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The contractor laws that changed on January 1, 2026

Seven 2025 bills changed the Contractors State License Law on January 1, 2026, and two raised citation fines from July 1. Section by section, what each says.

Published 2026-09-26

The Contractors State License Board (CSLB) listed seven bills in its New Laws Affecting Contractors Starting in 2026 bulletin, dated December 29, 2025 and numbered #25-04. All seven took effect on January 1, 2026. Two of them carry a second date, July 1, 2026, when the new citation fines became operative. Every one of them is now in the text of the Contractors State License Law, so a question about any of these sections tests the new wording.

Home improvement contracts: AB 1327 and SB 517

Two bills changed Bus. & Prof. Code s. 7159, the section that lists what a home improvement contract must contain.

AB 1327 (Chapter 348) is about cancellation. The first page of the contract now carries the contractor’s email address beside the name and address the Notice of Cancellation is sent to, with a statement that the notice may be sent to either. It also carries a telephone number for the contractor or a representative, to help the buyer locate and fill out the notice (s. 7159(c)(3)(B)). The Civil Code side moved with it: Civ. Code s. 1689.6(d) now says cancellation occurs when the buyer gives written notice at the address or email address in the agreement, and s. 1689.7(b) requires the seller’s email address and telephone number on the first page. The right-to-cancel notices in both codes now say the buyer may cancel by emailing, mailing, faxing or delivering a written notice. And under s. 7159(a)(6), if the Notice of Cancellation is missing from the contract, the buyer may file a complaint with CSLB.

SB 517 (Chapter 585) is about subcontractors. The contract must state whether a subcontractor will be used, with a yes-or-no box to check (s. 7159(c)(7)). If yes, it carries a disclaimer that a list of subcontractors, with names, contact information, license numbers and classifications, will be provided on request, and the same disclaimer goes on every change order during the project. Subdivision (a)(5)(B) keeps the prime contractor responsible for completing the project and adds that this does not stop CSLB disciplining a subcontractor or a home improvement salesperson (HIS) for their own violations.

Workers’ compensation: SB 291

SB 291 (Chapter 455) rewrote the penalties in s. 7125.4. Filing a false exemption certificate, hiring after filing one without first filing a Certificate of Workers’ Compensation Insurance, or employing someone without coverage is cause for discipline, and the section now sets minimum civil penalties: $10,000 per violation for a sole owner found to have employed workers without coverage, $20,000 per violation for a partnership, corporation, limited liability company or tribal business, and further penalties for repeat violations up to $30,000 per occurrence. A qualifier responsible under s. 7068.1 is guilty of a misdemeanor for committing or failing to prevent any of it (subdivision (b)), and CSLB may not renew or reinstate the license until a valid certificate is on file (subdivision (c)).

The same bill amended s. 7125.7: by January 1, 2027, CSLB must establish a process, including an audit or proof, to verify that a licensee claiming to have no employees is eligible for the exemption, and report it to the Legislature by the same date. And s. 7017.3 now requires the board’s annual report to count the disciplinary actions taken under s. 7125.4.

Citation fines: SB 779 and SB 291, from July 1, 2026

Both bills reached the fine tables, and both set July 1, 2026 as the operative date. The July 2026 fine changes post carries the full before-and-after table; three figures matter here. Section 7028.7, the citation for contracting without a license, now carries a civil penalty of $1,500 to $15,000 (SB 779, Chapter 233). Section 7099.2, the citation for a licensee, now runs $500 to $8,000 for most violations and $1,500 to $30,000 for a violation of s. 7110, 7114 or 7118. CSLB’s own rule on assessing those penalties, 16 CCR s. 884, was amended to match with the same July 1 effective date, so the table reprinted in the CSLB Law Book 2026 is the pre-July version.

Wage judgments: AB 1002

AB 1002 (Chapter 567) added s. 7036. The Attorney General may bring a civil action to discipline, deny or refuse to continue a contractor license on the ground that the contractor failed to pay workers the wages they were owed, has not satisfied a wage judgment, or is violating a court order about wages. The Attorney General must notify the registrar at least 30 days before filing, and CSLB may intervene within 60 days of the complaint. The relief is an order directing the registrar to suspend, revoke or deny, and that order counts as disciplinary action under s. 7071.8, which is the disciplinary bond section.

Two smaller ones: SB 456 and AB 521

SB 456 (Chapter 758) added s. 7050, an exemption from the license law for an artist who draws, paints, restores or conserves a mural under an agreement with someone who could legally authorize the work. A mural is a unique work of fine art protected by copyright, trademark, label or patent, drawn or painted by hand directly onto a wall, ceiling or fixture. Painted wall signs are not murals, so a sign painter still needs a license.

AB 521 (Chapter 265) amended s. 7071.4(h). A licensee may deposit cash or a cashier’s check with the registrar in place of a bond, and the amended subdivision says the board is not liable for any legal fees or costs in an action against that deposit, whenever it was filed.

Reading these on the exam

Every section above carries its history line on leginfo: “Effective January 1, 2026”, and for ss. 7028.7 and 7099.2, “Operative July 1, 2026, by its own provisions”. The legislation pages on this site reproduce those lines. Where a study resource predates 2026, check the section against the current text before you trust a dollar figure in it.

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