The Contractors State License Board (CSLB) Statewide Investigative Fraud Team (SWIFT) recently started conducting random raids throughout California construction projects looking to bust contractors and qualifiers for unlicensed work pursuant to a recent change in the law.

Before, if the CSLB discovered contractors performing unlicensed work, the penalty was the issuance of a citation; however pursuant to SB 261 and 262 – which went into effect on Jan. 1, 2014 – the CSLB can now take its own disciplinary action – and it is.

Under SB 261 and 262 the CSLB can take disciplinary action against:

  • any person who uses a canceled, revoked, suspended, or altered contractor’s license, uses a forged contractor’s license, or uses or allows another to use a contractor’s license not issued to them; or
  • a qualifier and the licensee they are qualifying if the qualifier is not actively involved in the construction activities of the licensee.

This means that the CSLB can take direct administrative action against any licensed or unlicensed contractor who commits violations related to the fraudulent use of a contractor license. So, even if you are properly licensed, if you are aware that an unlicensed contractor is working on your project, your company may be: 1) liable for injury caused by the work of the unlicensed contractor; and 2) charged with a misdemeanor, serve up to six months in jail, and pay a fine of $3,000 to $5,000.

The takeaway: Keep your contractor’s license current and check and re-check the status of your subcontractors’ licenses throughout the duration of a project. You don’t want to serve time for someone else’s crime.