California regulates contractors harder than any other state, and 2025 and 2026 both moved the goalposts. Here is what electricians, plumbers, HVAC techs and builders need to have straight this year.
CSLB licensing and the new $1,000 threshold
The Contractors State License Board (CSLB) licenses every contractor on any job worth $1,000 or more in combined labor and materials, a threshold AB 2622 raised from $500 effective January 2025. The exemption only covers casual, minor work that needs no building permit and no hired help, so it is a handyperson allowance, not a business model. The classifications trades care about are C-10 (electrical), C-36 (plumbing), C-20 (HVAC) and B (general building), each requiring four years of journey-level experience, trade and law exams, fingerprinting and a $25,000 contractor bond. Electricians employed by C-10 contractors also need DIR electrician certification, a separate credential from the company license.
Mechanics liens: the 20-day preliminary notice
California lien rights hinge on the preliminary notice: subcontractors and suppliers must serve it within 20 days of first furnishing labor or materials, and serving late only protects the 20 days looking back. The lien itself must be recorded within 90 days of completion of the whole project, cut to 60 days for the direct contractor and 30 for others when a notice of completion is recorded. Enforcement suit follows within 90 days of recording. The system is unforgiving but predictable, which favours contractors who systemise it.
Workers comp: mandatory for everyone from 2026
This is the big one. Under SB 216, from January 1, 2026 every CSLB licensee must carry workers compensation insurance (or approved self-insurance) regardless of whether they have employees. The days of the exempt sole-operator license are over; renewals without proof of coverage will not go through. Budget for it now if you have not already.
Sales tax and Cal/OSHA
California does not tax construction labor; contractors generally pay sales or use tax on the materials they consume. Safety is enforced by Cal/OSHA, a state plan that goes beyond federal OSHA, most famously with outdoor heat illness prevention rules (water, shade, rest at 80°F, high-heat procedures at 95°F) and, since 2024, an indoor heat standard, both of which apply squarely to trade crews.
- License threshold: $1,000 including materials (AB 2622, from 2025)
- Licensing body: CSLB; DIR certification for employed electricians
- Contractor bond: $25,000
- Preliminary notice: 20 days from first furnishing
- Lien recording: 90 days from completion (60/30 with notice of completion)
- Workers comp: Mandatory for ALL licensees from Jan 1, 2026 (SB 216)
- Sales tax on labor: Not taxed; tax paid on materials
- OSHA: Cal/OSHA state plan (heat illness rules)
California FAQs for trade businesses
Does the $1,000 exemption let me run a handyman business?
Only barely. It covers casual, minor jobs under $1,000 total (labor and materials) that need no permit and no helpers. Advertising as a contractor or splitting jobs to stay under the line are both violations.
I have no employees. Do I still need workers comp in 2026?
Yes. From January 1, 2026, SB 216 requires every CSLB licensee to carry workers compensation or approved self-insurance regardless of employees. Renewals without proof will not process.
When exactly does my 20-day preliminary notice clock start?
From your first furnishing of labor or materials to the project. Serving late is not fatal but only protects work going back 20 days from service, so the habit worth building is noticing every project on day one.
SKEDS handles the scheduling, dispatch, H&S sign-offs, customer notifications and invoicing, free for a single user. Grab the free templates while you are here.
SKEDS for US tradesFree invoice templateFree quote templateThis guide is general information, not legal advice. Licensing thresholds, lien statutes and tax rules change; always confirm current requirements with the licensing board, an attorney or your accountant before relying on them.