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Can You Work or Get Paid With a Suspended CSLB License?

Updated November 1, 2026

No. CSLB says you may not contract for work with a suspended license, and that work performed during a bond or workers' comp suspension is considered unlicensed. CSLB can take disciplinary action against you for it. The bigger risk is often the money on the job, and that part of the law changes on January 1, 2027.

The rule today: Business and Professions Code 7031

  • You may not be able to sue for payment. A contractor generally has to show they were licensed at all times during the work, regardless of the merits of the claim.
  • The customer can sue for their money back. A person who used an unlicensed contractor can bring an action to recover all compensation paid.
  • Your security interest may fail. A security interest taken to secure payment is unenforceable if you were not licensed at all times during the work.

What SB 342 changes on January 1, 2027

Governor Newsom signed SB 342 on September 30, 2026. It narrows those penalties for these projects only:

  • Public works of improvement
  • Commercial construction projects
  • Institutional construction projects
  • Common interest developments, if a tenant or resident is not a party to the contract
  • Multifamily residential projects of four or more units, if a tenant or resident is not a party to the contract

On those projects, you can sue for payment if you were licensed when the contract was signed and during the part of the work you want to be paid for. The customer's recovery is limited to what they paid for work performed while you were unlicensed.

What SB 342 does not change

Projects outside that list, including a homeowner's remodel or a residential project of fewer than four units, stay under the all-or-nothing rule. On a covered project, you still need a license when the contract is signed, and you still lose the unlicensed portion. How the new law applies to a contract signed before 2027 is a question for a construction attorney.

The narrow exception: substantial compliance

A court can find substantial compliance after an evidentiary hearing if you were licensed in California before the work, acted reasonably and in good faith to maintain your license, and acted promptly and in good faith to fix the problem once you learned of it. It is not available to someone who was never licensed, and you should not plan a job around it. It is one more reason to act the day you find out.

Fines and stop orders

CSLB says that since July 1, 2026, fines for unlicensed activity start at $1,500. If the problem is workers' comp, CSLB can also issue a Stop Order requiring you to stop using employee labor until coverage is in place and CSLB has lifted the order. Ignoring one is a misdemeanor.

What to do today

  1. Read your record on CSLB's License Check page. It lists each suspension reason, and more than one can apply.
  2. Do not sign new contracts until the record shows the suspension is cleared.
  3. Clear each reason: see bond suspensions, workers' comp suspensions, or the full list.
  4. Keep the dates and paperwork showing when you found out and what you did.
  5. If you have a job in progress or money in dispute, talk to a construction attorney before you do anything else on that job.

Sources

This guide is general information, not legal advice. CSLB rules and fees change; always confirm on cslb.ca.gov.

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