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The Risks of Hiring Unlicensed Subcontractors as a Licensed General Contractor in California

Updated: May 10

As a General Contractor in California it is crucial to understand the legal requirements and potential risks associated with hiring subcontractors.

The California Contractors State License Board (CSLB) has strict regulations in place to protect both contractors and consumers from the dangers of unlicensed work.

According to the CSLB, any individual performing work valued at $500 or more in combined labor and material costs must hold a valid contractor's license.

This means that as a general contractor, you are not permitted to hire unlicensed subcontractors to work under your license and worker's compensation insurance, except in a few specific circumstances.

Exceptions to this rule include:

1. Work performed by your direct employees, provided they are covered under your worker's compensation insurance.

2. Work performed by a subcontractor licensed in a different trade, as long as the work is incidental and supplemental to the main project.

3. Minor repairs or maintenance that do not require a contractor's license. However, knowingly hiring an unlicensed subcontractor can result in serious consequences for your business.

The CSLB may take disciplinary action against you, which can include substantial fines and the suspension or revocation of your contractor's license.

This can damage your reputation and hinder your ability to secure future projects. Furthermore, if an unlicensed subcontractor is injured while working on your project, your worker's compensation insurance may not cover their injuries. This could leave you personally liable for their medical expenses and lost wages, potentially exposing you to costly legal battles and financial losses.

To protect yourself and your business, it is essential to verify that any subcontractors you hire hold valid licenses in their respective trades. By working with licensed professionals, you ensure compliance with state regulations, maintain a safe working environment, and shield yourself from potential legal and financial liabilities.

At the Law Office of Jack Kakoian, we understand the complexities of California's construction laws and are committed to helping contractors navigate these regulations. If you have any questions or concerns about hiring subcontractors or maintaining compliance with state requirements, please don't hesitate to contact our experienced legal team for guidance.​​​​​​​​​​​​​​​​

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