7028 BP – Contracting Without a License – California Law

California Business and Professions Code 7028 makes it illegal to engage in contracting unless you have a current and valid contractor’s license. A first-time conviction is a misdemeanor punishable by

• up to 6 months in jail and
• fines of up to $5000.00.

The full text of the code section reads as follows:

7028. (a) Unless exempted from this chapter, it is a misdemeanor for a person to engage in the business of, or act in the capacity of, a contractor within this state under either of the following conditions:

(1) The person is not licensed in accordance with this chapter.

(2) The person performs acts covered by this chapter under a license that is under suspension for failure to pay a civil penalty or to comply with an order of correction, pursuant to Section 7090.1, or for failure to resolve all outstanding final liabilities, pursuant to Section 7145.5.

(b) A first conviction for the offense described in this section is punishable by a fine not exceeding five thousand dollars ($5,000) or by imprisonment in a county jail not exceeding six months, or by both that fine and imprisonment.

(c) If a person has been previously convicted of the offense described in this section, unless the provisions of subdivision (d) are applicable, the court shall impose a fine of 20 percent of the contract price, or 20 percent of the aggregate payments made to, or at the direction of, the unlicensed person, or five thousand dollars ($5,000), whichever is greater, and, unless the sentence prescribed in subdivision (d) is imposed, the person shall be confined in a county jail for not less than 90 days, except in an unusual case where the interests of justice would be served by imposition of a lesser sentence or a fine. If the court imposes only a fine or a jail sentence of less than 90 days for second or subsequent convictions under this section, the court shall state the reasons for its sentencing choice on the record.

(d) A third or subsequent conviction for the offense described in this section is punishable by a fine of not less than five thousand dollars ($5,000) nor more than the greater amount of ten thousand dollars ($10,000) or 20 percent of the contract price, or 20 percent of the aggregate payments made to, or at the direction of, the unlicensed person, and by imprisonment in a county jail for not more than one year or less than 90 days. The penalty provided by this subdivision is cumulative to the penalties available under all other laws of this state.

(e) A person who violates this section is subject to the penalties prescribed in subdivision (d) if the person was named on a license that was previously revoked and, either in fact or under law, was held responsible for any act or omission resulting in the revocation.

(f) If the unlicensed person engaging in the business of or acting in the capacity of a contractor has agreed to furnish materials and labor on an hourly basis, “the contract price” for the purposes of this section means the aggregate sum of the cost of materials and labor furnished and the cost of completing the work to be performed.

(g) Notwithstanding any other law, an indictment for any violation of this section by an unlicensed person shall be found, or information or a complaint shall be filed, within four years from the date of the contract proposal, contract, completion, or abandonment of the work, whichever occurs last.

(h) For any conviction under this section, a person who utilized the services of the unlicensed person is a victim of crime and is eligible, pursuant to subdivision (f) of Section 1202.4 of the Penal Code, for restitution for economic losses, regardless of whether he or she had knowledge that the person was unlicensed.

(i) The changes made to this section by the act adding this subdivision are declaratory of existing law.

Examples

• Carlos enters into an agreement, worth $4,000, to build his neighbor’s garage, despite the fact that he has no contractor’s license.
• John operates Johnny Builders, LLC and enters into several contracts for the construction of new homes, even though his contractor’s license is suspended.
• Without a contractor’s license, Beth creates Pools-R-Us and enters into a substantial contract to repair her town’s public pool.

Defenses

Luckily, there are several legal defenses that a person can raise if accused of a crime under BP 7028. These include showing that an accused party was:

• not a “contractor,”
• working on a “small operation,’ and/or
• an employee.

Penalties

A violation of California Business and Professions Code 7028 is charged as a misdemeanor, as opposed to a California felony or an infraction.

As a misdemeanor, a first-time offense is punishable by:

• Imprisonment in a county jail for up to six months (and longer if multiple convictions); and/or,
• A fine of up to $5,000 (and more if multiple convictions).

A person could also face disciplinary proceedings from the Contractors State License Board of California.

Our California criminal defense attorneys will discuss the following in this article:

• 1. Is contracting without a license a crime in California?
• 2. What are the best defenses to assert in court?
  • 2.1 Not a Contractor
  • 2.2 Small Operations Exemption
  • 2.3 An Employee
• 3. What are the penalties?
• 4. Related Offenses
  • 4.1 Unauthorized Practice of Law – BP 6125
  • 4.2 Unauthorized Practice of Medicine – BP 2052
  • 4.3 False Advertising – 17500
  • 4.4. Fraudulent Use of a Contractor’s License Number – BP 7027.3

1. Is contracting without a license a crime in California?

California Business and Professions Code 7028 BP makes it a crime to do either of the following:

1. Serve as a contractor without a license from the Contractors State License Board; and,
2. Operate as a contractor under a license that is suspended for failure to pay a civil penalty, or, to comply with an order of correction.¹

California law states that a “contractor” means the same thing as “builder.” And, the term includes any person that does himself, or through others,

• Constructs,
• Alters,
• Repairs,
• Adds to or subtracts from,
• Improves,
• Moves,
• Wrecks, or
• Demolishes

any building, excavation, or other project, structure, development, or improvement.²

Please note that under Business and Professions Code 7028, a contract entered into by an unlicensed contractor is illegal.³

Further, failure to obtain a contractor’s license will bar a contractor from recovering any money that may be due (for work performed under a contract).⁴

2. What are the best defenses to assert in court?

A person accused under BP 7028 can challenge the accusation by raising a legal defense. A good defense can often get a charge reduced or even dismissed. Please note, though, that it is critical for an accused to hire an attorney to get the most effective defense.

