one of the biggest hidden risks of going unlicensed. Etehad Law can explain where you stand if a worker was injured on your Los Angeles property.

How do I check whether a California contractor is licensed?

You can verify any license for free on the CSLB website, which shows the license status, bond, workers’ compensation coverage, and any disciplinary history. Checking before work starts is far easier than untangling problems later. Etehad Law tells Beverly Hills and Los Angeles homeowners to confirm a license and insurance before signing anything.