Bill Text: CA SB342 | 2025-2026 | Regular Session | Amended

California Senate Bill 342

Bill Title: Contractors: unlicensed work.

Sponsorship: Partisan Bill (Democrat 1)

Status: (Engrossed) 2026-07-01 - Read second time and amended. Re-referred to Com. on APPR. [SB342 Detail]

Download: California-2025-SB342-Amended.html

Amended IN Assembly July 01, 2026

Amended IN Senate January 05, 2026

Amended IN Senate March 17, 2025

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 342

Introduced by Senator Umberg

February 12, 2025

An act to amend Section 7031 of the Business and Professions Code, relating to professions and vocations.

LEGISLATIVE COUNSEL'S DIGEST

SB 342, as amended, Umberg. Contractors: unlicensed work.

Existing law, the Contractors State License Law, establishes the Contractors State License Board in the Department of Consumer Affairs to license and regulate contractors. Existing law prohibits a person engaging in the business or acting in the capacity of a contractor from recovering compensation for work performed that requires a contractor’s license unless the person was a duly licensed contractor at all times during the performance of the act or contract, except as specified.

This bill would instead allow that person to recover compensation for that work if the person was a duly licensed contractor at the time the contract was executed and during the portion of the times of the performance of that act or contract for which they are seeking to recover compensation.
This bill would further exempt an action for compensation arising from a contract for a public work of improvement, as specified.

Existing law authorizes a person who uses the services of an unlicensed contractor to bring an action to recover all compensation paid to the unlicensed contractor for performance of any act or ~~contract.~~ contract, except as provided.

~~This bill would instead authorize that person to recover the portion of compensation paid to the unlicensed contractor for work performed during the time in which the contractor was unlicensed.~~
This bill would additionally exempt an action for compensation arising from a contract for a public work of improvement, as specified.

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 7031 of the Business and Professions Code is amended to read:

7031.

(a) (1) Except as provided in paragraph (2) or subdivision (e), no person engaged in the business or acting in the capacity of a contractor may bring or maintain any action, or recover in law or equity in any action, in any court of this state for the collection of compensation for the performance of any act or contract where a license is required by this chapter without alleging that they were a duly licensed contractor ~~at the time the contract was executed and during the portion of the times of the~~ at all times during the performance of that act or ~~contract for which they are seeking to recover compensation,~~ contract, regardless of the merits of the cause of action brought by the person.

(2) Paragraph (1) shall not apply to either of the following:
~~(2)The prohibition in paragraph (1) shall not apply to contractors who are each~~

(A) Any contractor who is individually licensed under this chapter but who ~~fail~~ fails to comply with Section 7029.

(B) An action for compensation arising from a contract for a public work of improvement. A person may maintain an action for compensation under this subparagraph if the person was a duly licensed contractor at the time the contract was executed and during the portion of the performance of the contract for which compensation is sought, without regard to the underlying merits of the cause of action.

(b) (1) Except as provided in paragraph (2) or subdivision (e), a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in this state to recover ~~the portion of~~ all compensation paid to the unlicensed contractor ~~for work performed during the time in which the contractor was unlicensed.~~ for performance of any act or contract.

(2) Paragraph (1) does not apply to an action for compensation arising from a contract for a public work of improvement. A person may maintain an action for compensation under this paragraph if the person was a duly licensed contractor at the time the contract was executed and during the portion of the performance of the contract for which compensation is sought, without regard to the underlying merits of the cause of action.

(c) A security interest taken to secure any payment for the performance of any act or contract for which a license is required by this chapter is unenforceable if the person performing the act or contract was not a duly licensed contractor at all times during the performance of the act or contract.

(d) If licensure or proper licensure is controverted, then proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors State License Board which establishes that the individual or entity bringing the action was duly licensed in the proper classification of contractors at all times during the performance of any act or contract covered by the action. Nothing in this subdivision shall require any person or entity controverting licensure or proper licensure to produce a verified certificate. When licensure or proper licensure is controverted, the burden of proof to establish licensure or proper licensure shall be on the licensee.

(e) The judicial doctrine of substantial compliance shall not apply under this section where the person who engaged in the business or acted in the capacity of a contractor has never been a duly licensed contractor in this state. However, notwithstanding subdivision (b) of Section 143, the court may determine that there has been substantial compliance with licensure requirements under this section if it is shown at an evidentiary hearing that the person who engaged in the business or acted in the capacity of a contractor (1) had been duly licensed as a contractor in this state prior to the performance of the act or contract, (2) acted reasonably and in good faith to maintain proper licensure, and (3) acted promptly and in good faith to remedy the failure to comply with the licensure requirements upon learning of the failure.

(f) The exceptions to the prohibition against the application of the judicial doctrine of substantial compliance found in subdivision (e) shall apply to all contracts entered into on or after January 1, 1992, and to all actions or arbitrations arising therefrom, except that the amendments to subdivisions (e) and (f) enacted during the 1994 portion of the 1993–94 Regular Session of the Legislature shall not apply to either of the following:

(1) Any legal action or arbitration commenced prior to January 1, 1995, regardless of the date on which the parties entered into the contract.

(2) Any legal action or arbitration commenced on or after January 1, 1995, if the legal action or arbitration was commenced prior to January 1, 1995, and was subsequently dismissed.