Three common defenses to BP 7028 accusations are:

1. Not a contractor;
2. Small work exemption; and/or,
3. An employee.

2.1. Not a Contractor

Please note that Business and Professions Code 7028 only applies to “contractors.” Further, this term carries a very specific definition under Business and Professions Code 7026. Thus, a solid legal defense is for a party to show that he was not technically a “contractor” while performing any work in question.

2.2. Small Work Exemption

California Business and Professions Code 7048 BP provides an exception to the laws within BP 7028. The exception is commonly known as the “small operations exemption.” It states that BP 7028 does not apply to any work being performed under a contract for less than $500.⁵ It also does not apply to operations that are considered “casual, minor, or inconsequential…”.⁶ A person, therefore, could perform such work even without a contractor’s license.

2.3. An Employee

BP 7028 does not apply to a person who does contracting work as an employee, while earning wages from a contracting company. Here, the contracting company is subject to Business and Professions Code 7028, not the employee.

3. What are the penalties?

Under BPC 7028, contracting without a license is a misdemeanor offense.⁷

A first conviction for the offense is punishable by:

• Imprisonment in the county jail for up to six months; and/or,
• A fine of up to $5,000.⁸

Repeat offenders are subject to greater fines and longer prison terms. A second-time conviction carries:

• 90 days in jail, and
• A fine that is the greater of:
  • 20% of the contract price; or
  • 20% of the aggregate payments made to – or at the direction of – the unlicensed person; or
  • $5,000

And a third or subsequent offense carries:

• 90 days to 1 year in jail; and
• A fine that is the greater of:
  • 20% of the contract price; or
  • 20% of the aggregate payments made to – or at the direction of – the unlicensed person; or
  • $5,000 – $10,000⁹

Note that defendants whose license was previously revoked always face third-time penalties, even for a first- or second-time offense.

In addition to fines and/or jail, defendants convicted of contacting without a license may also be ordered to pay restitution.

4. Related Offenses

There are three crimes related to contracting without a license. These are:

1. Unauthorized practice of law – BP 6125;
2. Unauthorized practice of medicine – BP 2052; and,
3. False advertising – BP 17500.

4.1. Unauthorized Practice of Law – BP 6125

Business and Professions Code 6125 makes it illegal for a person to engage in the unauthorized practice of law.

Under BP 6125, a person can only practice law in California if he is an active member of the California State Bar.¹⁰

A non-lawyer who presents himself as an attorney, or practices law, faces California misdemeanor penalties. These may include:

• A fine of up to $1,000; and/or,
• Imprisonment in the county jail for up to one year.¹¹

These penalties are even steeper for former attorneys who have been:

• Involuntarily shifted to “inactive” membership in the State Bar,
• Suspended from membership in the State Bar,
• Disbarred, or
• Resigned from the State Bar with criminal charges pending.¹²

In these cases, the unauthorized practice of law is a wobbler offense, meaning it can be charged as a misdemeanor or a felony. The potential felony jail sentence can go as high as three years.¹³

4.2. Unauthorized Practice of Medicine – BP 2052

Business and Professions Code 2052 makes it a crime for a person to engage in the unauthorized practice of medicine.

Specifically, BP 2052 prohibits the following activities if they are undertaken without a valid professional medical license:

• Practicing, attempting to practice, or advertising oneself as practicing any system of treating illness or affliction;
• Diagnosing, treating, operating on, or prescribing for any physical or mental condition; and
• Engaging in a conspiracy to—or aiding and abetting someone else to—do any of those things.¹⁴

The unauthorized practice of medicine in California is a wobbler offense. This means it may be charged as either

• a misdemeanor or
• a felony.

The potential misdemeanor penalties are:

• Imprisonment for up to one year in county jail; and/or,
• A fine of up to $1,000.¹⁵

The potential felony penalties are:

• Imprisonment for 16 months, two years, or three years in county jail; and/or,
• A fine of up to ten thousand dollars ($10,000).¹⁶

4.3. False Advertising – BP 17500

California Business and Professions Code 17500 makes it a crime for a person or company to engage in false advertising.

Under BP 17500, false or deceptive advertising is when a person or company makes false or misleading statements to consumers about the nature of a product or service.¹⁷

A person or company that violates BP 17500 is guilty of a misdemeanor. The offense is punishable by:

• Imprisonment in the county jail for up to six months; and/or,
• A fine not to exceed $2,500.¹⁸

A person or company guilty of false advertisement may also face

• a civil lawsuit and/or
• an injunction.

4.4. Fraudulent Use of a Contractor’s License Number – BP 7027.3

Business & Professions Code 7027.3 is the California law re fraudulent use of a contractor’s license number. Examples would include

• using another person’s license number, or
• using a number that is fictitious altogether.

This offense is a wobbler that can be charged as

• a misdemeanor or
• a felony, and
• can carry penalties of up to 3 years in custody.

Legal References: