All contractors and subcontractors performing construction work in California must be licensed. See Business and Professions Code (B&P) §7031. In order to recover compensation for the work that they have performed, all contractors and subcontractors must plead and prove licensing at all times during the construction project. See Hydrotech Systems Ltd. v. Oasis Water Park (1991) 52 Cal.3d 988.

1. General Building Contractors ("B Licensees") (B&P §7057),
2. General Engineering ("A Licensees") (B&P §7056), and
3. Specially Contractors consisting of the various subcontractors (B&P §7058).

B LICENSEES:
Effective January 1, 1998, a B Licensee:
1. Can take a prime or subcontract for framing and carpentry.
2. If the project requires only one other craft, must either issue a subcontract or hold the appropriate specialty license.
3. Is sufficient if the project involves 2 or more unrelated trades or crafts exclusive of framing and carpentry.
4. Must always subcontract fire protection (Classification C-12) and well drilling (Classification C-57).

A LICENSEES:
Performs work requiring specialized engineering knowledge and skill such as irrigation drainage, flood control, harbors, dams, railroads, highways, streets and roads, airports, sewers, bridges, pipelines, parks, refineries, excavating, grading, trenching, etc.

It is a question of law for the court to determine the appropriate license required. See Ron Yates Construction Co. v. Superior Court (1986) 186 Cal.App.3d 337.

There's a limited doctrine of "substantial compliance" within the license law. See B&P §7031(d). Substantial compliance can be established if the contractor can establish that it:

1. Was duly licensed prior to the performance of the act or contract,
2. Acted reasonably in good faith to maintain proper license, and
3. Did not know or reasonably should'nt have known that he or she was not duly licensed.

There are 2 primary penalties for contracting without a license. As noted above, the contractor or subcontractor may not sue to collect money due it for the work performed. (B&P §7031.) It is also a misdemeanor. (B&P §7028.) There are many grounds for disciplinary action in the contractor's license law. Some of the grounds that are encountered most often are:

1. Abandonment of the construction project (B&P §7107),
2. Division or misapplication of funds (B&P §7108),
3. A contractor's failure to pay a subcontractor a progress payment within ten days of being paid (B&P §7108.5),
4. Small or willful departure from plans and specifications or from accepted trade standards for the good and workmanlike construction (B&P §7109),
5. Material failure to complete the project for the price stated in the contract (B&P §7113), willful or fraudulent act injuring another (B&P §7116),
6. Acting as a contractor under an inactive license (B&P §7117.5), and
7. Willful failure to prosecute work diligently (B&P §7119).

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